Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0778
    -0.0015 (-0.14%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2619
    -0.0003 (-0.02%)
     
  • USD/JPY

    151.4290
    +0.0570 (+0.04%)
     
  • Bitcoin USD

    70,174.30
    +273.29 (+0.39%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,486.77
    +318.70 (+0.79%)
     

Mackinac Financial Corporation Reports 2021 Second Quarter Financial Results

MANISTIQUE, Mich., July 22, 2021 (GLOBE NEWSWIRE) -- Mackinac Financial Corporation (Nasdaq: MFNC) (“we”, or the “Corporation”) the bank holding company for mBank (“the Bank”) today announced 2021 second quarter net income of $2.94 million, or $.28 per share, compared to 2020 second quarter net income of $3.45 million, or $.33 per share. The 2021 second quarter results included expenses related to the pending merger with Nicolet Bankshares, Inc. (Green Bay, WI) (“Nicolet”), which had an estimated after-tax impact of $391 thousand on earnings. Adjusted net income (net of transaction related expenses) for the second quarter of 2021 was $3.34 million, or $.32 per share. Weighted average shares outstanding for the second quarter of 2021 were 10,550,393 compared to 10,533,589 for the same period of 2020.

Total assets of the Corporation at June 30, 2021 were $1.52 billion, compared to $1.52 billion at June 30, 2020. Shareholders’ equity at June 30, 2021 totaled $171.92 million, compared to $164.16 million at June 30, 2020. Book value per share outstanding equated to $16.30 at the end of the second quarter 2021, compared to $15.58 per share outstanding a year ago. Tangible book value at quarter-end was $148.31 million, or $14.06 per share outstanding, compared to $139.88 million, or $13.28 per share outstanding at the end of the second quarter 2020.

Additional notes:

  • mBank, the Corporation’s primary asset, recorded net income of $3.82 million for the second quarter of 2021, compared to $3.88 million for the second quarter of 2020. Transaction expenses were minimal at the bank level for the period and did not meaningfully impact mBank net income.

  • Non-interest income remained solid for the quarter, including secondary market mortgage fees and gains on sale of $982 thousand and premiums on the sale of Small Business Administration (SBA) guaranteed loans of $869 thousand.

  • Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and Paycheck Protection Program (“PPP”) fees, was 4.16%.

  • On April 12, 2021 the Board of Directors of MFNC announced the signing of a definitive agreement for Nicolet to acquire the Corporation. On July 15, 2021 the shareholders of MFNC voted (either in-person or via proxy) to approve the transaction at a Special Shareholder meeting of the Corporation. The transaction is still expected to close in the third quarter of 2021. Specific information regarding the transaction can be found at www.bankmbank.com.

Revenue & PPP Recognition

Total revenue of the Corporation for second quarter 2021 was $16.61 million, compared to $18.81 million for the second quarter of 2020. The majority of the variance is due to the higher levels of FASB (GAAP) recognition of PPP loan fee income in the 2020 period. Total interest income for the second quarter 2021 was $14.19 million, compared to $16.44 million for the same period in 2020. The year-over-year variance in interest income, once again, was related to the aforementioned timing of PPP recognition in 2020. The 2021 second quarter interest income also included accretive yield of $642 thousand from combined credit mark accretion associated with acquisitions, compared to $320 thousand in the same period of 2020.

PPP fee income for the second quarter of 2021 was $1.43 million, compared to $2.13 million for the second quarter of 2020. As of June 30, 2021, the Corporation has $2.166 million of PPP fee income that has been received but not recognized. Recognition of the remaining PPP fees will occur in accordance with FASB guidance based on normal amortization or acceleration upon the forgiveness of the PPP loan by the SBA. Current monthly amortization / recognition is approximately $163 thousand.

Loan Production and Portfolio Mix

Total balance sheet loans at June 30, 2021 were $978 million, compared to June 30, 2020 balances of $1.15 billion. Total loans under management reside at $1.215 billion, which includes $236.88 million of service retained loans. Overall loan production for the first six months of 2021 was $218.90 million, which included $57.67 million of PPP loans. The remaining $161.22 million was inclusive of, but not limited to, $67.99 million of secondary market loans, $63.3 million of commercial loans and $16.97 million of conventional balance sheet mortgage loans.

