Mackinac Financial Corporation Reports 2019 Second Quarter Results

Company Release - 8/1/2019 2:04 PM ET

MANISTIQUE, Mich., Aug. 01, 2019 (GLOBE NEWSWIRE) -- Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2019 second quarter net income of $3.67 million, or $.34 per share, compared to 2018 second quarter net income of $396 thousand, or $.05 per share.  The 2018 second quarter results included expenses related to the acquisition of First Federal of Northern Michigan (“FFNM”), which had an after-tax impact of $1.56 million on earnings.  Adjusted net income (net of transaction related expenses) for the second quarter of 2018 was $1.96 million or $.25 per share.  Second quarter 2019 net income compared to 2018 adjusted net income increased by $1.71 million, or 87%.

Overall Quarterly Loan Production
Overall Quarterly Loan Production


2019 New Loan Production
2019 New Loan Production


Total Loans by Region June 30, 2019
Total Loans by Region June 30, 2019


MFNC Composition of Loans June 30, 2019
MFNC Composition of Loans June 30, 2019


Margin Analysis Per Quarter
Margin Analysis Per Quarter


Funding Sources June 30, 2019
Funding Sources June 30, 2019


Funding Sources June 30, 2018
Funding Sources June 30, 2018


Income for the first two quarters of 2019 was $6.84 million, or $.64 per share, compared to $1.93 million, or $.27 per share for the same period of 2018.  When giving effect to transaction related expenses, adjusted six-month net income for 2018 was $3.64 million or $.50 per share.  

Weighted average shares outstanding for the second quarter 2019 were 10,740,712, compared to 7,769,720 for the same period of 2018.  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. 

Total assets of the Corporation at June 2019 were $1.33 billion, compared to $1.27 billion at June 30, 2018.  Shareholders’ equity at June 30, 2019 totaled $157.84 million, compared to $148.87 million at June 30, 2018.  Book value per share equated to $14.70 at the end of the second quarter 2019, compared to $13.90 per share a year ago.  Tangible book value at quarter-end was $133.24 million, or $12.40 per share, compared to $123.97 million, or $11.57 per share at the end of the second quarter 2018. 

Additional notes:

  • mBank, the Corporation’s primary asset, recorded year-to-date net income of $7.37 million for the first six months of 2019, compared to $3.25 million for the same period of 2018. The 2018 six-month results included expenses related to the acquisition of FFNM, which had an after-tax impact of $1.23 million on earnings.  Adjusted bank net income (net of transaction related expenses) for the first half of 2018 was $4.48 million, equating to a year-over-year increase of $2.89 million, or 65%.  The increase in net income equated to an improvement in Return on Average Assets at the bank from .63% (.86% as adjusted) for the first six months of 2018 to 1.13% for the same period of 2019.
     
  • The Corporation achieved loan growth of $21.84 million through June 30, 2019.  As expected, the majority of this growth occurred in the second quarter.  The growth was driven by new loan production of $184.5 million in the first half of 2019 comprised of $81.4 million in the first quarter and $103.1 million in the second quarter.   New loan production was $59.0 million for the second quarter of 2018 and $103.9 million in the first six months of 2018.
     
  • Total core bank deposits have increased $42.08 million in the first six months of 2019 through more proactive sales activity in the treasury management line of business and increased marketing efforts in key retail markets.
     
  • Reliance on higher-cost brokered deposits continues to decrease significantly from $151.68 million, or 14.94% of total deposits at the end of the second quarter 2018 to $136.76 million, or 12.46% of total deposits at year-end 2018, to a second quarter 2019 balance of $114.10 million, or 10.23% of total deposits.
     
  • Second quarter 2019 net interest margin remained strong at 4.76%.  Core operating margin for the second quarter, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and a small amount of interest income recognized from the resolution of some non-accrual loans, was 4.43%.  
     
  • The Corporation was added to the Russell 2000 Index in June 2019 when the index finalized its annual reconstitution. 

Revenue

Total revenue of the Corporation for second quarter 2019 was $17.87 million, compared to $13.80 million for the second quarter of 2018.  Total interest income for the quarter ended June 30, 2019 was $16.76 million, compared to $12.94 million for the same period in 2018. The 2019 second quarter interest income included accretive yield of $740 thousand from credit mark accretion associated with acquisitions and $273 thousand from non-accrual resolution.  Credit mark accretion was $284 thousand for the same period of 2018.  The year-over-year change in accretive yield was mainly associated with the increase from acquired loan portfolios from the FFNM and Lincoln Community Bank acquisitions.

