MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per For The Period Ended
share data) -------------------------------------
June 30, December 31, June 30,
2007 2006 2006
----------- ----------- -----------
(Unaudited) (Unaudited)
Selected Financial Condition Data
(at end of period):
Total assets $ 393,319 $ 382,791 $ 352,497
Total loans 338,896 322,581 283,110
Total deposits 321,246 312,421 284,164
Borrowings and subordinated
debentures 38,307 38,307 37,617
Total shareholders' equity 30,485 28,790 27,179
Selected Statements of Income Data
(six months and year ended):
Net interest income $ 6,447 $ 11,593 $ 5,614
Income before taxes 1,581 1,216 688
Net income 1,581 1,716 688
Income per common share - Basic .46 .50 .20
Income per common share - Diluted .46 .50 .20
Three Months Ended:
Net interest income $ 3,269 $ 3,027 $ 2,935
Income before taxes 546 338 190
Net income 546 338 190
Income per common share - Basic .16 .10 .05
Income per common share - Diluted .16 .10 .05
Selected Financial Ratios and Other
Data (six months and year ended):
Performance Ratios:
Net interest margin 3.57% 3.51% 3.62%
Efficiency ratio 82.79 93.95 95.20
Return on average assets .84 .49 .42
Return on average equity 10.68 6.19 5.11
Average total assets $ 381,238 $ 347,927 $ 330,980
Average total shareholders' equity $ 29,836 $ 27,744 $ 27,135
Average loans to average deposits
ratio 103.84% 99.77% 99.64%
Common Share Data (at end of
period):
Market price per common share $ 9.45 $ 11.50 $ 10.27
Book value per common share $ 8.89 $ 8.40 $ 7.93
Common shares outstanding 3,428,695 3,428,695 3,428,695
Weighted average shares outstanding 3,428,695 3,428,695 3,428,695
Other Data (at end of period):
Allowance for loan losses $ 4,920 $ 5,006 $ 5,415
Non-performing assets $ 5,126 $ 2,965 $ 498
Allowance for loan losses to total
loans 1.45% 1.55% 1.91%
Non-performing assets to total
assets 1.30% .77% .14%
Number of:
Branch locations 13 13 13
FTE Employees 106 99 99
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31, June 30,
(Dollars in thousands) 2007 2006 2006
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 7,518 $ 4,865 $ 5,529
Federal funds sold 3,489 5,841 12,535
----------- ----------- -----------
Cash and cash equivalents 11,007 10,706 18,064
Interest-bearing deposits in other
financial institutions 3,687 856 893
Securities available for sale 24,086 32,769 33,870
Federal Home Loan Bank stock 3,794 3,794 4,855
Loans:
Commercial 292,285 261,726 231,547
Mortgage 42,677 58,014 48,931
Installment 3,934 2,841 2,632
----------- ----------- -----------
Total Loans 338,896 322,581 283,110
Allowance for loan losses (4,920) (5,006) (5,415)
----------- ----------- -----------
Net loans 333,976 317,575 277,695
Premises and equipment 12,471 12,453 12,748
Other real estate held for sale 77 26 52
Other assets 4,221 4,612 4,320
----------- ----------- -----------
TOTAL ASSETS $ 393,319 $ 382,791 $ 352,497
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 28,811 $ 23,471 $ 21,773
Interest-bearing deposits
NOW and Money Market 73,994 73,188 68,107
Savings 12,422 13,365 14,136
CDs < $100,000 96,546 89,585 81,768
CDs > $100,000 24,879 23,645 19,025
Brokered 84,594 89,167 79,355
----------- ----------- -----------
Total deposits 321,246 312,421 284,164
Borrowings 38,307 38,307 37,617
Other liabilities 3,281 3,273 3,537
----------- ----------- -----------
Total liabilities 362,834 354,001 325,318
Shareholders' equity:
Preferred stock - No par value:
Authorized 500,000 shares, no
shares outstanding
Common stock and additional paid
in capital - No par value
Authorized - 18,000,000 shares
Issued and outstanding -
