Reflecting on this quarter and moving forward into 2020, we first
acknowledge how the COVID-19 pandemic has impacted the daily
operations and the lives of all our employees and clients in a
swift and uncertain manner. Mackinac Financial Corporation (Nasdaq:
MFNC) (“we”, or the “Corporation”) the bank holding company for
mBank (“the Bank”), continues to actively work to assist its staff
members, clients, communities and shareholders during this
challenging time. In addition to the customary earnings discussion,
further information about the Corporation’s COVID-19 pandemic
response and ongoing monitoring is contained throughout the
release.
The Corporation today announced 2020 first
quarter net income of $3.05 million, or $.28 per share, compared to
2019 first quarter net income of $3.17 million, or $.30 per share.
Weighted average shares outstanding for the first quarter of 2020
were 10,717,967 compared to 10,720,127 for the same period of
2019.
Total assets of the Corporation at March 31,
2020 were $1.36 billion, compared to $1.32 billion at March 31,
2019. Shareholders’ equity at March 31, 2020 totaled $160.06
million, compared to $154.75 million at March 31, 2019. Book value
per share outstanding equated to $15.20 at the end of the first
quarter 2020, compared to $14.41 per share outstanding a year ago.
Tangible book value at quarter-end was $135.61 million, or $12.87
per share outstanding, compared to $129.97 million, or $12.10 per
share outstanding at the end of the first quarter 2019.
Additional notes:
- mBank, the Corporation’s primary asset, recorded net income of
$3.40 million for the first quarter of 2020.
- The Corporation repurchased 240,644 shares under its share
repurchase program during the first quarter at an average price of
$11.34. It has since paused its repurchase
activity.
- Though not reflected in the first quarter results, we have
funded approximately $160 million of Payroll Protection Program
(PPP) loans. These loans are supporting over one thousand
small businesses throughout our footprint with the majority of
recipients residing in the Upper Peninsula and Northern Michigan.
- Non-interest income was very solid for the quarter including
secondary market mortgage fees of $538K and premiums on the sale of
Small Business Administration (SBA) guaranteed loans of $710K.
- The residential mortgage pipeline resides at very robust levels
and we expect strong output from this line of business as we look
to upcoming quarters.
- Core operating margin, which is net of accretion from acquired
loans that were subject to purchase accounting adjustments, was
4.32%.
- The first quarter provision for loan losses was $100 thousand.
While this amount was consistent with past quarters, as a result of
COVID-19, the qualitative factors for economic conditions were
adjusted within the Allowance for Loan Losses (ALLL) calculation
and methodology. The Corporation is not currently required to
utilize CECL and management will actively refine the provision and
loan reserves as client impact and broader economic data from the
pandemic become more clear in the second quarter and beyond.
COVID-19 Operating Update
Upon the onset of the COVID-19 pandemic,
management took proactive measures and moved quickly to implement
protocols and adjust operations to continue to serve all
constituencies. Speaking to these specific operational actions,
President of the Corporation and President and CEO of mBank, Kelly
W. George, stated: “When the Coronavirus crisis started to heighten
around mid-March, we began to swiftly activate our pandemic
response plan in each critical risk area of the bank. Certainly,
first and foremost, the initial step was to take precautionary
health measures for the safety of our staff and clients at the
banking centers given that our lobbies are where the most human
interaction took place on a daily basis. We subsequently closed our
lobby access in the middle of March and began serving clients who
needed in-person transactions almost exclusively via drive-thru
window. We are also heavily utilizing our phone, online and mobile
service capacity as we engage in as little client and staff
activity within the lobbies as possible and expect this protocol to
continue into the near future.”
He went on to say, “Our experience in operating
our uniquely disparate footprint for a community bank, coupled with
investments in technology that were needed to manage our
geographies, have provided a strong framework to continue to
service clients effectively under these unusual circumstances. It
has also enabled us to make timely business decisions as we work
through this crisis. In addition, the experience of working
together as a management team for many years and our prior
utilization of more flexible remote work schedules for various
levels of staff have contributed to as seamless of a transition as
could be hoped for in the new COVID-19 operating environment.”
Other aspects of the pandemic response plan that
were implemented or that we continue to refine are noted below:
- Testing of various contingency funding sources and ensuring the
Corporation is monitoring the inflows and outflows of cash
throughout its balance sheet to make certain that adequate levels
of liquidity are maintained.
- The establishment of a COVID-19 Task Force that meets several
times a week. This task force is made up of executive-level
managers and is designed to ensure that timely and prudent
operating protocols are applied to enhance necessary oversight of
mission critical risk areas and human resources.
- The rollout of a COVID-19 loan relief program consistent with
prudent industry guidance to support our clients’ near term cash
flow needs and assist both consumers and businesses, in various
ways, that have been immediately adversely impacted. We have
provided needed relief to approximately 20% of our loan base as of
this release, with the majority of such relief supporting business
clients in hospitality, tourism, gas stations and commercial real
estate.
