MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per
share data) For The Period Ended
----------------------------------------
June 30, December 31, June 30,
2008 2007 2007
------------ ----------- -----------
(Unaudited) (Unaudited)
Selected Financial Condition Data
(at end of period):
Total assets $ 437,327 $ 408,880 $ 393,319
Total loans 362,122 355,079 338,896
Total deposits 356,976 320,827 321,246
Borrowings and subordinated
debentures 36,280 45,949 38,307
Total shareholders' equity 40,975 39,321 30,485
Selected Statements of Income Data
(six months and year ended):
Net interest income $ 6,163 $ 13,417 $ 6,447
Income before taxes 2,808 2,923 1,581
Net income 1,908 10,163 1,581
Income per common share - Basic .56 2.96 .46
Income per common share - Diluted .56 2.96 .46
Three Months Ended:
Net interest income $ 3,118 $ 3,410 $ 3,269
Income before taxes 2,644 787 546
Net income 1,769 527 546
Income per common share - Basic .52 .15 .16
Income per common share - Diluted .52 .15 .16
Selected Financial Ratios and
Other Data (six months and year
ended):
Performance Ratios:
Net interest margin 3.16% 3.60% 3.57%
Efficiency ratio 91.85 79.46 82.79
Return on average assets .92 2.59 .84
Return on average equity 9.61 31.05 10.68
Average total assets $ 417,964 $ 392,313 $ 381,238
Average total shareholders' equity $ 39,945 $ 32,731 $ 29,836
Average loans to average deposits
ratio 107.72% 104.94% 103.84%
Common Share Data (at end of
period):
Market price per common share $ 7.00 $ 8.98 $ 9.45
Book value per common share $ 11.98 $ 11.47 $ 8.89
Common shares outstanding 3,419,736 3,428,695 3,428,695
Weighted average shares
outstanding 3,424,314 3,428,695 3,428,695
Other Data (at end of period):
Allowance for loan losses $ 3,585 $ 4,146 $ 4,920
Non-performing assets $ 8,008 $ 5,234 $ 5,126
Allowance for loan losses to total
loans .99% 1.17% 1.45%
Non-performing assets to total
assets 1.83% 1.28% 1.30%
Number of:
Branch locations 12 12 13
FTE Employees 96 100 106
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31, June 30,
(Dollars in thousands) 2008 2007 2007
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 7,115 $ 6,196 $ 7,518
Federal funds sold 19,274 166 3,489
----------- ----------- -----------
Cash and cash equivalents 26,389 6,362 11,007
Interest-bearing deposits in other
financial institutions 387 1,810 3,687
Securities available for sale 23,230 21,597 24,086
Federal Home Loan Bank stock 3,794 3,794 3,794
Loans:
Commercial 292,645 288,839 274,783
Mortgage 65,869 62,703 60,575
Installment 3,608 3,537 3,538
----------- ----------- -----------
Total Loans 362,122 355,079 338,896
Allowance for loan losses (3,585) (4,146) (4,920)
----------- ----------- -----------
Net loans 358,537 350,933 333,976
Premises and equipment 11,377 11,609 12,471
Other real estate held for sale 3,395 1,226 77
Other assets 10,218 11,549 4,221
----------- ----------- -----------
TOTAL ASSETS $ 437,327 $ 408,880 $ 393,319
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 27,741 $ 25,557 $ 28,811
Interest-bearing deposits:
NOW, Money Market, Checking 78,703 81,160 73,994
Savings 15,171 12,485 12,422
CDs < $100,000 78,678 80,607 96,546
CDs > $100,000 28,252 22,355 24,879
Brokered 128,431 98,663 84,594
----------- ----------- -----------
Total deposits 356,976 320,827 321,246
Borrowings:
Federal funds purchased - 7,710 -
Short-term - 1,959 -
Long-term 36,280 36,280 38,307
----------- ----------- -----------
Total borrowings 36,280 45,949 38,307
Other liabilities 3,096 2,783 3,281
----------- ----------- -----------
Total liabilities 396,352 369,559 362,834
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 -
