MANISTIQUE, MI--(Marketwire - November 4, 2009) - Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for mBank (the "Bank") today announced
third quarter 2009 income of $1.536 million or $.45 per share compared to a
net income of $.216 million, or $.06 per share for the third quarter of
2008. Net income for the first nine months of 2009 totaled $2.087 million,
or $.61 per share, compared to $2.124 million, or $.62 per share, for the
same period in 2008.
The quarter and nine month results for 2009 includes a $1.208 million gain
on the sale of two branch banking offices, $.644 million in security gains
and the FDIC special assessment which was charged to all banking
organizations based upon asset size, and amounted to $.215 million for
mBank. The nine month results for 2008 include the positive effect, $3.475
million, of a lawsuit settlement and the negative effects, $.425 million,
of a severance agreement. Excluding the branch sales, security gains and
the charge for the FDIC special assessment for 2009 and the lawsuit
settlement and severance payment in 2008, our adjusted nine month net
income in 2009 would be $1.023 million, or $.30 income per share compared
to adjusted income of $.142 million, $.04 per share in the 2008 nine month
period.
A provision for loan losses of $1.400 million was recorded in the nine
month period and $.700 million in the third quarter of 2009 compared to
$1.200 million and $.450 million for the same periods in 2008. The 2009
provision restores the allowance for loan losses to an adequate level based
upon the current level of loans, historical loss rates and specific
reserves required for problem loans.
Weighted average shares totaled 3,419,736 year to date and for the third
quarter in 2009 compared to 3,422,777 for the nine month period and
3,419,736 at the third quarter of 2008.
Net interest margin in the third quarter of 2009 increased to $4.310
million, or 3.66% compared to $3.371 million, or 3.39% in the third quarter
of 2008. For the nine month period the net interest margin totaled $11.856
million, or 3.54% compared to $9.534 million or 3.24% for the same period
in 2008. This increased margin was due to a combination of a significant
reduction in funding costs partially offset by decreased rates on earning
assets. Paul Tobias, Chairman and Chief Executive officer, commented,
"Our improved interest margin reflects pricing discipline on new and
renewed loans in addition to the lower rates on wholesale deposits, and the
benefit of increased low cost transactional deposits. We expect this trend
to continue."
Noninterest income, totaled $2.418 million in the third quarter of 2009,
compared to $.288 million the third quarter of 2008. In the third quarter
and for the nine months ended in 2009, noninterest income included a $1.208
million gain from the sale of two branch offices and net security gains of
$.644 million. Included in noninterest income for the third quarter and
nine months ended periods of 2008 was the $3.475 million lawsuit
settlement. Excluding these extraordinary items for both periods, the
normalized 2009 nine month noninterest income exceeded 2008 by $.526
million, or 60.46%. Noninterest expense in the third quarter and for the
nine month periods of 2009 was $10.152 million compared to $9.597 million
in 2008. This increase was largely attributed to FDIC insurance premiums,
which increased by $.668 million in 2009.
Total assets of the Corporation at September 30, 2009 were $513.180
million, up $72.227 million, or 16.38% from the $440.953 million in total
assets reported at September 30, 2008 and up $61.749 million, or 13.68%,
from total assets of $451.431 million at year-end 2008. Asset totals at
September 30, 2009 reflect increased balances of investment securities of
approximately $33 million, which the Corporation added to leverage the $11
million proceeds of TARP funding.
Loans at September 30, 2009 totaled $384.100 million, a 6.25% increase from
the $361.521 million at September 30, 2008, from year-end loans of $370.280
million. Kelly George, President and Chief Executive Officer of mBank
stated, "We continue to see good loan growth opportunities. Loan growth in
the first nine months was strong despite large paydowns amounting to $11.4
million, along with normal loan principal reductions of $30.6 million.
Given the current economic environment, and tough requirements for loan
pricing and credit quality, we are pleased with current year to date
production which totaled $72.8 million, 97% of which occurred in the Upper
Peninsula and Northern Lower Michigan markets. In general, the Upper
Peninsula has not experienced the economic downturn and collateral
deterioration that has occurred elsewhere in Michigan. We continue to see
loan opportunities, however; we expect some slowing of loan growth through
the end of 2009. We expect continued success in loan production attributed
to our expertise with the SBA 504 and 7A programs. mBank ranks third in
the entire state of Michigan in dollar volume of SBA loans at $13.2
million. These programs benefit us with new loan opportunities along with a
secondary source of balance sheet liquidity and the potential for
significant fee income when the guaranteed portion is sold."