- Continual messaging and outreach to maintain staff and
community confidence.
Revenue
Total revenue of the Corporation for first
quarter 2020 was $17.60 million, compared to $16.95 million for the
first quarter of 2019. Total interest income for the first
three months of 2020 was $15.67 million, compared to $15.83 million
for the same period in 2019. The 2020 first quarter interest income
included accretive yield of $819 thousand from combined credit mark
accretion associated with acquisitions, compared to $526 thousand
in the same period of 2019.
Loan Production and Portfolio Mix
Total balance sheet loans at March 31, 2020 were
$1.04 billion, compared to March 31, 2019 balances of $1.04
billion. Total loans under management reside at $1.33
billion, which includes $287.13 million of service retained
loans. Overall loan production for the first three months of
2020 was $66.8 million, compared to $81.4 million in the first
quarter of 2019 and $44.97 million for the same period of 2018.
A photo accompanying this announcement is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/f4ddac03-cd2d-4685-8fcb-72db04e1eb52
Prior to the COVID-19 outbreak, payoff activity
continued to somewhat constrain portfolio growth with $29.22
million of total commercial credits being paid off ahead of
scheduled maturity in the first quarter. Out of this $29.22
million, approximately $5.25 million resulted from collateral
divestments by various borrowers, and another $15.30 million in
client relationships that were refinanced at pricing and structure
terms that the Corporation does not offer within our traditional
bank lending guidelines. Payoff activity has subsided since
the onset of the COVID-19 pandemic.
Commenting on new loan production and overall
lending activities, Mr. George stated, “Early quarter loan
production was solid during the seasonally slowest origination
period of the year. However, as we transitioned from the middle of
March to April, loan activity was dominated by pandemic related
items and keeping up with a very high level of consumer mortgage
loan activity which continues to pick up. We have been very
proactive with our client base and communities in COVID-19 outreach
to gauge real time impacts in our various markets, along with
providing loan payment modification relief and assisting clients by
being a market leader in terms of originating PPP loans to ensure
continuity of the workforce in our more rural trade areas. We are
also involved in some of the other specific pandemic-based relief
programs that are being sponsored at the state level and are
looking to use the whole spectrum of federal and state services to
support our clients and all small businesses in our communities
until commerce expands in a meaningful way.”
Credit Quality
Nonperforming loans totaled $6.42 million,
or .61% of total loans at March 31, 2020, compared to $5.59
million, or .53% of total loans at March 31, 2019. Total loan
delinquencies greater than 30 days resided at 1.23%, compared to
.95% in 2019. The nonperforming assets to total assets
ratio resided at .64% for first quarter of 2020, compared to .57%
for the first quarter of 2019. Commenting on overall credit risk,
Mr. George stated, “We had seen no signs of any adverse systemic
issues or material deterioration in our loan portfolio prior to the
COVID-19 pandemic. At the onset of COVID-19, we began to actively
work to identify potential heightened industry and consumer
exposure within the portfolio based on our footprint.”
Mr. George continued, “Most of these credits are
very good borrowers with whom we have had long-standing
relationships, but COVID-19 has unavoidably impacted their
business. Most possess well-positioned balance sheets, reside in
desirable waterfront or primary commerce hub centric areas that can
sustain some stress, but certainly their revenues have been
severely impacted over the last couple of months and will continue
to be. We do believe they are well positioned to be nimble enough
to make adjustments to safely serve clients shortly after business
resumes and individuals feel more comfortable moving around once
health data regarding the future of the pandemic is procured as we
move into summer. Also, our markets are destinations that are
predominately reached by automobile, where tourists are not reliant
on air travel. Overall, we feel that we have as good of a handle on
what we are doing as possible in terms of loan relief from the
regulatory guidance provided, where the environmental factors
affecting risk trends are moving, and the industry areas to focus
on. All of these measures will continue to be refined for financial
reporting and with respect to our ALLL as we work through this
crisis in the upcoming quarters and more clarity arises as to the
level of credit impact for community banks such as ours.”
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/f658d1de-0192-43d3-9313-fa144d726eb2
Margin Analysis, Funding and Liquidity
Net interest income for first quarter 2020 was
$13.40 million, resulting in a Net Interest Margin (NIM) of 4.60%,
compared to $13.24 million in the first quarter 2019 and a NIM of
4.55%. Core operating margin, which is net of accretion from
acquired loans that were subject to purchase accounting
adjustments, was 4.32% for the first quarter of 2020, compared to
4.37% for the same period of 2019. The quarter-over-quarter core
margin increase from December 31, 2019 was the result of the
positive impact from early period repricing of brokered deposits,
some prepayment fees associated with the aforementioned early
quarter loan payoffs and also a small rate expansion in the
mortgage loan portfolio pre-COVID-19.
