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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): July 30, 2020

 

MACKINAC FINANCIAL CORPORATION

 

(previous filings under the name NORTH COUNTRY FINANCIAL CORPORATION)

(Exact name of registrant as specified in its charter)

 

michigan 0-20167 38-2062816
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

 

130 SOUTH CEDAR STREET, MANISTIQUE, michigan 49854
(Address of principal executive offices) (Zip Code)

 

Registrant's telephone number, including area code: (888) 343-8147

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each
class
Trading
Symbol(s)
Name of each exchange on which
registered
Common Stock MFNC Nasdaq Stock Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

 

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On July 30, 2020, Mackinac Financial Corporation issued a press release announcing its announcing its results of operations for the three and six months ended June 30, 2020 and Statement of Financial Condition as of June 30, 2020. The press release is attached as Exhibit No. 99 and incorporated herein by reference.

 

ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS.

 

(d) Exhibits

 

The following exhibits are furnished herewith:

 

EXHIBIT
NUMBER

EXHIBIT DESCRIPTION
  
99Press Release of Mackinac Financial Corporation dated July 30, 2020
  
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

 

SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

MACKINAC FINANCIAL CORPORATION

 

 

Date: July 30, 2020  
  By: /s/ Jesse A. Deering
    Jesse A. Deering
    EVP/CFO

 

 

 

 

Exhibit 99

 

 

PRESS RELEASE

 

For Release: July 30, 2020
Nasdaq: MFNC
Contact: Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 /jdeering@bankmbank.com
Website: www.bankmbank.com

 

MACKINAC FINANCIAL CORPORATION REPORTS 2020 SECOND quarter Results AND COVID-19 PROGRESS

 

Manistique, Michigan – Mackinac Financial Corporation (Nasdaq: MFNC) (“we”, or the “Corporation”) the bank holding company for mBank (“the Bank”) today announced 2020 second quarter net income of $3.45 million, or $.33 per share, compared to 2019 second quarter net income of $3.67 million, or $.34 per share. Net income for the first two quarters of 2020 was $6.50 million, or $.61 per share, compared to $6.84 million, or $.64 per share for the same period of 2019.

 

Total assets of the Corporation at June 30, 2020 were $1.52 billion, compared to $1.33 billion at June 30, 2019. Shareholders’ equity at June 30, 2020 totaled $164.16 million, compared to $157.84 million at June 30, 2019. Book value per share outstanding equated to $15.58 at the end of the second quarter 2020, compared to $14.70 per share outstanding a year ago. Tangible book value at quarter-end was $139.88 million, or $13.28 per share outstanding, compared to $133.24 million, or $12.40 per share outstanding at the end of the second quarter 2019.

 

Additional notes:

 

·mBank, the Corporation’s primary asset, recorded net income of $3.88 million for the second quarter of 2020 and $7.28 million for the first six months of 2020.

 

·As reflected in the size of the balance sheet, the Corporation funded approximately $150 million of Payroll Protection Program (“PPP”) loans in the second quarter with origination fees totaling approximately $5.1 million. These loans are supporting over one thousand small businesses throughout our footprint with the majority of recipients residing in the Upper Peninsula and Northern Michigan.

 

·Only $15.3 million of commercial loan payment deferrals remain from peak levels of approximately $201 million, equating to a reduction of 92%.

 

·Non-interest income was very solid for the second quarter including strong secondary market mortgage fees of $1.51 million and premiums on the sale of Small Business Administration (SBA) guaranteed loans of $274 thousand. Year-to-date secondary market mortgage fees were $2.05 million and SBA premiums $984 thousand. The residential mortgage pipeline resides at very robust levels and we expect sustained output from this line of business as we look to upcoming quarters.

 

·Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and PPP loan origination fees, was 3.75%. However, we also estimate, on a non-GAAP basis, that PPP loan yields (not inclusive of fee income) are roughly a 26 basis point strain. Estimated core operating margin is approximately 4.01%.