Credit Quality

Nonperforming loans totaled $4.93 million, or .50% of total loans (.53% when excluding PPP loans) at June 30, 2021, compared to $6.12 million, or .53% of total loans at June 30, 2020. Total loan delinquencies greater than 30 days resided at .46% (.49% when excluding PPP loans), compared to .54% in 2020. The nonperforming assets to total assets ratio resided at .41% (.41% when excluding PPP loans) for the second quarter of 2021, compared to .55% for the second quarter of 2020. The Corporation currently has no commercial loans in principal deferral and a nominal $2.08 million that remain in the interest only portion of their COVID-19 loan modification period. There are no consumer loans that remain in full payment deferral. Total loans in some type of COVID-19 payment modification are a minimal .21% of total loans. There remains no sign of any adverse systemic issues or deterioration in the loan portfolio.

Margin Analysis, Funding and Liquidity

Net interest income for second quarter 2021 was $13.22 million, resulting in a Net Interest Margin (NIM) of 4.56%, compared to $14.36 million in the second quarter 2020 and a NIM of 4.51%. Net interest income was impacted by the aforementioned PPP recognition for the 2020 period. Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments as well as PPP impact, was 4.16% for the second quarter of 2021, compared to 3.75% for the same period of 2020.

Total bank deposits were $1.29 billion at June 30, 2021, compared to $1.14 billion at first quarter-end 2020, an increase of approximately $150 million. Total brokered deposits have decreased significantly and were $13.35 million at June 30, 2021, compared to $90.48 million at June 30, 2020, a decrease of $77 million. FHLB (Federal Home Loan Bank) borrowings have also decreased from $63.31 million at June 30, 2020 to $28.11 million at June 30, 2021. Overall access to short-term functional liquidity remains very strong through multiple sources, if needed.

Noninterest Income / Expense

Second quarter 2021 Noninterest Income was $2.42 million, compared to $2.37 million for the same period of 2020. Noninterest Expense for the second quarter of 2021 was $11.91 million, compared to $12.35 million for the same period of 2020. When giving effect to the $495 thousand of pre-tax transaction expenses ($391 thousand after-tax), noninterest expense was $11.42 million for the second quarter of 2021.

Capital

Both the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 15.64% and 15.76% and tier 1 capital to total tier 1 average assets at the Corporation of 9.68% and at the Bank of 9.38%. The leverage ratio is calculated inclusive of PPP loan balances.

Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation and Chairman of mBank concluded, “With the recent MFNC shareholder approval of the Nicolet transaction, we have moved one step closer to the consummation of the merger. As we approach the closing of the transaction, the company continues to work on behalf of all constituencies to make the transition as smooth as possible, while maintaining best-in-class service to our valued clients. We thank all of our shareholders, clients and employees for being a part of Mackinac Financial.”

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $1.5 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 28 branch locations; ten 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: 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 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

As of and For the

As of and For the

As of and For the

Period Ending

Year Ending

Period Ending

June 30,

December 31,

June 30,

(Dollars in thousands, except per share data)

2021

2020

2020

(Unaudited)

(Unaudited)

Selected Financial Condition Data (at end of period):

Assets

$

1,518,952

$

1,501,730

$

1,518,473

Loans

978,055

1,077,592

1,153,790

Investment securities

101,955

111,836

108,703

Deposits

1,307,154

1,258,776

1,227,552

Borrowings

28,441

63,479

114,466

Shareholders' equity

171,919

167,864

164,157

Selected Statements of Income Data (six months and year ended)

Net interest income

$

27,044

$

54,806

$

27,855

Income before taxes

8,006

17,056

8,235

Net income

6,825

13,473

6,505

Income per common share - Basic

.65

1.27

.61

Income per common share - Diluted

.64

1.27

.61

Weighted average shares outstanding - Basic

10,536,722

10,580,044

10,625,778

Weighted average shares outstanding- Diluted

10,582,597

10,580,044

10,552,581

Three Months Ended:

Net interest income

$

13,266

$

13,899

$

14,458

Income before taxes

3,728

4,614

4,373

Net income

2,945

3,644

3,454

Income per common share - Basic

.28

.35

.33

Income per common share - Diluted

.28

.35

.33

Weighted average shares outstanding - Basic

10,550,393

10,536,023

10,533,589

Weighted average shares outstanding- Diluted

10,617,422

10,536,023

10,460,802

Selected Financial Ratios and Other Data:

Performance Ratios:

Net interest margin

4.54

%

4.37

%

4.55

%

Efficiency ratio

74.09

71.84

73.23

Return on average assets

.91

.92

.93

Return on average equity

8.09

8.19

8.05

Average total assets

$

1,517,185

$

1,464,674

$

1,411,081

Average total shareholders' equity

170,217

164,505

162,556

Average loans to average deposits ratio

81.71

%

93.34

%

95.91

%

Common Share Data at end of period:

Market price per common share

$

19.76

$

12.76

$

10.37

Book value per common share

16.30

15.99

15.58

Tangible book value per share

14.06

13.71

13.28

Dividends paid per share, annualized

.56

.56

.56

Common shares outstanding

10,550,393

10,500,758

10,533,589

Other Data at end of period:

Allowance for loan losses

$

5,651

$

5,816

$

5,355

Non-performing assets

6,276

7,210

8,350

Allowance for loan losses to total loans

.58

%

.54

%

.46

%

Non-performing assets to total assets

.41

%

.48

%

.55

%

Texas ratio

4.08

%

4.82

%

4.22

%

Number of:

Branch locations

28

28

29

FTE Employees

291

315

315

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

June 30,

2021

2020

2020

(Unaudited)

(Unaudited)

ASSETS

Cash and due from banks

$

341,436

$

218,901

$

126,398

Federal funds sold

10,041

76

28,110

Cash and cash equivalents

351,477

218,977

154,508

Interest-bearing deposits in other financial institutions

2,427

2,917

7,831

Securities available for sale

101,955

111,836

108,703

Federal Home Loan Bank stock

4,473

4,924

4,924

Loans:

Commercial

738,429

819,907

878,521

Mortgage

221,388

238,705

255,524

Consumer

18,238

18,980

19,745

Total Loans

978,055

1,077,592

1,153,790

Allowance for loan losses

(5,651

)

(5,816

)

(5,355

)

Net loans

972,404

1,071,776

1,148,435

Premises and equipment

24,533

25,518

25,448

Other real estate held for sale

1,343

1,752

2,226

Deferred tax asset

2,496

3,303

1,727

Deposit based intangibles

4,031

4,368

4,706

Goodwill

19,574

19,574

19,574

Other assets

34,239

36,785

40,391

TOTAL ASSETS

$

1,518,952

$

1,501,730

$

1,518,473

LIABILITIES AND SHAREHOLDERS EQUITY

LIABILITIES:

Deposits:

Noninterest bearing deposits

$

459,716

$

414,804

$

385,811

NOW, money market, interest checking

501,251

450,556

386,029

Savings

141,729

130,755

123,771

CDs<$250,000

178,723

202,266

226,971

CDs>$250,000

12,384

15,224

14,488

Brokered

13,351

45,171

90,482

Total deposits

1,307,154

1,258,776

1,227,552

Federal funds purchased

Borrowings

28,441

63,479

114,466

Other liabilities

11,438

11,611

12,298

Total liabilities

1,347,033

1,333,866

1,354,316

SHAREHOLDERS EQUITY:

Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,550,393; 10,500,758 and 10,533,589 respectively

127,624

127,164

127,213

Retained earnings

43,189

39,318

35,295

Accumulated other comprehensive income (loss)

Unrealized (losses) gains on available for sale securities

1,689

1,965

2,059

Minimum pension liability

(583

)

(583

)

(410

)

Total shareholders equity

171,919

167,864

164,157

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$

1,518,952

$

1,501,730

$

1,518,473

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

(Unaudited)

(Unaudited)

INTEREST INCOME:

Interest and fees on loans:

Taxable

$

13,414

$

15,549

$

27,535

$

30,162

Tax-exempt

20

55

40

129

Interest on securities:

Taxable

503

560

1,028

1,180

Tax-exempt

132

152

274

240

Other interest income

120

125

204

395

Total interest income

14,189

16,441

29,081

32,106

INTEREST EXPENSE:

Deposits

723

1,707

1,612

3,634

Borrowings

200

276

425

617

Total interest expense

923

1,983

2,037

4,251

Net interest income

13,266

14,458

27,044

27,855

Provision for loan losses

50

100

100

200

Net interest income after provision for loan losses

13,216

14,358

26,944

27,655

OTHER INCOME:

Deposit service fees

265

236

522

640

Income from loans sold on the secondary market

982

1,511

2,284

2,049

SBA/USDA loan sale gains

869

274

1,302

984

Mortgage servicing amortization

154

204

395

393

Net security gains

0

0

36

0

Other

154

142

283

238

Total other income

2,424

2,367

4,822

4,304

OTHER EXPENSE:

Salaries and employee benefits

6,306

7,009

13,130

13,060

Occupancy

1,092

1,008

2,275

2,132

Furniture and equipment

818

804

1,660

1,606

Data processing

707

852

1,477

1,677

Advertising

176

312

289

524

Professional service fees

515

574

1,013

1,072

Loan origination expenses and deposit and card related fees

419

406

869

787

Writedowns and losses on other real estate held for sale

84

30

32

34

FDIC insurance assessment

150

165

290

315

Communications expense

259

224

500

437

Transaction related expenses

495

-

495

-

Other

891

968

1,730

2,080

Total other expenses

11,912

12,352

23,760

23,724

Income before provision for income taxes

3,728

4,373

8,006

8,235

Provision for income taxes

783

919

1,181

1,730

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$

2,945

$

3,454

$

6,825

$

6,505

INCOME PER COMMON SHARE:

Basic

$

.28

$

.33

$

.65

$

.61

Diluted

$

.28

$

.33

$

.64

$

.61

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,

2021

2020

2020

(Unaudited)

(Audited)

(Unaudited)

Commercial Loans:

Real estate - operators of nonresidential buildings

$

130,222

$

138,992

$

136,299

Hospitality and tourism

100,162

100,237

98,981

Lessors of residential buildings

53,016

52,035

48,852

Gasoline stations and convenience stores

26,583

29,046

28,463

Logging

17,408

18,651

22,283

Commercial construction

48,205

47,698

38,712

Other

362,833

433,248

504,931

Total Commercial Loans

738,429

819,907

878,521

1-4 family residential real estate

210,364

227,044

235,467

Consumer

18,238

18,980

19,745

Consumer construction

11,024

11,661

20,057

Total Loans

$

978,055

$

1,077,592

$

1,153,790

Credit Quality (at end of period):

June 30,

December 31,

June 30,

2021

2020

2020

(Unaudited)

(Audited)

(Unaudited)

Nonperforming Assets :

Nonaccrual loans

$

4,927

$

5,458

$

6,124

Loans past due 90 days or more

6

-

-

Restructured loans

-

-

-

Total nonperforming loans

4,933

5,458

6,124

Other real estate owned

1,343

1,752

2,226

Total nonperforming assets

$

6,276

$

7,210

$

8,350

Nonperforming loans as a % of loans

.50

%

.51

%

.53

%

Nonperforming assets as a % of assets

.41

%

.48

%

.55

%

Reserve for Loan Losses:

At period end

$

5,651

$

5,816

$

5,355

As a % of outstanding loans

.58

%

.54

%

.46

%

As a % of nonperforming loans

114.56

%

106.56

%

87.44

%

As a % of nonaccrual loans

114.69

%

106.56

%

87.44

%

Texas Ratio

4.08

%

4.82

%

4.22

%

Charge-off Information (year to date):

Average loans

$

1,051,518

$

1,117,132

$

1,097,382

Net charge-offs (recoveries)

$

264

$

492

$

153

Charge-offs as a % of average

loans, annualized

.05

%

.04

%

.03

%

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS

QUARTER ENDED

(Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

BALANCE SHEET (Dollars in thousands)