A photo accompanying this announcement is
available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/827bfe6b-a68f-4260-84e9-d74331091448
Total bank deposits (excluding brokered
deposits) have increased by $21.02 million year-over-year from
$978.07 million at March 31, 2019 to $999.09 million at first
quarter-end 2020. Total brokered deposits have decreased
significantly and were $96.29 million at March 31, 2020, compared
to $119.18 million at March 31, 2019, a decrease of 19%. It is
noted that brokered deposits have increased by roughly $40 million
since yearend 2019. This increase is the direct result of the bank
taking precautionary measures to augment its cash position at the
onset of the COVID-19 pandemic. FHLB (Federal Home Loan Bank)
borrowings were also flat at $64 million since the end of
2019. Overall access to short term functional liquidity
remains very strong through multiple sources.
Mr. George stated, “Core bank deposits have
increased year-over-year as a result of strong deposit gathering
efforts through 2019. The collective activities to grow our core
deposit base and lessen reliance on wholesale sources over the past
18-24 months has stabilized our balance sheet liquidity and
provided a strong foundation to work through this crisis. With the
large drop in interest rates from the Federal Reserve this quarter,
we once again proactively reviewed our internal deposit rates and
market competition to maintain appropriate pricing to help best
offset the margin compression from our variable rate loan
portfolio. These initiatives were completed while being highly
cognizant to protect our core deposit base with the onset of the
COVID-19 crisis. We have not experienced significant outflows
of customer deposits above or beyond what we would expect during a
normal first quarter. This is primarily due to the fact that the
mix of our loan portfolio is not heavily concentrated with large
unfunded lines of credit. On those we do have, we saw minimal
concerning activity. We continue to have strong access to multiple
sources of external funding and also expect to utilize the Federal
Reserve’s Payroll Protection Program Liquidity Facility for the
funding of the majority of the PPP loans we originate to balance
the use of all our available funding sources and most prudently
structure the liability side of our balance sheet.”
Noninterest Income /
Expense
First quarter 2020 Noninterest Income was $1.94
million, compared to $1.12 million for the same period of
2019. The significant year-over-year improvement is mainly a
combination of the secondary market mortgage and SBA sales.
The SBA sales were not inclusive of any PPP loan activity, all of
which took place in the second quarter. Noninterest Expense for the
first quarter of 2020 was $11.37 million, compared to $10.24
million for the same period of 2019. For comparison purposes,
noninterest expense for the fourth quarter of 2019 equated to
$10.81 million. The quarter-over-quarter change was mainly
the result of normalized data processing expenses and FDIC
insurance premiums.
Assets and Capital
Total assets of the Corporation at March 31,
2020 were $1.36 billion, compared to $1.32 billion at March 31,
2019. Shareholders’ equity at March 31, 2020 totaled $160.06
million, compared to $154.75 million at March 31, 2019. Book value
per share outstanding equated to $15.20 at the end of the first
quarter 2020, compared to $14.41 per share outstanding a year ago.
Tangible book value at quarter-end was $135.61 million, or $12.87
per share outstanding, compared to $129.97 million, or $12.10 per
share outstanding at the end of the first quarter 2019.
Both the Corporation and the Bank are
“well-capitalized” with total risk-based capital to risk-weighted
assets of 13.41% at the Corporation and 13.23% at the Bank and tier
1 capital to total tier 1 average assets at the Corporation of
10.20% and at the Bank of 10.06%. The Corporation is monitoring the
impact of the recent pandemic-associated market volatility on its
Goodwill asset. The Corporation may undertake a Goodwill
impairment study in the second quarter to confirm the value of this
intangible asset depending on how market events unfold.
Paul D. Tobias, Chairman and Chief Executive
Officer of the Corporation and Chairman of mBank concluded, “As we
work through the latest economic crisis, we remain poised to
weather this storm in the same manner we have other global events
in the past. Our Executive Management team is a group that has been
with the bank through the economic downturn in 2008 and 2009 and
will be active in positioning the Corporation to help all
constituencies while preserving shareholder value. We are the same
bank currently as we were going into this and continue to be
well-capitalized, appropriately conservative and have plenty of
liquidity. Our commitment is to continue with our steadfast
efforts to help our employees, customers and communities through
this crisis.”
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: the
effects of the COVID-19 pandemic, particularly potentially negative
effects on our customers, borrowers, third party service providers
and our liquidity; 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.