Loan Production and Portfolio Mix

Total balance sheet loans at June 30, 2019 were $1.06 billion, compared to June 30, 2018 balances of $1.00 billion.  Total loans under management reside at $1.38 billion, which includes $320.03 million of service retained loans.  Loan production for the second quarter of 2019 was $103.1 million, compared to $59.0 million for the second quarter of 2018.  Overall loan production for the first six months of 2019 was $184.5 million, compared to $103.9 million in 2018, an increase of $80.6 million, or 77%.  Increased production was evident in all lines of business and across the entire market footprint and has driven year-to-date 2019 balance sheet loan growth of $21.84 million. 

Overall Quarterly Loan Production: https://www.globenewswire.com/NewsRoom/AttachmentNg/833c3aa5-cb0e-4fc4-877a-9be5362b34a5

2019 New Loan Production: https://www.globenewswire.com/NewsRoom/AttachmentNg/50c70a9f-9a53-4716-9187-e591e26fb2bc

Payoff activity, outside of normal amortization, has been a continual headwind to portfolio growth and was elevated once again in the second quarter of 2019 with $21 million of total commercial credits being paid off ahead of scheduled maturities. Aggregate commercial credits being paid off ahead of maturity totaled $45 million during the first two quarters of 2019.

As noted in the charts below, the loan portfolio remains well balanced and diversified in terms of geography and loan type.   This prudent diversification should help mitigate both interest rate risk and concentration risk should the current elongated good credit cycle deteriorate as the result of any potential adverse national economic conditions.

Total Loans by Region June 30, 2019: https://www.globenewswire.com/NewsRoom/AttachmentNg/948207e5-c76c-4233-9667-86667430e0f5

MFNC Composition of Loans June 30, 2019: https://www.globenewswire.com/NewsRoom/AttachmentNg/71416a4d-5f94-443e-968c-2c1b91fee222

Commenting on new loan production and overall lending activities, President of the Corporation and President and CEO of mBank, Kelly W. George, stated, “We are very pleased with our first-half 2019 lending activities.  Overall new loan production increased again in the second quarter and outpaced last year’s total by $44 million.  This production supported our anticipated loan growth for the quarter even with the aforementioned payoff activity.  The growing contribution from the new lending teams from the acquisitions last year provided positive impact to these totals and the continued performance from the legacy lending team has been excellent as we continue to adjudicate high quality credits.  Secondary market mortgage activity has been significantly augmented by our larger bank platform and 2019 has seen a positive shift in refinance trends for the first time in several years with our refinance volume increasing through the second quarter by 79% over 2018.  This trend drove increased year-over-year gain on sale income where premiums remain strong and slightly increased on average from 2018.”

“We continue to monitor payoff activity on the commercial side given the continued competitive pressure for loans from all types of lending organizations.  We will stay true to our underwriting and pricing discipline and not stretch to keep credits on the books that could negatively impact our balance sheet in the long-term from either a macro composition or micro individual credit level perspective pending changes in overall economic conditions in our regions.”  

Credit Quality

Nonperforming loans totaled $4.70 million, or .44% of total loans at June 30, 2019, compared to $5.0 million, or .50% of total loans at June 30, 2018. Total loan delinquencies greater than 30 days resided at a nominal 1.05 %, compared to .89% in 2018.  The nonperforming assets to total assets ratio resided at .51% for second quarter of 2019, compared to .59% for the second quarter of 2018.

The Financial Accounting Standards Board (FASB) recently voted to recommend delaying implementation of the Current Expected Credit Losses methodology (“CECL”) for small public banks, credit unions, and privately held institutions to 2023.  MFNC meets the criteria of a small public bank, i.e. a small reporting company described in the FASB vote. If this recommendation holds through the requisite 30-day comment period, the Corporation would not need to implement CECL until 2023. 

Commenting on overall credit risk, Mr. George stated, “As expected, we have normalized the slight increase in our non-performing and problem loan credit ratios that occurred in 2018 following the FFNM and Lincoln Community Bank 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. We also carry a very low level of Other Real Estate Owned, limiting time and expense in resolution of those properties. Purchase accounting marks from the previously acquired banks have continued to prove accurate, attaining expected accretion levels which should continue into future periods.”