3,428,695 shares 42,780 42,722 42,567
Accumulated deficit (12,162) (13,745) (14,772)
Accumulated other comprehensive
(loss) (133) (187) (616)
----------- ----------- -----------
Total shareholders' equity 30,485 28,790 27,179
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 393,319 $ 382,791 $ 352,497
=========== =========== ===========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per Three Months Ended Six Months Ended
share data) June 30, June 30,
--------- --------- --------- --------
2007 2006 2007 2006
--------- --------- --------- --------
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable $ 6,448 $ 5,182 $ 12,681 $ 9,681
Tax-exempt 143 192 314 385
Interest on securities:
Taxable 293 274 594 547
Tax-exempt - 41 - 82
Other interest income 166 194 366 363
--------- --------- --------- --------
Total interest income 7,050 5,883 13,955 11,058
--------- --------- --------- --------
INTEREST EXPENSE:
Deposits 3,267 2,509 6,489 4,589
Borrowings 514 439 1,019 855
--------- --------- --------- --------
Total interest expense 3,781 2,948 7,508 5,444
--------- --------- --------- --------
Net interest income 3,269 2,935 6,447 5,614
Provision for loan losses - - - (600)
--------- --------- --------- --------
Net interest income after provision
for loan losses 3,269 2,935 6,447 6,214
--------- --------- --------- --------
OTHER INCOME:
Service fees 185 122 346 232
Net security gains - - - -
Net gains on sale of secondary
market loans 91 42 199 83
Other 66 87 710 152
--------- --------- --------- --------
Total other income 342 251 1,255 467
--------- --------- --------- --------
OTHER EXPENSES:
Salaries and employee benefits 1,672 1,496 3,410 3,090
Occupancy 327 293 661 610
Furniture and equipment 166 155 323 311
Data processing 210 182 381 336
Professional service fees 174 414 325 614
Loan and deposit 79 98 151 228
Telephone 59 51 117 100
Advertising 91 107 183 177
Other 287 200 570 527
--------- --------- --------- --------
Total other expenses 3,065 2,996 6,121 5,993
--------- --------- --------- --------
Income before provision for income
taxes 546 190 1,581 688
Provision for (benefit of) income
taxes - - - -
--------- --------- --------- --------
NET INCOME $ 546 $ 190 $ 1,581 $ 688
========= ========= ========= ========
INCOME PER COMMON SHARE:
Basic $ .16 $ .05 $ .46 $ .20
========= ========= ========= ========
Diluted $ .16 $ .05 $ .46 $ .20
========= ========= ========= ========
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,
2007 2006 2006
------------ ------------ ------------
Commercial Loans
Real estate - operators of
nonresidential buildings $ 41,662 $ 44,308 $ 35,478
Hospitality and tourism 37,286 30,826 37,754
Real estate agents and managers 31,937 25,071 15,628
New car dealers 10,270 10,086 10,002
Other 117,058 115,426 101,637
------------ ------------ ------------
Total Commercial Loans 238,213 225,717 200,499
1-4 family residential real estate 55,090 58,014 48,931
Consumer 3,538 2,841 2,632
Construction 42,055 36,009 31,048
------------ ------------ ------------
Total Loans $ 338,896 $ 322,581 $ 283,110
============ ============ ============
Average loans for the period $ 321,414 $ 278,953 $ 262,274
============ ============ ============
Credit Quality (at end of period):
June 30, December 31, June 30,
2007 2006 2006
---------- ---------- ----------
Nonperforming Assets :
Nonaccrual loans $ 4,758 $ 2,899 $ 446
Loans past due 90 days or
more 291 40 -
Restructured loans - - -
---------- ---------- ----------
Total nonperforming
loans 5,049 2,939 446
Other real estate owned 77 26 52
---------- ---------- ----------
Total nonperforming
assets $ 5,126 $ 2,965 $ 498