Nasdaq:
MFNCContact:
Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906
/jdeering@bankmbank.comWebsite:
www.bankmbank.com
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESSELECTED FINANCIAL
HIGHLIGHTS
|
As of and
For the |
|
As of and For
the |
|
As of and For
the |
|
|
Period
Ending |
|
Year Ending |
|
Period Ending |
|
|
March
31, |
|
December 31, |
|
March 31, |
|
(Dollars in
thousands, except per share data) |
2020 |
|
2019 |
|
2019 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
Selected Financial Condition Data (at end
of period): |
|
|
|
|
|
|
Assets |
$ |
1,356,381 |
|
$ |
1,320,069 |
|
$ |
1,316,996 |
|
Loans |
|
1,044,177 |
|
|
1,058,776 |
|
|
1,045,428 |
|
Investment
securities |
|
114,734 |
|
|
107,972 |
|
|
113,460 |
|
Deposits |
|
1,095,381 |
|
|
1,075,677 |
|
|
1,097,248 |
|
Borrowings |
|
67,120 |
|
|
64,551 |
|
|
46,878 |
|
Shareholders' equity |
|
160,060 |
|
|
161,919 |
|
|
154,746 |
|
|
|
|
|
|
|
|
Selected Statements of Income Data (three months and year
ended) |
|
|
|
|
|
Net interest
income |
$ |
13,397 |
|
$ |
53,907 |
|
$ |
13,236 |
|
Income
before taxes |
|
3,862 |
|
|
17,710 |
|
|
4,009 |
|
Net
income |
|
3,051 |
|
|
13,850 |
|
|
3,167 |
|
Income per
common share - Basic |
|
0.28 |
|
|
1.29 |
|
|
0.30 |
|
Income per
common share - Diluted |
|
0.28 |
|
|
1.29 |
|
|
0.30 |
|
Weighted
average shares outstanding - Basic |
|
10,717,967 |
|
|
10,737,653 |
|
|
10,720,127 |
|
Weighted
average shares outstanding- Diluted |
|
10,817,470 |
|
|
10,757,507 |
|
|
10,723,921 |
|
|
|
|
|
|
|
|
Selected Financial Ratios and Other Data: |
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
|
Net interest
margin |
|
4.60 |
% |
|
4.57 |
% |
|
4.55 |
% |
Efficiency
ratio |
|
73.78 |
|
|
69.10 |
|
|
70.81 |
|
Return on
average assets |
|
0.93 |
|
|
1.04 |
|
|
0.97 |
|
Return on
average equity |
|
7.54 |
|
|
8.78 |
|
|
8.36 |
|
|
|
|
|
|
|
|
Average
total assets |
$ |
1,321,134 |
|
$ |
1,332,882 |
|
$ |
1,320,080 |
|
Average
total shareholders' equity |
|
162,661 |
|
|
157,831 |
|
|
153,689 |
|
Average
loans to average deposits ratio |
|
97.30 |
% |
|
95.03 |
% |
|
95.10 |
% |
|
|
|
|
|
|
|
Common Share Data at end of period: |
|
|
|
|
|
|
Market price
per common share |
$ |
10.45 |
|
$ |
17.56 |
|
$ |
15.74 |
|
Book value
per common share |
|
15.20 |
|
|
15.06 |
|
|
14.41 |
|
Tangible
book value per share |
|
12.87 |
|
|
12.77 |
|
|
12.10 |
|
Dividends
paid per share, annualized |
|
0.560 |
|
|
0.520 |
|
|
0.480 |
|
Common
shares outstanding |
|
10,533,589 |
|
|
10,748,712 |
|
|
10,740,712 |
|
|
|
|
|
|
|
|
Other Data at end of period: |
|
|
|
|
|
|
Allowance
for loan losses |
$ |
5,292 |
|
$ |
5,308 |
|
$ |
5,154 |
|
Non-performing assets |
$ |
8,644 |
|
$ |
7,377 |
|
$ |
7,549 |
|
Allowance
for loan losses to total loans |
|
0.51 |
% |
|
0.49 |
% |
|
0.49 |
% |
Non-performing assets to total assets |
|
0.64 |
% |
|
0.56 |
% |
|
0.57 |
% |
Texas
ratio |
|
6.13 |
% |
|
4.41 |
% |
|
5.59 |
% |
|
|
|
|
|
|
|
Number
of: |
|
|
|
|
|
|
Branch locations |
|
29 |
|
|
29 |
|
|
29 |
|
FTE Employees |
|
316 |
|
|
304 |
|
|
305 |
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
March
31, |
|
December
31, |
|
March
31, |
|
2020 |
|
2019 |
|
2019 |
|
(Unaudited) |
|