Margin Analysis and Funding

Net interest income for the second quarter 2019 was $13.99 million, resulting in a Net Interest Margin (NIM) of 4.76%, compared to $10.81 million in the second quarter 2018 and a NIM of 4.26%.  Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and the aforementioned small amount of non-accrual resolution, was 4.43% for the second quarter 2019.  Comparatively, net interest income for the first quarter of 2019 resided at $13.24 million, a NIM of 4.55%, and core NIM of 4.37%.  As illustrated in the chart below, core NIM remains consistent given the recent flat rate environment and consistent pricing fundamentals of the Corporation. 

Margin Analysis Per Quarter: https://www.globenewswire.com/NewsRoom/AttachmentNg/96133c4f-873b-499a-b437-a583e5204f61

Total bank deposits (excluding brokered deposits) have increased by $136.93 million year-over-year from $863.82 million at June 30, 2018 to $1.00 billion at second quarter-end 2019.  Total brokered deposits have decreased significantly and were $114.10 million at June 30, 2019, compared to $151.68 million at June 30, 2018, a decrease of 25%.  FHLB (Federal Home Loan Bank) borrowings were also reduced from $91.19 million at the end of the second quarter 2018 to $45.75 million at the end of the second quarter 2019. 

Funding Sources June 30, 2019: https://www.globenewswire.com/NewsRoom/AttachmentNg/77cdd581-565c-4cd3-a3f4-368d590069f8

Funding Sources June 30, 2018: https://www.globenewswire.com/NewsRoom/AttachmentNg/a86b7fe0-09f0-41f4-97a7-7902c01898e5

Mr. George stated, “The Corporation’s margin remains consistently strong with continued focus on pricing of both the loan and deposit portfolio.  We have also analyzed the potential margin impact if Fed rate cuts continue.  Given our well-matched balance sheet, we expect nominal core margin compression as we continue to proactively review traditional bank product offerings and functions to maintain a competitive position with peers, as well as regional and national banks.  Our bank deposits are up roughly $40 million since year-end 2018 and have allowed for a continued reduction in higher cost brokered deposits over the course of the first half of 2019. With continued focus and progress, we have significantly lessened our reliance on wholesale funding while maintaining a strong liquidity position to fund loans and our overall operations. 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 in our higher volume markets and with our Treasury Management line of business.”

Noninterest Income / Expense

Second quarter 2019 noninterest income was $1.11 million, compared to $863 thousand for the same period of 2018.  The year-over-year improvement is a combination of the scale provided by the two 2018 acquisitions as well as continued focus on drivers of noninterest income, including secondary market mortgage and SBA sales. Noninterest expense for the second quarter of 2019 was $10.26 million, compared to $11.08 million for the same period of 2018.  The expense variance from 2018 was heavily impacted by the transaction related expenses from FFNM, which equated to $1.98 million on a pre-tax basis.  For comparison purposes, noninterest expense remains consistent quarter-over-quarter with the first quarter of 2019 equating to $10.24 million.

Assets and Capital

Total assets of the Corporation at June 30, 2019 were $1.33 billion, compared to $1.27 billion at June 30, 2018.  Shareholders’ equity at June 30, 2019 totaled $157.84 million, compared to $148.87 million at June 30, 2018.  Book value per share outstanding equated to $14.70 at the end of the second quarter 2019, compared to $13.90 per share outstanding a year ago.  Tangible book value at quarter-end was $133.24 million, or $12.40 per share, compared to $123.97 million, or $11.57 per share, at the end of the second quarter 2018.  Both the common stock offering and the acquisitions had positive impacts on the Corporation’s overall capitalization and regulatory capital ratios. Each of the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 12.72% and 12.74% and tier 1 capital to total tier 1 average assets at the Corporation of 9.74% and at the bank of 9.76%.

Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation and Chairman of mBank concluded, “We believe that the first half of 2019 reflects the positive impact of our 2018 acquisitions and organic growth efforts. We continue to improve efficiency and our core funding with our larger operating platform as we evaluate opportunities for continued growth.  We will continue to be receptive to acquisitions with sound economics as we focus on organic growth, credit trends and further operating efficiencies in 2019.”