 

 

 

 

 

COVID-19 Operating Update

 

Upon the onset of the COVID-19 pandemic, management took proactive measures and moved quickly to implement protocols and adjust operations to continue to serve all constituencies. These protocols have been refined throughout the second quarter as the pandemic operating environment evolved within the Corporation’s respective regions. Speaking to these ongoing operational activities, President of the Corporation and President and CEO of mBank, Kelly W. George, stated, “When the Coronavirus crisis started to heighten around mid-March, we began to swiftly activate our pandemic response plan in each critical risk area of the bank. We subsequently closed our lobby access in the middle of March and began serving clients who needed in-person transactions almost exclusively via drive-thru windows. Most of our branch lobbies are now open to the public and all are operating under enhanced safety and cleaning protocol. Overall, the majority of our bank footprint, outside of Southeast Michigan, resides in markets where active COVID-19 cases are very nominal compared to other areas of the country. This is a trend we hope continues so that we do not need to take steps back to a more restrictive pandemic operating environment. The much lower COVID-19 case totals in most of our Northern Michigan and Wisconsin regions led to a sustained uptick in commerce activity, starting around Memorial Day, for both our tourism and retail industries. Specifically, hotel occupancies have come back to more normalized levels for this time of year. We remain cautiously optimistic that these positive health and commerce conditions can be maintained throughout our more traditionally busier seasonal months as we continue into the latter part of summer and early fall.”

 

Revenue & PPP Recognition

 

Total revenue of the Corporation for second quarter 2020 was $18.81 million, compared to $17.87 million for the second quarter of 2019. Total interest income for the second quarter was $16.44 million, compared to $16.76 million for the same period in 2019. The 2020 second quarter interest income included accretive yield of $320 thousand from combined credit mark accretion associated with acquisitions, compared to $741 thousand in the same period of 2019.

 

The second quarter 2020 interest income was also positively impacted by the recognition of a portion of the PPP loan origination fees that were earned during the quarter:

 

·The bank originated approximately $150 million of PPP loans in the second quarter.

·The origination efforts resulted in fees earned of $5.09 million, which are deferred and will be recognized over the life of the PPP loans, which is 24 months.

·Fee income of $2.13 million was recognized in the current quarter, offsetting $1.7 million of direct origination costs and the $425 thousand of accretion of the deferred fees.

·The remaining deferred fees of $2.97 million will be accreted over the remaining 21 months, or accelerated upon early payoff of the PPP loans.

 

Loan Production and Portfolio Mix

 

Total balance sheet loans at June 30, 2020 were $1.15 billion, which is inclusive of $149.82 million of PPP loans, compared to June 30, 2019 balances of $1.06 billion. Total loans under management reside at $1.44 billion, which includes $281.27 million of service retained loans. Driven by strong mortgage refinance activity, overall traditional loan production (non-PPP) for the first six months of 2020 was $174.81 million, compared to $184.6 million for the same period of 2019. When including PPP loans, total production was $324.63 million. Of the total production, traditional commercial loans equated to $64 million, consumer $111 million and the aforementioned $150 million of PPP. Within the consumer totals was $86 million of secondary market mortgage production. In total, 77% of PPP funds went to existing mBank clients. There were also 295 new customers that received PPP loans and 44 included a new deposit relationship.

 

 

 

 

 

 

 

 

Commenting on new loan production and overall lending activities, Mr. George stated, “As can be seen from our production totals, we had a very busy second quarter, which was dominated by record mortgage production and PPP activity. The overall make up of the portfolio remains well diversified. We also continue to partake in some other specific pandemic-based relief programs that are being sponsored at the state and federal levels to help support the working capital needs of our local small businesses in terms of reopening. The relatively low number of virus cases in the majority of our footprint provide a safer environment for tourists to travel via automobile driving the strong local commerce uptick we have seen over the last several months. Our northern markets are also seeing heightened real estate activity from families and businesses looking to avoid a possible second wave of the virus and relocate for an overall healthier quality of life where working remote may become more of the norm for some time. These attributes, coupled with lack of large concentrations of inventory, have driven up prices and shortened marketing times for everything from second homes to vacant land.”

 

 

 

 

 

 

 

Credit Quality and COVID-19 Loan Activity

 

Nonperforming loans totaled $6.124 million, or .53% (.61% excluding PPP balances) of total loans at June 30, 2020, compared to $6.416 million, or .61% of total loans at March 31, 2020 and $4.673 million, or .44% of total loans at June 30, 2019. Total loan delinquencies greater than 30 days resided at .54% (.61% excluding PPP balances), compared to 1.23% a quarter ago, and 1.05% in 2019.  The nonperforming assets to total assets ratio resided at .55% (.61% excluding PPP balances) for the second quarter of 2020, compared to .51% for the second quarter of 2019.

 

COVID-19 related loan deferral activity has slowed significantly in the second quarter reducing by 90% from peak levels and equating to a nominal 2.3% of total loans. Of the original $219.60 million of payment deferred loans, $196.70 have already returned to contractual obligations of either principal and interest or interest only, for a short period, as they come off of full payment deferral to build up cash flow.