Total deposits of $418.581 million at September 30, 2009 were up 16.05%
from deposits of $360.694 million on September 30, 2008. Deposits were up
$47.484 million, or 12.80% from year-end 2008 deposits of $371.097 million.
Total 2009 deposit growth reflects increases in noncore funding of $42.108
million and net increases in core deposits of $5.376 million, along with
growth of $30 million to replace deposits of two branch offices sold in the
third quarter at 2009. In the third quarter of 2009, we sold two branch
offices in the northwestern part of the Upper Peninsula, which had total
core deposits of approximately $30 million. We were able to replace the
$30 million of deposits sold with new transactional account balances, while
increased brokered deposits were utilized to fund increased investment
balances to leverage TARP funding. Deposit growth occurred in all three of
our regional markets, but we are especially pleased with our success in
Southeast Michigan with $12.0 million of growth, almost all transactional
account deposits.
Nonperforming assets at the end of the third quarter of 2009 totaled
$17.349 million, 3.38% of total assets, an increase of $10.273 million from
2008 year end balances. Mr. George commented, "The extended economy
slowdown continues to put added stress on marginal loan relationships. We
do not have a systematic problem with asset quality, and in fact, more than
50% of our nonperforming assets stems from six relationships. We increased
nonperforming loans by approximately $1.7 million during the third quarter,
$1.5 million from one secured commercial loan relationship in the Northern
Lower Peninsula which stemmed from the continued economic distress in
Michigan markets. We have reevaluated the supporting collateral in this
relationship and we feel exposure is low. We recognize the importance of
early identification of problematic credits and monitor all of our
delinquencies to determine risk of loss. We intend to manage our
nonperforming assets in order to limit carrying costs and further
collateral deterioration by aggressive disposition."
Total shareholders' equity at September 30, 2009 totaled $55.766 million,
compared to $41.427 million on September 30, 2008. The increase of $14.339
million includes $11 million of preferred stock which was issued in April
2009. Book value of common shareholders' equity was $13.25 per share at
September 30, 2009, an increase of $3.50 per share since the
recapitalization, priced at $9.75 in December 2004.
George, commenting on recent events added, "In the third quarter we
completed the sale of two of our Upper Peninsula branch offices, which
resulted in an above market deposit premium, and a net gain of $1.208
million. The sale of these branch offices tightened up the footprint of our
franchise, reduced operating costs, and will allow us to deploy capital to
higher growth markets. We also, as planned, reduced liquidity by selling
approximately $16 million of investment securities which resulted in a gain
of $.644 million. This action was a part of our TARP participation
strategy to leverage our balance sheet to offset TARP costs." George
concluded, "We are somewhat satisfied with our performance thus far in
2009, and we will continue to evaluate our banking franchise to build on
our 2009 successes by further expanding noninterest income and improving
net interest income to increase franchise value. We recently added several
key income producing employees to expand our efforts in generating
noninterest income along with loan and deposit growth. One primary
emphasis for the futures is a broadening of our consumer lending. We made
a significant commitment to this strategy with the recent executive staff
addition which will provide leadership from our new mortgage and consumer
lending office in Marquette."
Tobias concluded, "We are satisfied that we have positioned ourselves well
in a difficult economy. We have stumbled a bit in Southeastern Michigan,
but have our problems identified and are reducing exposures and dealing
with the significant non-performing loans. Our capital strength, low cost
structure and core earnings momentum make us optimistic about the future
prospects of our organization. We will continue to explore opportunities
for FDIC assisted deposit and loan transactions to expand our core deposit
mix, while staying the course with solid organic growth opportunities
within our current markets. As always, our initiatives will be governed by
the ultimate strategy of preserving and increasing value for our
shareholders."