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 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,” 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 Corporation 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 
      June 30, December 31, June 30,  
(Dollars in thousands, except per share data)   2019  2018  2018 
      (Unaudited) (Unaudited) (Unaudited) 
Selected Financial Condition Data (at end of period):       
Assets     $   1,330,723  $  1,318,040 $  1,274,095 
Loans        1,060,703     1,038,864    1,003,377 
Investment securities       110,348     116,748    114,682 
Deposits        1,114,853     1,097,537    1,015,501 
Borrowings       46,232     60,441    91,747 
Shareholders' equity       157,840     152,069    148,866 
            
Selected Statements of Income Data (six months and year ended)      
Net interest income    $   27,233  $  47,130 $  20,122 
Income before taxes       8,653     10,593    2,444 
Net income       6,836     8,367    1,933 
Income per common share - Basic     .64    .94   .27 
Income per common share - Diluted    .64    .94   .27 
Weighted average shares outstanding - Basic     10,730,477     8,891,967    7,041,010 
Weighted average shares outstanding- Diluted     10,739,471     8,921,658    7,073,764 
            
Three Months Ended:          
Net interest income    $   13,997  $  13,495 $  10,813 
Income before taxes       4,644     4,260    499 
Net income       3,669     3,365    396 
Income per common share - Basic     .34    .31   .05 
Income per common share - Diluted    .34    .31   .05 
Weighted average shares outstanding - Basic     10,740,712     10,712,745    7,769,720 
Weighted average shares outstanding- Diluted     10,752,070     10,712,745    7,809,018 
            
Selected Financial Ratios and Other Data:        
Performance Ratios:           
Net interest margin       4.65 %   4.44%   4.23%
Efficiency ratio       68.94     77.70    87.27 
Return on average assets      1.04    .71   .37 
Return on average equity      8.89     6.94    4.27 
            
Average total assets    $   1,323,321  $  1,177,455 $  1,050,305 
Average total shareholders' equity      155,098     120,478    91,258 
Average loans to average deposits ratio     95.22 %   97.75%   99.89%
            
Common Share Data at end of period:        
Market price per common share   $   15.80  $  13.65 $  16.58 
Book value per common share      14.70     14.20    13.90 
Tangible book value per share      12.40     11.61    11.57 
Dividends paid per share, annualized    .480    .480   .480 
Common shares outstanding      10,740,712     10,712,745    10,712,745 
            
Other Data at end of period:         
Allowance for loan losses   $   5,306  $  5,183 $  5,141 
Non-performing assets    $   6,798  $  8,196 $  7,486 
Allowance for loan losses to total loans  .50 %  .50%  .51%
Non-performing assets to total assets    .51 %  .62%  .59%
Texas ratio        4.91 %   6.33%   5.80%
            
Number of:           
  Branch locations       29     29    29 
  FTE Employees       301     288    233 


MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
           
  June 30, December 31, June 30, 
  2019 2018  2018 
  (Unaudited)    (Unaudited) 
ASSETS          
           
Cash and due from banks $  60,680   $  64,151  $  64,874  
Federal funds sold    10      6     15  
Cash and cash equivalents    60,690      64,157     64,889  
           
Interest-bearing deposits in other financial institutions    12,465      13,452     10,873  
Securities available for sale    110,348      116,748     114,682  
Federal Home Loan Bank stock    4,924      4,924     4,860  
           
Loans:          
Commercial    755,176      717,032     684,725  
Mortgage    284,864      301,461     299,450  
Consumer    20,663      20,371     19,202  
Total Loans  1,060,703    1,038,864   1,003,377  
Allowance for loan losses    (5,306)    (5,183)    (5,141) 
Net loans  1,055,397    1,033,681     998,236  
           
Premises and equipment    23,166      22,783     21,790  
Other real estate held for sale    2,125      3,119     2,461  
Deferred tax asset    6,259      5,763     8,000  
Deposit based intangibles    5,380      5,720     4,504  
Goodwill    19,224      22,024     20,389  
Other assets    30,745      25,669     23,411  
           
TOTAL ASSETS $1,330,723   $1,318,040  $1,274,095  
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
LIABILITIES:          
Deposits:          
Noninterest bearing deposits $  276,776   $  241,556  $  220,176  
NOW, money market, interest checking    344,213      368,890     337,344  
Savings    111,438      111,358     106,022  
CDs<$250,000    256,689      225,236     181,352  
CDs>$250,000    11,640      13,737     18,930  
Brokered    114,097      136,760     151,677  
Total deposits    1,114,853      1,097,537     1,015,501  
           
Federal funds purchased         2,905     10,000  
Borrowings    46,232      57,536     91,747  
Other liabilities    11,798      7,993     7,980  
Total liabilities    1,172,883      1,165,971     1,125,228  
           
SHAREHOLDERS’ EQUITY:          
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,740,712; 10,712,745 and 10,712,745 respectively    129,262      129,066     128,880  
Retained earnings    27,734      23,466     19,602  
Accumulated other comprehensive income (loss)          
Unrealized (losses) gains on available for sale securities    1,062      (245)    606  
Minimum pension liability    (218)    (218)    (221) 
Total shareholders’ equity    157,840      152,069     148,867  
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $  1,330,723   $  1,318,040  $  1,274,095  


MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
     
  Three Months Ended Six Months Ended
  June 30, June 30,
  2019 2018 2019 2018
               
  (Unaudited) (Unaudited)
INTEREST INCOME:        
Interest and fees on loans:        
Taxable $   15,586  $  12,071  $   30,181  $  22,461 
Tax-exempt    42     31     89     56 
Interest on securities:        
Taxable    680     560     1,383     932 
Tax-exempt    85     79     183     148 
Other interest income    367     197     752     396 
Total interest income    16,760     12,938     32,588     23,993 
         
INTEREST EXPENSE:        
Deposits    2,515     1,602     4,869     2,838 
Borrowings    248     523     486     1,033 
Total interest expense    2,763     2,125     5,355     3,871 
         
Net interest income    13,997     10,813     27,233     20,122 
Provision for loan losses    200     100     300     150 
Net interest income after provision for loan losses    13,797     10,713     26,933     19,972 
         
OTHER INCOME:        
Deposit service fees    408     323     814     592 
Income from loans sold on the secondary market    355     277     667     454 
SBA/USDA loan sale gains    29     83     154     134 
Mortgage servicing amortization    128     (2)    248     (10)
Other    190     182     344     307 
Total other income    1,110     863     2,227     1,477 
         
OTHER EXPENSE:        
Salaries and employee benefits    5,511     4,923     10,946     9,077 
Occupancy    1,004     928     2,085     1,739 
Furniture and equipment    723     644     1,441     1,175 
Data processing    708     586     1,417     1,090 
Advertising    214     192     523     387 
Professional service fees    547     397     981     701 
Loan origination expenses and deposit and card related fees    184     148     363     274 
Writedowns and losses on other real estate held for sale    73     40     101     66 
FDIC insurance assessment    77     187     211     343 
Communications expense    232     152     460     307 
Transaction related expenses    -      1,976     -     2,165 
Other    990     904     1,979     1,681 
Total other expenses    10,263     11,077     20,507     19,005 
         
Income before provision for income taxes    4,644     499     8,653     2,444 
Provision for income taxes    975     103     1,817     511 
         
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $   3,669  $  396  $   6,836  $  1,933 
         
INCOME PER COMMON SHARE:        
Basic  $.34  $.05   $.64 $.27 
Diluted  $.34 $.05  $.64 $ .27 
         


MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
       
(Dollars in thousands)      
       
Loan Portfolio Balances (at end of period):      
       
  June 30,   December 31,   June 30,  
 2019  2018 2018 
 (Unaudited) (Unaudited) (Unaudited) 
Commercial Loans:      
Real estate - operators of nonresidential buildings$   143,897  $  150,251 $  117,285 
Hospitality and tourism   92,809     77,598    78,122 
Lessors of residential buildings   49,489     50,204    37,866 
Gasoline stations and convenience stores   26,974     24,189    22,207 
Logging   21,666     20,860    17,368 
Commercial construction   36,803     29,765    20,895 
Other   383,538     364,165    390,982 
  Total Commercial Loans   755,176     717,032    684,725 
       
1-4 family residential real estate   273,813     286,908    284,041 
Consumer   20,663     20,371    19,202 
Consumer construction   11,051     14,553    15,409 
       
  Total Loans$   1,060,703  $  1,038,864 $  1,003,377 
       


Credit Quality (at end of period):      
       
 June 30,  December 31,  June 30, 
 2019  2018 2018 
 (Unaudited) (Unaudited) (Unaudited) 
Nonperforming Assets :      
Nonaccrual loans$   4,673  $  5,054 $  3,825 
Loans past due 90 days or more   -     23    - 
Restructured loans   -     -    1,200 
  Total nonperforming loans   4,673     5,077    5,025 
Other real estate owned   2,125     3,119    2,461 
  Total nonperforming assets$   6,798  $  8,196 $  7,486 
Nonperforming loans as a % of loans  .44 %  .49%  .50%
Nonperforming assets as a % of assets  .51 %  .62%  .59%
Reserve for Loan Losses:      
At period end$   5,306  $  5,183 $  5,141 
As a % of average loans  .50 %  .50%  .51%
As a % of nonperforming loans   113.55 %   102.09%   102.31%
As a % of nonaccrual loans   113.55 %   102.55%   134.41%
Texas Ratio   4.91 %   6.33%   5.80%
       