3,419,736; 3,428,695;
and 3,428,695 shares,
respectively 42,773 42,843 42,780
Accumulated deficit (1,672) (3,582) (12,162)
Accumulated other
comprehensive income (loss) (126) 60 (133)
----------- ----------- -----------
Total shareholders' equity 40,975 39,321 30,485
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 437,327 $ 408,880 $ 393,319
=========== =========== ===========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share Three Months Six Months
data) Ended Ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable $ 5,604 $ 6,448 $ 11,704 $ 12,681
Tax-exempt 102 143 210 314
Interest on securities:
Taxable 271 293 537 594
Tax-exempt 2 - 3 -
Other interest income 81 166 170 366
-------- -------- -------- --------
Total interest income 6,060 7,050 12,624 13,955
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 2,551 3,267 5,616 6,489
Borrowings 391 514 845 1,019
-------- -------- -------- --------
Total interest expense 2,942 3,781 6,461 7,508
-------- -------- -------- --------
Net interest income 3,118 3,269 6,163 6,447
Provision for loan losses 750 - 750 -
-------- -------- -------- --------
Net interest income after provision
for loan losses 2,368 3,269 5,413 6,447
-------- -------- -------- --------
OTHER INCOME:
Service fees 194 185 368 346
Net security gains - - 65 -
Net gains on sale of secondary
market loans 49 91 97 199
Proceeds from lawsuit settlements 3,475 - 3,475 470
Other 29 66 52 240
-------- -------- -------- --------
Total other income 3,747 342 4,057 1,255
-------- -------- -------- --------
OTHER EXPENSES:
Salaries and employee benefits 2,075 1,672 3,882 3,410
Occupancy 348 327 703 661
Furniture and equipment 190 166 368 323
Data processing 216 210 437 381
Professional service fees 79 174 232 325
Loan and deposit 144 79 254 151
Telephone 39 59 84 117
Advertising 60 91 120 183
Other 320 287 582 570
-------- -------- -------- --------
Total other expenses 3,471 3,065 6,662 6,121
-------- -------- -------- --------
Income before provision for income taxes 2,644 546 2,808 1,581
Provision for (benefit of) income taxes 875 - 900 -
-------- -------- -------- --------
NET INCOME $ 1,769 $ 546 $ 1,908 $ 1,581
======== ======== ======== ========
INCOME PER COMMON SHARE:
Basic $ .52 $ .16 $ .56 $ .46
======== ======== ======== ========
Diluted $ .52 $ .16 $ .56 $ .46
======== ======== ======== ========
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,
2008 2007 2007
---------- ---------- ----------
Commercial Loans
Real estate - operators of nonresidential
buildings $ 41,778 $ 41,597 $ 41,662
Hospitality and tourism 35,053 37,604 37,286
Real estate agents and managers 27,495 29,571 31,937
New car dealers 10,716 10,569 10,270
Other 148,539 130,546 117,058
---------- ---------- ----------
Total Commercial Loans 263,581 249,887 238,213
1-4 family residential real estate 60,882 57,613 55,090
Consumer 3,608 3,537 3,538
Construction
Commercial 29,064 38,952 36,570
Consumer 4,987 5,090 5,485
---------- ---------- ----------
Total Loans $ 362,122 $ 355,079 $ 338,896
========== ========== ==========
Credit Quality (at end of period):
June 30, December 31, June 30,
2008 2007 2007
--------- --------- ---------
Nonperforming Assets:
Nonaccrual loans $ 4,613 $ 3,298 $ 4,758
Loans past due 90 days or more - 710 291
--------- --------- ---------
Total nonperforming loans 4,613 4,008 5,049
Other real estate owned 3,395 1,226 77
--------- --------- ---------
Total nonperforming assets $ 8,008 $ 5,234 $ 5,126
========= ========= =========
Nonperforming loans as a % of loans 1.27% 1.13% 1.49%
--------- --------- ---------
