The Directors of Mackinac Financial Corporation (Nasdaq:MFNC)
(Mackinac), the holding company for mBank, today announced the
consummation of the all-stock merger of First Federal of Northern
Michigan Bancorp, Inc. (OTC:FFNM) (FFNM), Alpena, Michigan, with
and into Mackinac. First Federal of Northern Michigan (First
Federal), FFNM’s subsidiary bank, was consolidated into mBank and
all branches will open as mBank locations on Monday, May 21, 2018.
Consistent with the terms of the Agreement and Plan of
Merger, FFNM shareholders will receive .576 shares of Mackinac
common stock for each share of FFNM common stock. The
aggregate value of the stock consideration, based on an assumed
value of Mackinac shares of $15.67, which is the average closing
price for the previous five trading days, is approximately $33.6
million. FFNM also maintained the required minimum equity
necessary to declare and pay an $8 million special dividend to its
shareholders immediately prior to closing as part of the
agreement. The special dividend is expected to be released
for distribution on May 25, 2018. Total consideration to FFNM
shareholders in connection with the transaction would equate to
$41.6 million, based upon the assumed value of Mackinac common
shares.
The transaction will increase Mackinac’s
post-transaction assets to an estimated $1.3 billion and balance
sheet loans to approximately $1 billion. mBank plans to consolidate
First Federal’s Gaylord office into mBank’s Gaylord location on
June 18th, 2018. The First Federal Gaylord office will remain
operational from the close of the transaction until such date.
Combined with mBank's current locations, the addition of the six
acquired Northern Lower Peninsula of Michigan offices (following
the anticipated Gaylord consolidation) will increase total branches
from 23 to 29.
“On behalf of the entire Mackinac Board of
Directors, staff, and management, we would like to extend a sincere
welcome to all First Federal of Northern Michigan clients,
employees and shareholders,” said Kelly W. George, Mackinac
President and mBank President and CEO. Our primary objective will
be providing professional, secure and flexible banking products and
services to all customers as we look to deepen our banking
relationships with current clients and actively work to attract new
ones. mBank also welcomes becoming an active corporate citizen
within all the FFNM markets assisting with various municipal,
educational, charitable and business development organizations to
help make a positive difference within the communities. Continued
George, “In closing, we feel privileged to be able to serve the
banking needs of the citizens and businesses of our new market
areas and look forward to continuing the long-standing
relationships built on the fine tradition of First Federal of
Northern Michigan.”
Former FFNM Chairman Martin Thomson, pursuant to
a previous nomination, is expected to be officially appointed to
the Mackinac Board of Directors on May 30, 2018 during the next
Mackinac board meeting. Former FFNM CEO Michael W. Mahler
will remain with mBank (at its Alpena, MI location) as Executive
Vice President of Community Banking and Administration. Mr.
Thomson commenting on the merger noted, “We are proud to be a part
of a quality banking organization that has a culture similar to
what we had at First Federal and a scale that allows for continued
prosperity of all shareholders and the advancement of our
communities. Throughout the last decade we have had a chance to get
to know Mackinac well through various collaborations and they have
been an excellent partner to work with, which helped pave the way
for this transaction to finally come together.”
As part of the Corporation’s commitment to
continued community support, mBank will make an immediate $100,000
donation to the First Federal Community Foundation. The
foundation is dedicated to community activities and the promotion
of charitable causes. New mBank Executive Vice President,
Michael W. Mahler commented, “I am very excited to join the mBank
leadership team and will be continuing on as the President of the
First Federal Foundation as well. I couldn’t be happier that the
bank and foundation will work together to continue to deeply
support our community. mBank’s generous donation to the foundation
reinforces its commitment to being a community focused financial
institution and I look forward to continuing to work in Alpena and
positively impacting the region through efforts at both the bank
and the Foundation.”
Mackinac anticipates the transaction to be
accretive to earnings per share, exclusive of transaction related
costs, for 2018. Operating economies are targeted to be fully
phased in by the end of 2018. The Tangible Book Value earn
back for Mackinac is currently expected to be approximately three
years or less.
“We are very excited to expand our presence in
the Northern Lower Peninsula region by partnering with another
long-standing, community minded financial institution,” commented
Paul D. Tobias, Chairman and CEO of Mackinac and Chairman of
mBank. “Strategically, the proximity to our current footprint
complements our Traverse City and Gaylord markets very well and
allows us to add considerable scale in that region to enhance our
franchise value. Perhaps more importantly, we have further
confirmed that culturally, this partnership is an excellent fit for
both organizations.”
Mackinac was advised by Piper Jaffray & Co.
and the law firm of Honigman Miller Schwartz and Cohn LLP. FFNM was
advised by ProBank Austin and the law firm of Shumaker, Loop &
Kendrick, LLP.
About Mackinac Financial Corporation Mackinac
Financial Corporation is a registered bank holding company formed
under the Bank Holding Company Act of 1956 whose common stock is
traded on the NASDAQ stock market as “MFNC”. The principal
subsidiary company is mBank. Headquartered in Manistique, MI, mBank
has a total of 30 branch locations throughout Michigan and Northern
Wisconsin and current assets in excess of $1.2 billion. The
company’s banking services include commercial lending, asset-based
lending, treasury management products, services geared toward small
to mid-sized businesses and a full array of personal and business
deposit products, consumer loans, mobile banking, online banking
and bill pay.
This release contains forward-looking statements within the
meaning of the “Safe-Harbor” provisions of the Private Securities
Litigation Reform Act of 1995 regarding Mackinac's outlook or
expectations with respect to the acquisition of FFNM, including
expected cost savings, expected transaction-related and integration
expenses and the impact of the transaction on Mackinac's future
performance. Words and phrases such as "growth," "anticipates,"
"estimates," "expect," "plan," "approximately," “allows,” "should,"
"will," and variations of such words and phrases or similar
expressions are intended to identify such forward-looking
statements. Such statements are based upon current beliefs and
expectations and involve substantial risks and uncertainties which
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. These
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions ("risk factors") 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. Mackinac undertakes no obligation
to update, amend or clarify forward-looking statements, whether as
a result of new information, future events or otherwise.
Risk factors relating to both the transaction and the
integration of FFNM into Mackinac after closing include, without
limitation:
- The anticipated cost savings and strategic gains expected from
the transaction may be significantly harder or take longer to
achieve than expected or may not be achieved in their entirety as a
result of unexpected factors or events;
- The integration of FFNM's business and operations into
Mackinac, which will include conversion of FFNM's operating systems
and procedures, may take longer than anticipated or be more costly
than anticipated or have unanticipated adverse results relating to
FFNM's or Mackinac's existing businesses;
- Mackinac's ability to achieve anticipated results from the
transaction is dependent on the state of the economic and financial
markets going forward. Specifically, Mackinac may incur more credit
losses from FFNM’s loan portfolio than expected and deposit
attrition may be greater than expected.
Risk factors also include, but are not limited to, the risk
factors described under "Risk Factors" in Mackinac's Annual Report
on Form 10-K filed with the Securities and Exchange Commission on
March 15, 2018. These and other factors are representative of the
risk factors that may emerge and could cause a difference between
an ultimate actual outcome and a preceding forward-looking
statement.
Contacts:
Paul D. Tobias Chairman & CEO Mackinac Financial Corporation
& Chairman mBankBirmingham, MI (248) 290 –
5901ptobias@bankmbank.com
Kelly W. GeorgePresident, Mackinac Financial Corporation &
President & CEO, mBank
Manistique, MI (906) 341 – 7140kgeorge@bankmbank.com
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