Mackinac Financial Corporation Announces Signing of New Employment Agreement With Chief Executive

MANISTIQUE, MI -- (MARKET WIRE) -- May 17, 2007 -- Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for mBank (the "Bank") today announced the signing of a new employment agreement with its Chairman and Chief Executive Officer, Paul Tobias.

The process of entering into a new employment agreement was initiated at the request of Mr. Tobias to the Compensation Committee of the Board of Directors. The original employment agreement had been executed during a time of considerable uncertainty for the Corporation and with a different slate of Corporate Directors. The new contract, at Mr. Tobias' request and with Board concurrence, modified certain provisions of the original contract. These modifications are favorable to the Corporation and reflect the improved condition of the Corporation and strong Corporate governance practices. Paul Tobias commented on his new agreement with the Corporation, "I am pleased to have executed a new contract with MFNC. I believe that this new contract reflects appropriate standards for sound corporate governance and the improved financial condition of the Company. As an investor and as an employee it also signals my confidence in the future prospects of MFNC."

The major changes of the new contract modify termination payments as shown below. The new employment agreement, in its entirety, was filed as an exhibit to Form 8-K on May 10th, 2007.

REASON FOR TERMINATION     TERMINATION PAYMENTS        TERMINATION PAYMENTS
                            UNDER OLD CONTRACT          UNDER NEW CONTRACT
------------------------  -------------------------    --------------------


By death                  One year; base salary and    No termination
                          benefits                     payments required

By the Company for cause  No termination payments      No termination
                          required                     payments required

By Executive voluntarily  If by Executive for Good     No termination
                          Reason, then: three years;   payments required
                          base salary, highest bonus
                          and benefits


By the Company without    Three years; base salary,    Lump sum of 300% of
cause and the effective   highest bonus and benefits   base salary and
date of termination is                                 highest bonus; one
during the first 12                                    year of benefits
months



By the Company without    Three years; base salary,    Lump sum of 200% of
cause and the effective   highest bonus and benefits   base salary and
date of termination is                                 highest bonus; one
during the second 12                                   year of benefits
months


By the Company without    Three years; base salary,    Lump sum of 100% of
cause and the effective   highest bonus and benefits   base salary and
date of termination is                                 highest bonus; one
during the third 12                                    year of benefits
months


Disability                Two years; base salary and   Insurance benefits
                          benefits, subject to
                          reduction for long term
                          disability benefits
                          received by the Executive


Termination upon Change   If by Executive for Good     Lump sum of 299% of
of Control (by            Good Reason or by Company    current base salary;
Executive or by the       (other than for cause or     one year of benefits
Company other than        disability): lump sum;
for Cause)                lump sum; 300% of
                          aggregate of base salary
                          and highest bonus; and
                          three years for benefits

                          If by Executive without
                          Good Reason, 100% of base
                          salary and highest bonus

Mackinac Financial Corporation is a registered bank holding company which owns mBank. The Bank has 13 offices; nine in the Upper Peninsula, three in the Northern Lower Peninsula and one in Oakland County, Michigan. The Company's banking services include commercial lending and treasury management products and services geared toward small to mid-sized businesses; as well as checking and savings accounts, time deposits, interest bearing transaction accounts, safe deposit facilities, real estate mortgage lending, and direct and indirect consumer financing.

Contact Information: Contact: Investor Relations (888) 343-8147 Website: www.bankmbank.com