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
97,041 |
|
|
$ |
49,794 |
|
|
$ |
55,923 |
|
Federal
funds sold |
|
31 |
|
|
|
32 |
|
|
|
1,040 |
|
Cash and cash equivalents |
|
97,072 |
|
|
|
49,826 |
|
|
|
56,963 |
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits in other financial institutions |
|
8,825 |
|
|
|
10,295 |
|
|
|
12,712 |
|
Securities
available for sale |
|
114,734 |
|
|
|
107,972 |
|
|
|
113,460 |
|
Federal Home
Loan Bank stock |
|
4,924 |
|
|
|
4,924 |
|
|
|
4,924 |
|
|
|
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
|
|
|
Commercial |
|
760,357 |
|
|
|
765,524 |
|
|
|
732,678 |
|
Mortgage |
|
263,445 |
|
|
|
272,014 |
|
|
|
293,126 |
|
Consumer |
|
20,375 |
|
|
|
21,238 |
|
|
|
19,624 |
|
Total Loans |
|
1,044,177 |
|
|
|
1,058,776 |
|
|
|
1,045,428 |
|
Allowance for loan losses |
|
(5,292 |
) |
|
|
(5,308 |
) |
|
|
(5,154 |
) |
Net loans |
|
1,038,885 |
|
|
|
1,053,468 |
|
|
|
1,040,274 |
|
|
|
|
|
|
|
|
|
|
Premises and
equipment |
|
24,522 |
|
|
|
23,608 |
|
|
|
23,479 |
|
Other real
estate held for sale |
|
2,228 |
|
|
|
2,194 |
|
|
|
1,961 |
|
Deferred tax
asset |
|
3,154 |
|
|
|
3,732 |
|
|
|
6,906 |
|
Deposit
based intangibles |
|
4,874 |
|
|
|
5,043 |
|
|
|
5,549 |
|
Goodwill |
|
19,574 |
|
|
|
19,574 |
|
|
|
19,224 |
|
Other
assets |
|
37,589 |
|
|
|
39,433 |
|
|
|
31,544 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
1,356,381 |
|
|
$ |
1,320,069 |
|
|
$ |
1,316,996 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
Noninterest bearing deposits |
$ |
278,191 |
|
|
$ |
287,611 |
|
|
$ |
245,201 |
|
NOW, money market, interest checking |
|
369,003 |
|
|
|
373,165 |
|
|
|
363,753 |
|
Savings |
|
109,818 |
|
|
|
109,548 |
|
|
|
110,978 |
|
CDs<$250,000 |
|
227,924 |
|
|
|
233,956 |
|
|
|
245,427 |
|
CDs>$250,000 |
|
14,152 |
|
|
|
12,775 |
|
|
|
12,706 |
|
Brokered |
|
96,293 |
|
|
|
58,622 |
|
|
|
119,183 |
|
Total deposits |
|
1,095,381 |
|
|
|
1,075,677 |
|
|
|
1,097,248 |
|
|
|
|
|
|
|
|
|
|
Federal funds purchased |
|
22,790 |
|
|
|
6,225 |
|
|
|
6,780 |
|
Borrowings |
|
67,120 |
|
|
|
64,551 |
|
|
|
46,878 |
|
Other liabilities |
|
11,030 |
|
|
|
11,697 |
|
|
|
11,344 |
|
Total liabilities |
|
1,196,321 |
|
|
|
1,158,150 |
|
|
|
1,162,250 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
Common stock and additional paid in capital - No par value
Authorized - 18,000,000 shares Issued and outstanding -
10,533,589; 10,748,712 and 10,740,712
respectively |
|
127,003 |
|
|
|
129,564 |
|
|
|
129,204 |
|
Retained earnings |
|
33,316 |
|
|
|
31,740 |
|
|
|
25,347 |
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
Unrealized (losses) gains on available for sale securities |
|
151 |
|
|
|
1,025 |
|
|
|
413 |
|
Minimum pension liability |
|
(410 |
) |
|
|
(410 |
) |
|
|
(218 |
) |
Total shareholders’ equity |
|
160,060 |
|
|
|
161,919 |
|
|
|
154,746 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
1,356,381 |
|
|
$ |
1,320,069 |
|
|
$ |
1,316,996 |
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
|
For the
Three Months Ended |
|
March 31, |
|
2020 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
INTEREST INCOME: |
|
|
|
Interest and fees on loans: |
|
|
|
Taxable |
$ |
14,613 |
|
$ |
14,595 |
Tax-exempt |
|
74 |
|
|
47 |