Mackinac Financial Corporation is a registered bank holding company formed
under the Bank Holding Company Act of 1956 with assets in excess of $500
million 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 10 branch locations; six
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 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, branch closings 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 Company 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
(Dollars in thousands, except per share
data) For The Period Ended
---------------------------------
September December September
30, 31, 30,
2009 2008 2008
---------- --------- ----------
(Unaudited) (Unaudited)
Selected Financial Condition Data (at
end of period):
Assets $ 513,180 $ 451,431 $ 440,953
Loans 384,100 370,280 361,521
Investment securities 80,203 47,490 42,781
Deposits 418,581 371,097 360,694
Borrowings 36,140 36,210 36,210
Shareholders' Equity 55,766 41,552 41,427
Selected Statements of Income Data (nine
months and year ended):
Net interest income $ 11,856 $ 12,864 $ 9,534
Income before taxes and preferred
dividend 3,552 2,659 3,082
Net income 2,087 1,872 2,124
Income per common share - Basic .61 .55 .62
Income per common share - Diluted .61 .55 .62
Three Months Ended:
Net interest income $ 4,310 $ 3,330 $ 3,371
Income before taxes and preferred
dividend 2,585 (423) 274
Net income 1,536 (252) 216
Income per common share - Basic .45 (.07) .06
Income per common share - Diluted .45 (.07) .06
Selected Financial Ratios and Other Data
(nine months and year ended):
Performance Ratios:
Net interest margin 3.54% 3.23% 3.24%
Efficiency ratio 77.71 85.51 87.36
Return on average assets .57 .44 .68
Return on average common equity 5.72 4.61 7.03
Average total assets $ 486,447 $ 425,343 $ 419,891
Average total common shareholders'
equity $ 44,312 $ 40,630 $ 40,332
Average loans to average deposits ratio 91.72% 105.61% 106.83%
Common Share Data (at end of period):
Market price per common share $ 4.10 $ 4.40 $ 5.26
Book value per common share $ 13.25 $ 12.15 $ 12.11
Common shares outstanding 3,419,736 3,419,736 3,419,736
Weighted average shares outstanding 3,419,736 3,422,012 3,422,777
Other Data (at end of period):
Allowance for loan losses $ 4,081 $ 4,277 $ 3,585
Non-performing assets $ 17,439 $ 7,076 $ 6,400
Allowance for loan losses to total loans 1.06% 1.16% .94%
Non-performing assets to total assets 3.38% 1.57% 1.45%
Number of:
Branch locations 10 12 12
FTE Employees 97 100 96
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September December September
30, 31, 30,
(Dollars in thousands) 2009 2008 2008
---------- --------- ----------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 23,249 $ 10,112 $ 8,217
Federal funds sold - - 4,422
---------- --------- ----------
Cash and cash equivalents 23,249 10,112 12,639
Interest-bearing deposits in other
financial institutions 662 582 382
Securities available for sale 80,203 47,490 42,781
Federal Home Loan Bank stock 3,794 3,794 3,794
Loans:
Commercial 306,590 296,088 290,406
Mortgage 73,116 70,447 67,576
Installment 4,394 3,745 3,539
---------- --------- ----------
Total Loans 384,100 370,280 361,521
Allowance for loan losses (4,081) (4,277) (3,385)
---------- --------- ----------
Net loans 380,019 366,003 358,136
Premises and equipment 10,281 11,189 11,360
Other real estate held for sale 5,821 2,189 1,751
Other assets 9,151 10,072 10,110
---------- --------- ----------
TOTAL ASSETS $ 513,180 $ 451,431 $ 440,953
========== ========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Noninterest bearing deposits $ 33,254 $ 30,099 $ 34,858
NOW, money market, checking 88,843 70,584 80,185
Savings 18,807 20,730 18,957
CDs < $100,000 59,637 73,752 74,940
CDs > $100,000 25,409 25,044 30,220
Brokered 192,631 150,888 121,534
---------- --------- ----------
Total deposits 418,581 371,097 360,694
Borrowings:
Federal funds purchased - - -
Short-term - - -
Long-term 36,140 36,210 36,210
---------- --------- ----------
Total borrowings 36,140 36,210 36,210