 

 

 

Of the $15.3 million of commercial loans still in payment deferral, there are no significant concentrations, with the largest single borrower categories being rental properties ($4.60 million) and Hotels ($4.00 million). Hotel specific loan deferrals have reduced significantly from $65.60 million, or a 94% reduction.

 

 

 

 

 

 

 

The second quarter provision for loan losses was $100 thousand.  This amount was consistent with past quarters. As a result of COVID-19, the qualitative factors for economic conditions were adjusted within the Allowance for Loan Losses (ALLL) calculation and methodology at the end of the first quarter of 2020.  These adjustments did not lead to a larger provision. Management will actively refine the provision and loan reserves as client impact and broader economic data both regionally and nationally from the pandemic becomes more clear. Coupled with the health data specific to our region and footprint that could also negatively impact the current uptick in business activity. The Corporation is not currently required to utilize CECL.

 

Commenting on overall credit risk, Mr. George stated, “The credit book has seen no signs of any systemic adverse trends, and the vast majority of our COVID-19 loan deferments are now expired with very few requests for extensions. While certainly not clear of all headwinds, we remain cautiously optimistic on the second half of 2020 in terms of overall credit performance given further national stimulus actions are probable and expect more clarity to evolve as to the virus spread and containment measures. Both factors helping to reduce the possibility of returning to business closures and/or a resetting of improving consumer confidence within our local markets provided a larger second wave does not materialize. Also, we remain ever vigilant in terms of monitoring deterioration in any isolated specific situations that could arise for a client or two where provisions could be needed in light of ongoing pandemic conditions within a particular industry that we all know can still change quickly.”

 

Margin Analysis, Funding and Liquidity

 

Net interest income for second quarter 2020 was $14.46 million, resulting in a Net Interest Margin (NIM) of 4.51%, compared to $14.0 million in the second quarter 2019 and a NIM of 4.76%. Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and recognized PPP fee income, was 3.75% for the second quarter of 2020, compared to 4.43% for the same period of 2019. Items impacting margin, outside of the overall current low interest rate environment, include higher than normal cash balances as well as negative impact from the yields associated with PPP loans. On a non-GAAP basis, management currently estimates the direct negative impact of the PPP loan balances for the second quarter to be .26%. Estimated adjusted core margin for the second quarter is 4.01%.

 

 

 

 

 

 

 

Total bank deposits (excluding brokered deposits) have increased by $136.31 million year-over-year from $1.00 billion at June 30, 2019 to $1.137 billion at second quarter-end 2020. Total brokered deposits have also decreased and were $90.48 million at June 30, 2020, compared to $114.10 million at June 30, 2019, a decrease of 21%. However, brokered deposits have increased by roughly $32 million since year-end 2019. This increase is the direct result of the bank taking precautionary measures to augment its cash position at the onset of the COVID-19 pandemic and some funding of PPP loans. FHLB (Federal Home Loan Bank) borrowings were also mostly flat at $65 million since the end of 2019. The Corporation utilized the Payroll Protection Program Liquidity Facility (PPPLF) to fund a portion of the PPP loan originations. The current balance of the PPPLF is approximately $51 million. Overall access to short term functional liquidity remains very strong through multiple sources.

 

Mr. George stated, “We are pleased with our organic efforts in terms of core deposit growth this year within the more challenging pandemic environment. Core deposit growth just in July equates to approximately $25M supporting the commerce buildup we have seen since reopening in later May throughout our various business segments. We continue to carry large levels of liquidity in light of PPP and we also put some conservative measures in place at the onset of the pandemic to ensure funds availability given the large unknowns. These liquidity levels should continue to normalize through the rest of the year as PPP winds down and some wholesale funding sources mature. The large drop in rates in late quarter one has led to unavoidable margin compression, but we have been proactive in continuing to review and market price our deposit offerings to best offset the dollars lost.”

 

Noninterest Income / Expense

 

Second quarter 2020 noninterest income was $2.37 million, compared to $1.11 million for the same period of 2019. The significant year-over-year improvement is mainly a combination of the secondary market mortgage and SBA sales. The SBA 7A sales were not inclusive of any PPP loan fees, all of which are recognized through interest income. Noninterest Expense for the second quarter of 2020 was $12.35 million, compared to $10.26 million for the same period of 2019. For comparison purposes, noninterest expense for the first quarter of 2020 equated to $11.37 million. The quarter-over-quarter change was heavily impacted by the direct PPP expenses that were offset by corresponding PPP fee recognition as well as some pandemic related operating items. Specific non-recurring items associated with COVID-19 and PPP equated to $949 thousand and included $125 thousand of COVID-related compensation for retail centric employees, and $824 thousand of direct PPP related origination costs. Management expects expenses to normalize in the coming quarters in light of the one-time nature of these items.