Interest on securities: |
|
|
|
Taxable |
|
621 |
|
|
703 |
Tax-exempt |
|
87 |
|
|
98 |
Other interest income |
|
270 |
|
|
385 |
Total interest income |
|
15,665 |
|
|
15,828 |
|
|
|
|
INTEREST EXPENSE: |
|
|
|
Deposits |
|
1,927 |
|
|
2,354 |
Borrowings |
|
341 |
|
|
238 |
Total interest expense |
|
2,268 |
|
|
2,592 |
|
|
|
|
Net interest
income |
|
13,397 |
|
|
13,236 |
Provision
for loan losses |
|
100 |
|
|
100 |
Net interest
income after provision for loan losses |
|
13,297 |
|
|
13,136 |
|
|
|
|
OTHER INCOME: |
|
|
|
Deposit service fees |
|
403 |
|
|
406 |
Income from loans sold on the secondary market |
|
538 |
|
|
312 |
SBA/USDA loan sale gains |
|
710 |
|
|
125 |
Mortgage servicing amortization |
|
259 |
|
|
120 |
Net security gains |
|
- |
|
|
- |
Other |
|
27 |
|
|
154 |
Total other income |
|
1,937 |
|
|
1,117 |
|
|
|
|
OTHER EXPENSE: |
|
|
|
Salaries and employee benefits |
|
6,051 |
|
|
5,435 |
Occupancy |
|
1,124 |
|
|
1,081 |
Furniture and equipment |
|
802 |
|
|
718 |
Data processing |
|
825 |
|
|
709 |
Advertising |
|
212 |
|
|
309 |
Professional service fees |
|
498 |
|
|
434 |
Loan origination expenses and deposit and card related fees |
|
381 |
|
|
179 |
Writedowns and losses on other real estate held for sale |
|
3 |
|
|
28 |
FDIC insurance assessment |
|
150 |
|
|
134 |
Communications expense |
|
213 |
|
|
228 |
Other |
|
1,113 |
|
|
989 |
Total other expenses |
|
11,372 |
|
|
10,244 |
|
|
|
|
Income
before provision for income taxes |
|
3,862 |
|
|
4,009 |
Provision
for income taxes |
|
811 |
|
|
842 |
|
|
|
|
NET
INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ |
3,051 |
|
$ |
3,167 |
|
|
|
|
INCOME PER COMMON SHARE: |
|
|
|
Basic |
$ |
0.28 |
|
$ |
0.30 |
Diluted |
$ |
0.28 |
|
$ |
0.30 |
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESLOAN PORTFOLIO AND CREDIT
QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
|
March
31, |
|
December 31, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Commercial Loans: |
|
|
|
|
|
Real estate - operators of nonresidential buildings |
$ |
136,477 |
|
$ |
141,965 |
|
$ |
147,752 |
Hospitality and tourism |
|
94,734 |
|
|
97,721 |
|
|
85,604 |
Lessors of residential buildings |
|
48,529 |
|
|
51,085 |
|
|
46,702 |
Gasoline stations and convenience stores |
|
26,495 |
|
|
27,176 |
|
|
24,663 |
Logging |
|
21,380 |
|
|
22,136 |
|
|
21,073 |
Commercial construction |
|
29,971 |
|
|
40,107 |
|
|
33,118 |
Other |
|
402,771 |
|
|
385,334 |
|
|
373,766 |
Total Commercial Loans |
|
760,357 |
|
|
765,524 |
|
|
732,678 |
|
|
|
|
|
|
1-4 family residential real estate |
|
244,059 |
|
|
253,918 |
|
|
281,104 |
Consumer |
|
20,375 |
|
|
21,238 |
|
|
19,624 |
Consumer construction |
|
19,386 |
|
|
18,096 |
|
|
12,022 |
|
|
|
|
|
|
Total Loans |
$ |
1,044,177 |
|
$ |
1,058,776 |
|
$ |
1,045,428 |
|
|
|
|
|
|
Credit Quality (at end of
period):
|
March
31, |
|
December 31, |
|
March 31, |
|
|
2020 |
|
2019 |
|
2019 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
Nonperforming Assets : |
|
|
|
|
|
|
Nonaccrual loans |
$ |
6,416 |
|
$ |
5,172 |
|
$ |
5,588 |
|
Loans past
due 90 days or more |
|
- |
|
|
11 |
|
|
- |
|
Restructured
loans |
|
- |
|
|
- |
|
|
- |
|
Total nonperforming loans |
|
6,416 |
|
|
5,183 |
|
|
5,588 |