Other liabilities 2,693 2,572 2,622
---------- --------- ----------
Total liabilities 457,414 409,879 399,526
SHAREHOLDERS' EQUITY:
Preferred stock - No par value:
Authorized 500,000 shares, no
shares outstanding 10,466 - -
Common stock and additional paid in
capital - No par value
Authorized - 18,000,000 shares
Issued and outstanding - 3,419,736
shares 43,485 42,815 42,794
Retained Earnings 378 (1,708) (1,456)
Accumulated other comprehensive
income 1,437 445 89
---------- --------- ----------
Total shareholders' equity 55,766 41,552 41,427
---------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 513,180 $ 451,431 $ 440,953
========== ========= ==========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share
data) Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2009 2008 2009 2008
-------- ------- -------- --------
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable $ 5,106 $ 5,537 $ 15,212 $ 17,241
Tax-exempt 63 100 237 310
Interest on securities:
Taxable 888 303 2,020 840
Tax-exempt 7 1 11 4
Other interest income 28 87 44 257
-------- ------- -------- --------
Total interest income 6,092 6,028 17,524 18,652
-------- ------- -------- --------
INTEREST EXPENSE:
Deposits 1,550 2,308 4,894 7,924
Borrowings 232 349 774 1,194
-------- ------- -------- --------
Total interest expense 1,782 2,657 5,668 9,118
-------- ------- -------- --------
Net interest income 4,310 3,371 11,856 9,534
Provision for loan losses 700 450 1,400 1,200
-------- ------- -------- --------
Net interest income after provision for
loan losses 3,610 2,921 10,456 8,334
-------- ------- -------- --------
OTHER INCOME:
Service fees 236 229 750 597
Net security gains 644 (1) 644 64
Net gains on sale of secondary
market loans 247 16 179 113
Proceeds from lawsuit settlements - - - 3,475
Other 1,291 44 1,675 96
-------- ------- -------- --------
Total other income 2,418 288 3,248 4,345
-------- ------- -------- --------
OTHER EXPENSES:
Salaries and employee benefits 1,603 1,534 4,761 5,416
Occupancy 336 336 1,069 1,039
Furniture and equipment 193 202 604 570
Data processing 221 212 665 649
Professional service fees 161 120 458 352
Loan and deposit 402 176 1,175 430
Telephone 50 41 139 125
Advertising 80 93 238 213
Other 397 221 1,043 803
-------- ------- -------- --------
Total other expenses 3,443 2,935 10,152 9,597
-------- ------- -------- --------
Income before provision for income
taxes 2,585 274 3,552 3,082
Provision for (benefit of) income taxes 864 58 1,142 958
-------- ------- -------- --------
NET INCOME 1,721 216 2,410 2,124
-------- ------- -------- --------
Preferred dividend expense 185 - 323 -
-------- ------- -------- --------
NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $ 1,536 $ 216 $ 2,087 $ 2,124
======== ======= ======== ========
INCOME PER COMMON SHARE:
Basic $ .45 $ .06 $ .61 $ .62
======== ======= ======== ========
Diluted $ .45 $ .06 $ .61 $ .62
======== ======= ======== ========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
September December September
30, 31, 30,
2009 2008 2008
----------- ----------- -----------
Commercial Loans
Real estate - operators of
nonresidential buildings $ 47,007 $ 41,299 $ 41,486
Hospitality and tourism 45,867 35,086 35,287
Real estate agents and managers 23,996 29,292 29,277
Lessors of nonresidential buildings 13,782 13,467 13,352
Other 151,862 145,831 140,631
----------- ----------- -----------
Total Commercial Loans 282,514 264,975 260,033
1-4 family residential real estate 66,700 65,595 62,895
Consumer 4,394 3,745 3,539
Construction
Commercial 24,076 31,113 30,373
Consumer 6,416 4,852 4,681
----------- ----------- -----------
Total Loans $ 384,100 $ 370,280 $ 361,521
=========== =========== ===========
Credit Quality (at end of period):
September December September
30, 31, 30,
2009 2008 2008
---------- ---------- ----------
Nonperforming Assets:
Nonaccrual loans $ 10,655 $ 4,887 $ 4,649
Loans past due 90 days or more - - -
Restructured loans 873 - -
---------- ---------- ----------
Total nonperforming loans 11,528 4,887 4,649