Nonperforming assets as a % of assets 1.83% 1.28% 1.30%
--------- --------- ---------
Reserve for Loan Losses:
At period end $ 3,585 $ 4,146 $ 4,920
--------- --------- ---------
As a % of average loans 1.00% 1.24% 1.53%
--------- --------- ---------
As a % of nonperforming loans 77.72% 103.44% 97.45%
--------- --------- ---------
As a % of nonaccrual loans 77.72% 125.71% 103.41%
========= ========= =========
Charge-off Information (year to date):
Average loans 360,176 333,415 321,414
--------- --------- ---------
Net charge-offs 1,310 1,260 86
--------- --------- ---------
Charge-offs as a % of average loans .36% .38% .03%
--------- --------- ---------
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
QUARTER ENDED
-----------------------------------------------------
(Unaudited)
-----------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
--------- --------- --------- --------- ---------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 362,122 $ 360,056 $ 355,079 $ 344,149 $ 338,896
Allowance for loan
losses (3,585) (3,924) (4,146) (5,022) (4,920)
--------- --------- --------- --------- ---------
Total loans, net 358,537 356,132 350,933 339,127 333,976
Intangible assets 85 104 124 143 163
Total assets 437,327 417,175 4,088,880 401,213 393,319
Core deposits 200,293 203,445 199,809 218,638 211,773
Noncore deposits (1) 156,683 122,602 121,018 102,733 109,473
--------- --------- --------- --------- ---------
Total deposits 356,976 326,047 320,827 321,371 321,246
Total borrowings 36,280 48,849 45,949 38,239 38,307
Total shareholders'
equity 40,975 39,633 39,321 38,697 30,485
Total shares
outstanding 3,419,736 3,428,695 3,428,695 3,428,695 3,428,695
AVERAGE BALANCES
(Dollars in
thousands)
Assets $ 418,246 $ 417,682 $ 406,308 $ 400,105 $ 382,065
Loans 362,574 357,778 350,050 340,391 324,721
Deposits 332,725 336,016 324,194 327,293 309,469
Equity 40,399 39,491 38,973 32,184 30,412
INCOME STATEMENT
(Dollars in
thousands)
Net interest income $ 3,118 $ 3,045 $ 3,410 $ 3,560 $ 3,269
Provision for loan
losses 750 - - 400 -
--------- --------- --------- --------- ---------
Net interest
income after
provision 2,368 3,045 3,410 3,160 3,269
Total noninterest
income 3,747 310 355 396 342
Total noninterest
expense 3,471 3,191 2,978 3,001 3,065
--------- --------- --------- --------- ---------
Income before taxes 2,644 164 787 555 546
Provision for income
taxes 875 25 260 (7,500) -
--------- --------- --------- --------- ---------
Net income $ 1,769 $ 139 $ 527 $ 8,055 $ 546
========= ========= ========= ========= =========
PER SHARE DATA
Earnings - basic $ .52 $ .04 $ .15 $ 2.35 $ .46
Earnings - diluted .52 .04 .15 2.35 .46
Book value 11.98 11.56 11.47 11.29 8.89
Market value,
closing price 7.00 8.50 8.98 8.75 9.45
ASSET QUALITY RATIOS
Nonperforming
loans/total loans 1.27% 0.94% 1.13% .92% 1.49%
Nonperforming
assets/total assets 1.83 1.08 1.28 .90 1.30
Allowance for loan
losses/total loans .99 1.09 1.17 1.46 1.45
Allowance for loan
losses/nonperforming
loans 77.22 116.06 103.42 158.32 97.45
PROFITABILITY RATIOS
Return on average
assets 1.70% 0.13% .51% 7.99% .57%
Return on average
equity 17.62 1.42 5.36 99.30 7.20
Net interest margin 3.19 3.13 3.55 3.71 3.60
Efficiency ratio 88.45 95.34 78.02 74.71 83.21
Average loans/
average deposits 108.97 106.48 107.98 104.00 104.93
CAPITAL ADEQUACY RATIOS
Leverage ratio 8.56% 7.85% 8.05% 8.03% 7.97%
Tier 1 capital ratio 9.48 8.84 8.97 9.03 8.85
Total capital ratio 10.45 9.92 10.13 10.28 10.10
Average equity/
average assets 9.66 9.45 9.59 8.04 7.96
Tangible equity/
tangible assets 9.35 9.48 9.59 9.61 7.71
(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