Charge-off Information (year to date):      
  Average loans$   1,049,383  $  941,221 $  858,508 
  Net charge-offs (recoveries)$   177  $  396 $  88 
  Charge-offs as a % of average loans, annualized   .03 %  .04%  .02%


MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
            
 QUARTER ENDED  
 (Unaudited)  
 June 30, March 31, December 31 September 30, June 30  
 2019 2019 2018 2018 2018  
BALANCE SHEET (Dollars in thousands)           
            
Total loans$   1,060,703   $1,045,428  $1,038,864  $993,808  $1,003,377   
Allowance for loan losses   (5,306)  (5,154)  (5,183)  (5,186)  (5,141)  
  Total loans, net   1,055,397    1,040,274   1,033,681   988,622   998,236   
Total assets   1,330,723    1,316,996   1,318,040   1,254,335   1,274,095   
Core deposits   989,116    965,359   947,040   885,988   844,894   
Noncore deposits    125,737    131,889   150,497   142,070   170,607   
  Total deposits   1,114,853    1,097,248   1,097,537   1,028,058   1,015,501   
Total borrowings   46,232    53,678   60,441   69,216   91,747   
Total shareholders' equity   157,840    154,746   152,069   149,367   148,867   
Total tangible equity   133,236    129,973   124,325   124,605   123,974   
Total shares outstanding   10,740,712    10,740,712   10,712,745   10,712,745   10,712,745   
Weighted average shares outstanding   10,752,070    10,720,127   10,712,745   10,712,745   7,769,720   
            
AVERAGE BALANCES (Dollars in thousands)           
            
Assets$   1,326,827   $1,320,080  $1,320,996  $1,284,068  $1,117,188   
Loans   1,051,998    1,046,740   1,043,409   1,001,763   905,802   
Deposits   1,103,413    1,099,644   1,087,174   1,042,004   913,220   
Equity   156,491    153,689   149,241   149,202   100,518   
            
INCOME STATEMENT (Dollars in thousands)           
            
Net interest income$   13,997   $13,236  $13,795  $13,214  $10,813   
Provision for loan losses   200    100   300   50   100   
  Net interest income after provision   13,797    13,136   13,495   13,164   10,713   
Total noninterest income   1,110    1,117   1,443   1,343   863   
Total noninterest expense   10,263    10,244   10,678   10,618   11,077   
Income before taxes   4,644    4,009   4,260   3,889   499   
Provision for income taxes   975    842   895   820   103   
Net income available to common shareholders$   3,669   $3,167  $3,365  $3,069  $396   
Income pre-tax, pre-provision$   4,844   $4,109  $4,560  $3,939  $599   
            
PER SHARE DATA           
            
Earnings per common share $.34  $.30  $.31  $.29  $.05   
Book value  per common share   14.70    14.41   14.20   13.94   13.90   
Tangible book value per share   12.40    12.10   11.61   11.63   11.57   
Market value, closing price   15.80    15.74   13.65   16.20   16.58   
Dividends per share .120   .120   .120   .120   .120   
            
ASSET QUALITY RATIOS           
            
Nonperforming loans/total loans  .44%   .53%  .49%  .46%  .50%  
Nonperforming assets/total assets .51   .57   .62   .53   .59   
Allowance for loan losses/total loans  .50   .49   .50   .52   .51   
Allowance for loan losses/nonperforming loans   113.55    92.23   102.09   114.58   102.31   
Texas ratio    4.91    5.59   6.33   5.14   5.80   
            
PROFITABILITY RATIOS           
            
Return on average assets   1.11 %  .97%  1.01%  .95%  .14%  
Return on average equity   9.40    8.36   8.95   8.16   1.58   
Net interest margin   4.76    4.55   4.64   4.60   4.26   
Average loans/average deposits   95.34    95.10   95.97   96.14   99.19   
            
CAPITAL ADEQUACY RATIOS           
            
Tier 1 leverage ratio   9.74 %   9.54%  9.24%  9.51%  9.39%  
Tier 1 capital to risk weighted assets   12.20    12.28   11.95   12.62   11.87   
Total capital to risk weighted assets   12.72    12.79   12.47   13.17   12.39   
Average equity/average assets (for the quarter)   11.80    11.64   11.30   11.62   9.00   
Tangible equity/tangible assets (at quarter end)   10.20    10.06   9.64   10.13   9.92   
            

Contact: Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 /[email protected]
Website: www.bankmbank.com

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Source: Mackinac Financial Corporation