========== ========== ==========
Nonperforming loans as a %
of loans 1.49% .91% .16%
---------- ---------- ----------
Nonperforming assets as a %
of assets 1.30% .77% .14%
---------- ---------- ----------
Reserve for Loan Losses:
At period end $ 4,920 $ 5,006 $ 5,415
---------- ---------- ----------
As a % of average loans 1.53% 1.79% 2.06%
---------- ---------- ----------
As a % of nonperforming
loans 97.45% 170.33% N/M%
---------- ---------- ----------
As a % of nonaccrual loans 103.41% 172.68% N/M%
========== ========== ==========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
QUARTER ENDED
-----------------------------------------------------
December September
June 30, March 31, 31, 30, June 30,
2007 2007 2006 2006 2006
--------- --------- --------- --------- ---------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 338,896 $ 318,421 $ 322,581 $ 292,614 $ 283,110
Allowance for loan
losses (4,920) (4,975) (5,006) (5,316) (5,415)
--------- --------- --------- --------- ---------
Total loans, net 333,976 313,446 317,575 287,298 277,695
Intangible assets 163 182 205 237 268
Total assets 393,319 375,644 382,791 363,191 352,497
Core deposits 211,773 201,529 199,609 195,774 185,784
Noncore deposits (1) 109,473 102,883 112,812 97,720 98,380
--------- --------- --------- --------- ---------
Total deposits 321,246 304,412 312,421 293,494 284,164
Total borrowings 38,307 38,307 38,307 38,307 37,617
Total shareholders'
equity 30,485 29,932 28,790 28,226 27,179
Total shares
outstanding 3,428,695 3,428,695 3,428,695 3,428,695 3,428,695
AVERAGE BALANCES
(Dollars in
thousands)
Assets $ 382,065 $ 380,403 $ 347,927 $ 362,632 $ 342,820
Loans 324,721 318,072 301,508 289,210 273,686
Deposits 309,469 309,619 294,755 296,608 274,591
Equity 30,412 29,254 27,744 28,041 27,213
INCOME STATEMENT
(Dollars in
thousands)
Net interest income $ 3,269 $ 3,178 $ 3,027 $ 2,952 $ 2,935
Provision for loan
losses - - (261) - -
--------- --------- --------- --------- ---------
Net interest
income after
provision 3,269 3,178 3,288 2,952 2,935
Total noninterest
income 342 913 276 240 251
Total noninterest
expense 3,065 3,056 3,226 3,002 2,996
--------- --------- --------- --------- ---------
Income before taxes 546 1,035 338 190 190
Provision for income
taxes - - - (500) -
--------- --------- --------- --------- ---------
Net income $ 546 $ 1,035 $ 338 $ 690 $ 190
========= ========= ========= ========= =========
PER SHARE DATA
Earnings - basic $ .46 $ .30 $ .10 $ .20 $ .05
Earnings - diluted .46 .30 .10 .20 .05
Book value 8.89 8.73 8.40 8.23 7.93
Market value,
closing price 9.45 9.26 11.50 10.56 10.27
ASSET QUALITY RATIOS
Nonperforming
loans/total loans 1.49% 1.53% .91% .71% .16
Nonperforming
assets/total assets 1.30 1.33 .77 .58 .14
Allowance for loan
losses/total loans 1.45 1.56 1.55 1.82 1.91
Allowance for loan
losses/nonperforming
loans 97.45 102.32 170.33 257.43 1,214.13
PROFITABILITY RATIOS
Return on average
assets .57% 1.10% .37% .75% .22
Return on average
equity 7.20 14.35 4.68 9.76 2.82
Net interest margin 3.60 3.55 3.44 3.36 3.62
Efficiency ratio 83.21 82.40 94.60 91.17 91.41
Averageloans/average
deposits 104.93 102.73 102.29 97.51 99.67
CAPITAL ADEQUACY
RATIOS
Leverage ratio 7.97% 7.85% 7.85% 7.81% 8.04
Tier 1 capital ratio 8.85 9.16 8.77 9.36 9.28
Total capital ratio 10.10 10.41 10.02 10.62 10.54
Averageequity/average
assets 7.96 7.69 7.81 7.73 7.94
Tangible equity/tangible
assets 7.71 7.92 7.47 7.71 7.64
(1) Noncore deposits includes Internet CDs, brokered deposits and CDs
greater than $100,000
Contact Information: Contact: Investor Relations (888) 343-8147 Website: www.bankmbank.com