Total loans

$

978,055

$

1,063,756

$

1,077,592

$

1,144,325

$

1,153,790

Allowance for loan losses

(5,651

)

(5,842

)

(5,816

)

(5,832

)

(5,355

)

Total loans, net

972,404

1,057,914

1,071,776

1,138,493

1,148,435

Total assets

1,518,952

1,508,248

1,501,730

1,522,917

1,518,473

Core deposits

1,281,419

1,249,591

1,198,381

1,195,062

1,122,582

Noncore deposits

25,735

23,688

60,395

85,825

104,970

Total deposits

1,307,154

1,273,279

1,258,776

1,280,887

1,227,552

Total borrowings

28,441

53,459

63,479

63,505

114,466

Total shareholders' equity

171,919

170,176

167,864

166,168

164,157

Total tangible equity

148,314

146,402

143,922

142,057

139,877

Total shares outstanding

10,550,393

10,550,393

10,500,758

10,533,589

10,533,589

Weighted average shares outstanding

10,550,393

10,522,899

10,536,023

10,533,589

10,533,589

AVERAGE BALANCES (Dollars in thousands)

Assets

$

1,522,548

$

1,512,496

$

1,505,869

$

1,536,128

$

1,501,423

Earning assets

1,168,006

1,235,235

1,252,038

1,303,102

1,290,012

Loans

1,025,306

1,078,022

1,118,665

1,154,670

1,147,620

Noninterest bearing deposits

452,881

426,890

422,081

422,134

346,180

Deposits

1,295,982

1,279,362

1,255,669

1,269,658

1,211,694

Equity

171,411

169,023

167,459

165,450

161,811

INCOME STATEMENT (Dollars in thousands)

Net interest income

$

13,266

$

13,778

$

13,898

$

13,052

$

14,458

Provision for loan losses

50

50

400

400

100

Net interest income after provision

13,216

13,728

13,498

12,652

14,358

Total noninterest income

2,424

2,398

2,779

3,116

2,367

Total noninterest expense

11,912

11,848

11,663

11,561

12,352

Income before taxes

3,728

4,278

4,614

4,207

4,373

Provision for income taxes

783

398

970

883

919

Net income available to common shareholders

$

2,945

$

3,880

$

3,644

$

3,324

$

3,454

Income pre-tax, pre-provision

$

3,778

$

4,328

$

5,014

$

4,607

$

4,473

PER SHARE DATA

Earnings per common share

$

.28

$

.37

$

.35

$

.32

$

.33

Book value per common share

16.30

16.13

15.99

15.78

15.58

Tangible book value per share

14.06

13.88

13.71

13.49

13.28

Market value, closing price

19.76

14.02

12.76

9.65

10.37

Dividends per share

.14

.14

.14

.14

.14

ASSET QUALITY RATIOS

Nonperforming loans/total loans

.50

%

.47

%

.51

%

.47

%

.53

%

Nonperforming assets/total assets

.41

.45

.48

.48

.55

Allowance for loan losses/total loans

.58

.55

.54

.51

.46

Allowance for loan losses/nonperforming loans

114.56

116.28

106.56

107.72

87.44

Texas ratio

4.08

4.41

4.82

4.91

4.22

PROFITABILITY RATIOS

Return on average assets

.78

%

1.04

%

.96

%

.86

%

.93

%

Return on average equity

6.89

9.31

8.66

7.99

8.58

Net interest margin

4.56

4.52

4.42

3.98

4.51

Average loans/average deposits

79.11

84.26

89.09

90.94

94.71

CAPITAL ADEQUACY RATIOS

Tier 1 leverage ratio

9.68

%

9.63

%

9.63

%

9.20

%

9.45

%

Tier 1 capital to risk weighted assets

15.64

14.74

14.48

13.91

13.27

Total capital to risk weighted assets

16.25

15.34

15.07

14.49

13.79

Average equity/average assets (for the quarter)

11.26

11.18

11.12

10.77

10.78

Contact: Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 /jdeering@bankmbank.com
Website: www.bankmbank.com



Advertisement