|
Other real
estate owned |
|
2,228 |
|
|
2,194 |
|
|
1,961 |
|
Total nonperforming assets |
$ |
8,644 |
|
$ |
7,377 |
|
$ |
7,549 |
|
Nonperforming loans as a % of loans |
|
0.61 |
% |
|
0.49 |
% |
|
0.53 |
% |
Nonperforming assets as a % of assets |
|
0.64 |
% |
|
0.56 |
% |
|
0.57 |
% |
Reserve for Loan Losses: |
|
|
|
|
|
|
At period
end |
$ |
5,292 |
|
$ |
5,308 |
|
$ |
5,154 |
|
As a % of
outstanding loans |
|
0.51 |
% |
|
0.50 |
% |
|
0.49 |
% |
As a % of
nonperforming loans |
|
82.48 |
% |
|
102.41 |
% |
|
92.23 |
% |
As a % of
nonaccrual loans |
|
82.48 |
% |
|
102.63 |
% |
|
92.23 |
% |
Texas
Ratio |
|
6.13 |
% |
|
4.41 |
% |
|
5.59 |
% |
|
|
|
|
|
|
|
Charge-off Information (year to date): |
|
|
|
|
|
Average loans |
$ |
1,047,144 |
|
$ |
1,047,439 |
|
$ |
1,046,740 |
|
Net charge-offs (recoveries) |
$ |
116 |
|
$ |
260 |
|
$ |
129 |
|
Charge-offs as a % of average loans, annualized |
|
0.04 |
% |
|
0.02 |
% |
|
0.05 |
% |
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESQUARTERLY FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
QUARTER ENDED |
|
(Unaudited) |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
BALANCE SHEET (Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
$ |
1,044,177 |
|
|
$ |
1,058,776 |
|
|
$ |
1,059,942 |
|
|
$ |
1,060,703 |
|
|
$ |
1,045,428 |
|
Allowance
for loan losses |
|
(5,292 |
) |
|
|
(5,308 |
) |
|
|
(5,308 |
) |
|
|
(5,306 |
) |
|
|
(5,154 |
) |
Total loans, net |
|
1,038,885 |
|
|
|
1,053,468 |
|
|
|
1,054,634 |
|
|
|
1,055,397 |
|
|
|
1,040,274 |
|
Total
assets |
|
1,356,381 |
|
|
|
1,320,069 |
|
|
|
1,355,383 |
|
|
|
1,330,723 |
|
|
|
1,316,996 |
|
Core
deposits |
|
984,936 |
|
|
|
1,004,280 |
|
|
|
1,022,115 |
|
|
|
989,116 |
|
|
|
965,359 |
|
Noncore
deposits |
|
110,445 |
|
|
|
71,397 |
|
|
|
91,464 |
|
|
|
125,737 |
|
|
|
131,889 |
|
Total deposits |
|
1,095,381 |
|
|
|
1,075,677 |
|
|
|
1,113,579 |
|
|
|
1,114,853 |
|
|
|
1,097,248 |
|
Total
borrowings |
|
67,120 |
|
|
|
64,551 |
|
|
|
70,079 |
|
|
|
46,232 |
|
|
|
53,678 |
|
Total
shareholders' equity |
|
160,060 |
|
|
|
161,919 |
|
|
|
160,165 |
|
|
|
157,840 |
|
|
|
154,746 |
|
Total
tangible equity |
|
135,612 |
|
|
|
137,302 |
|
|
|
135,379 |
|
|
|
133,236 |
|
|
|
129,973 |
|
Total shares
outstanding |
|
10,533,589 |
|
|
|
10,748,712 |
|
|
|
10,740,712 |
|
|
|
10,740,712 |
|
|
|
10,740,712 |
|
Weighted
average shares outstanding |
|
10,717,967 |
|
|
|
10,748,712 |
|
|
|
10,740,712 |
|
|
|
10,740,712 |
|
|
|
10,720,127 |
|
|
|
|
|
|
|
|
|
|
|
AVERAGE BALANCES (Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
$ |
1,321,134 |
|
|
$ |
1,347,916 |
|
|
$ |
1,354,220 |
|
|
$ |
1,326,827 |
|
|
$ |
1,320,080 |
|
Earning
assets |
|
1,171,551 |
|
|
|
1,205,241 |
|
|
|
1,204,782 |
|
|
|
1,179,584 |
|
|
|
1,180,989 |
|
Loans |
|
1,047,144 |
|
|
|
1,081,294 |
|
|
|
1,065,337 |
|
|
|
1,051,998 |
|
|
|
1,046,740 |
|
Noninterest
bearing deposits |
|
284,677 |
|
|
|
283,259 |
|
|
|
284,354 |
|
|
|
260,441 |
|
|
|
235,247 |
|
Deposits |
|
1,076,206 |
|
|
|
1,080,359 |
|
|
|
1,124,433 |
|
|
|
1,103,413 |
|
|
|
1,099,644 |
|
Equity |
|
162,661 |
|
|
|
161,588 |
|
|
|
159,453 |
|
|
|
156,491 |
|
|
|
153,689 |
|
|
|
|
|
|
|
|
|
|
|
INCOME STATEMENT (Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