Other real estate owned 5,821 2,189 1,751
---------- ---------- ----------
Total nonperforming assets $ 17,349 $ 7,076 $ 6,400
========== ========== ==========
Nonperforming loans as a % of loans 3.00% 1.32% 1.29%
---------- ---------- ----------
Nonperforming assets as a % of assets 3.38% 1.57% 1.45%
---------- ---------- ----------
Reserve for Loan Losses:
At period end $ 4,081 $ 4,277 $ 3,385
---------- ---------- ----------
As a % of average loans 1.10% 1.16% 0.94%
---------- ---------- ----------
As a % of nonperforming loans 35.40% 87.52% 72.81%
---------- ---------- ----------
As a % of nonaccrual loans 38.30% 87.52% 72.81%
========== ========== ==========
Charge-off Information (year to date):
Average loans 370,952 361,324 359,729
---------- ---------- ----------
Net charge-offs 1,596 2,169 1,961
---------- ---------- ----------
Charge-offs as a % of average loans .43% .60% .55%
---------- ---------- ----------
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
QUARTER ENDED
-------------------------------------------------------
(Unaudited)
-------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2009 2009 2009 2008 2008
--------- --------- --------- --------- ----------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 384,100 $ 372,004 $ 370,776 $ 370,280 $ 361,521
Allowance for loan
losses (4,081) (4,119) (4,793) (4,277) (3,385)
--------- --------- --------- --------- ----------
Total loans,
net 380,019 367,885 365,983 366,003 358,136
Intangible assets - 6 26 46 65
Total assets 513,180 506,304 466,375 451,431 440,953
Core deposits 200,541 202,892 196,860 195,165 208,940
Noncore deposits
(1) 218,040 210,260 188,897 175,932 151,754
--------- --------- --------- --------- ----------
Total deposits 418,581 413,152 385,757 371,097 360,694
Total borrowings 36,140 36,210 36,210 36,210 36,210
Total
shareholders'
equity 55,766 53,939 41,864 41,552 41,427
Total shares
outstanding 3,419,736 3,419,736 3,419,736 3,419,736 3,419,736
AVERAGE BALANCES
(Dollars in
thousands)
Assets $ 513,687 $ 491,205 $ 454,741 $ 441,583 $ 423,702
Loans 370,310 371,609 370,943 366,077 358,844
Deposits 419,102 401,510 372,670 358,213 341,377
Equity 54,594 49,855 41,813 41,516 41,097
INCOME STATEMENT
(Dollars in
thousands)
Net interest
income $ 4,310 $ 4,051 $ 3,495 $ 3,330 $ 3,371
Provision for loan
losses 700 150 550 1,100 450
--------- --------- --------- --------- ----------
Net interest
income after
provision 3,610 3,901 2,945 2,230 2,921
Total noninterest
income 2,418 439 391 308 288
Total noninterest
expense 3,443 3,470 3,239 2,961 2,935
--------- --------- --------- --------- ----------
Income before
taxes 2,585 870 97 (423) 274
Provision for
income taxes 864 271 7 (171) 58
Preferred dividend
expense 185 138 - - -
--------- --------- --------- --------- ----------
Net income $ 1,536 $ 461 $ 90 $ (252) $ 216
========= ========= ========= ========= ==========
PER SHARE DATA
Earnings - basic $ .45 $ .13 $ .03 $ (.07) $ .06
Earnings - diluted .45 .13 .03 (.07) .06
Book value per
common share 13.25 12.55 12.24 12.15 12.11
Market value,
closing price 4.10 4.50 4.00 4.40 5.26
ASSET QUALITY
RATIOS
Nonperforming
loans/total loans 3.00% 2.66% 3.52% 1.32% 1.29%
Nonperforming
assets/total
assets 3.38 2.93 3.27 1.57 1.45
Allowance for loan
losses/total
loans 1.06 1.11 1.29 1.16 .94
Allowance for loan
losses/nonperfor-
ming loans 35.40 41.71 36.72 87.52 72.81
PROFITABILITY
RATIOS
Return on average
assets .77% .38% .08% (.23)% .20%
Return on average
equity 7.17 3.71 .87 (2.42) 2.08
Net interest
margin 3.66 3.58 3.35 3.20 3.39
Efficiency ratio 70.09 76.55 82.36 80.30 79.12
Average
loans/average
deposits 88.36 92.55 99.54 102.20 105.12
CAPITAL ADEQUACY
RATIOS
Tier 1 leverage
ratio 10.30% 9.65% 7.86% 8.01% 8.31%
Tier 1 capital to
risk weighted
assets 12.89 11.94 9.31 9.25 9.40
Total capital to
risk weighted
assets 13.90 13.00 10.56 10.38 10.31
Average
equity/average
assets 10.63 10.15 9.20 9.40 9.70
Tangible
equity/tangible
assets 10.87 10.65 8.97 9.20 9.38
(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