13,397 |
|
|
$ |
13,350 |
|
|
$ |
13,324 |
|
|
$ |
13,997 |
|
|
$ |
13,236 |
|
Provision
for loan losses |
|
100 |
|
|
|
35 |
|
|
|
50 |
|
|
|
200 |
|
|
|
100 |
|
Net interest income after provision |
|
13,297 |
|
|
|
13,315 |
|
|
|
13,274 |
|
|
|
13,797 |
|
|
|
13,136 |
|
Total
noninterest income |
|
1,937 |
|
|
|
1,848 |
|
|
|
1,878 |
|
|
|
1,110 |
|
|
|
1,117 |
|
Total
noninterest expense |
|
11,372 |
|
|
|
10,813 |
|
|
|
10,444 |
|
|
|
10,263 |
|
|
|
10,244 |
|
Income
before taxes |
|
3,862 |
|
|
|
4,350 |
|
|
|
4,708 |
|
|
|
4,644 |
|
|
|
4,009 |
|
Provision
for income taxes |
|
811 |
|
|
|
1,054 |
|
|
|
989 |
|
|
|
975 |
|
|
|
842 |
|
Net income
available to common shareholders |
$ |
3,051 |
|
|
$ |
3,296 |
|
|
$ |
3,719 |
|
|
$ |
3,669 |
|
|
$ |
3,167 |
|
Income pre-tax, pre-provision |
$ |
3,962 |
|
|
$ |
4,385 |
|
|
$ |
4,758 |
|
|
$ |
4,844 |
|
|
$ |
4,109 |
|
|
|
|
|
|
|
|
|
|
|
PER
SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
common share |
$ |
0.28 |
|
|
$ |
0.31 |
|
|
$ |
0.35 |
|
|
$ |
0.34 |
|
|
$ |
0.30 |
|
Book value
per common share |
|
15.20 |
|
|
|
15.06 |
|
|
|
14.91 |
|
|
|
14.70 |
|
|
|
14.41 |
|
Tangible
book value per share |
|
12.87 |
|
|
|
12.77 |
|
|
|
12.60 |
|
|
|
12.40 |
|
|
|
12.10 |
|
Market
value, closing price |
|
10.45 |
|
|
|
17.56 |
|
|
|
15.46 |
|
|
|
15.80 |
|
|
|
15.74 |
|
Dividends
per share |
|
0.140 |
|
|
|
0.140 |
|
|
|
0.140 |
|
|
|
0.120 |
|
|
|
0.120 |
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans/total loans |
|
0.61 |
% |
|
|
0.49 |
% |
|
|
0.46 |
% |
|
|
0.44 |
% |
|
|
0.53 |
% |
Nonperforming assets/total assets |
|
0.64 |
|
|
|
0.56 |
|
|
|
0.55 |
|
|
|
0.51 |
|
|
|
0.57 |
|
Allowance
for loan losses/total loans |
|
0.51 |
|
|
|
0.50 |
|
|
|
0.50 |
|
|
|
0.50 |
|
|
|
0.49 |
|
Allowance
for loan losses/nonperforming loans |
|
82.48 |
|
|
|
102.41 |
|
|
|
109.33 |
|
|
|
113.55 |
|
|
|
92.23 |
|
Texas
ratio |
|
6.13 |
|
|
|
4.41 |
|
|
|
5.31 |
|
|
|
4.91 |
|
|
|
5.59 |
|
|
|
|
|
|
|
|
|
|
|
PROFITABILITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets |
|
0.93 |
% |
|
|
0.97 |
% |
|
|
1.09 |
% |
|
|
1.11 |
% |
|
|
0.97 |
% |
Return on
average equity |
|
7.54 |
|
|
|
8.09 |
|
|
|
9.25 |
|
|
|
9.40 |
|
|
|
8.36 |
|
Net interest
margin |
|
4.60 |
|
|
|
4.39 |
|
|
|
4.39 |
|
|
|
4.76 |
|
|
|
4.55 |
|
Average
loans/average deposits |
|
97.30 |
|
|
|
100.09 |
|
|
|
94.74 |
|
|
|
95.34 |
|
|
|
95.10 |
|
|
|
|
|
|
|
|
|
|
|
CAPITAL ADEQUACY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1
leverage ratio |
|
10.20 |
% |
|
|
10.09 |
% |
|
|
9.81 |
% |
|
|
9.74 |
% |
|
|
9.54 |
% |
Tier 1
capital to risk weighted assets |
|
12.89 |
|
|
|
12.71 |
|
|
|
12.39 |
|
|
|
12.20 |
|
|
|
12.28 |
|
Total
capital to risk weighted assets |
|
13.41 |
|
|
|
13.22 |
|
|
|
12.90 |
|
|
|
12.72 |
|
|
|
12.79 |
|
Average
equity/average assets (for the quarter) |
|
12.31 |
|
|
|
11.99 |
|
|
|
11.77 |
|
|
|
11.80 |
|
|
|
11.64 |
|
Tangible
equity/tangible assets (at quarter end) |
|
10.18 |
|
|
|
10.60 |
|
|
|
10.17 |
|
|
|
10.20 |
|
|
|
10.06 |
|
Mackinac Financial (NASDAQ:MFNC)
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Mackinac Financial (NASDAQ:MFNC)
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