 

Assets and Capital

 

Total assets of the Corporation at June 30, 2020 were $1.52 billion, compared to $1.33 billion at June 30, 2019. Shareholders’ equity at June 30, 2020 totaled $164.16 million, compared to $157.84 million at June 30, 2019. Book value per share outstanding equated to $15.58 at the end of the second quarter 2020, compared to $14.70 per share outstanding a year ago. Tangible book value at quarter end was $139.88 million, or $13.28 per share outstanding, compared to $133.24 million, or $12.40 per share outstanding at the end of the second quarter 2019.

 

 

 

 

 

 

Both the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 13.79% at the Corporation and 13.30% at the Bank and tier 1 capital to total tier 1 average assets (the “leverage ratio”) at the Corporation of 9.45% and at the Bank of 8.93%. The leverage ratio is calculated inclusive of PPP loan balances. The Corporation is monitoring the impact of the recent pandemic-associated market volatility on its Goodwill asset. The Corporation continues to conduct Goodwill impairment analysis to confirm the value of this intangible asset as market events unfold.

 

Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation and Chairman of mBank concluded, “We have weathered this economic storm thus far in a manner that has allowed us to protect our shareholders’ investment by growing our capital base and controlling our credit risk. While management acknowledges that, more likely than not, there will be challenges ahead for all banks, we can only get through the whole pandemic if we first get through the initial 120 days. We are the same bank currently as we were going into this and continue to be well-capitalized, appropriately conservative and have plenty of liquidity. Our commitment is to continue with our steadfast efforts to help our employees, customers and communities through this crisis while managing the bank for continued success. It is at times like this where the value of a community bank is demonstrated in the marketplace through the customers that we have helped.”

 

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 29 branch locations; eleven 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: the effects of the COVID-19 pandemic, particularly potentially negative effects on our customers, borrowers, third party service providers and our liquidity; 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 Corporation 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)  2020   2019   2019 
   (Unaudited)       (Unaudited) 
Selected Financial Condition Data (at end of period):               
Assets  $1,518,473   $1,320,069   $1,330,723 
Loans   1,153,790    1,058,776    1,060,703 
Investment securities   108,703    107,972    110,348 
Deposits   1,227,552    1,075,677    1,114,853 
Borrowings   114,466    64,551    46,232 
Shareholders' equity   164,157    161,919    157,840 
                
Selected Statements of Income Data (six months and year ended)               
Net interest income  $27,855   $53,907   $27,233 
Income before taxes   8,235    17,710    8,653 
Net income   6,505    13,850    6,836 
Income per common share - Basic   .61    1.29    .64 
Income per common share - Diluted   .61    1.29    .64 
Weighted average shares outstanding - Basic   10,625,778    10,737,653    10,730,477 
Weighted average shares outstanding- Diluted   10,552,581    10,757,507    10,739,471 
                
Three Months Ended:               
Net interest income  $14,458   $13,350   $13,997 
Income before taxes   4,373    4,350    4,644 
Net income   3,454    3,296    3,669 
Income per common share - Basic   .33    .31    .34 
Income per common share - Diluted   .33    .31    .34 
Weighted average shares outstanding - Basic   10,533,589    10,748,712    10,740,712 
Weighted average shares outstanding- Diluted   10,460,802    10,768,841    10,752,070 
                
Selected Financial Ratios and Other Data:               
Performance Ratios:               
Net interest margin   4.55%   4.57%   4.65%
Efficiency ratio   73.23    69.10    68.94 
Return on average assets   .93    1.04    1.04 
Return on average equity   8.05    8.78    8.89 
                
Average total assets  $1,411,081   $1,332,882   $1,323,321 
Average total shareholders' equity   162,556    157,831    155,098 
Average loans to average deposits ratio   95.91%   95.03%   95.22%
                
Common Share Data at end of period:               
Market price per common share  $10.37   $17.56   $15.80 
Book value per common share   15.58    15.06    14.70 
Tangible book value per share   13.28    12.77    12.40 
Dividends paid per share, annualized   .560    .520    .480 
Common shares outstanding   10,533,589    10,748,712    10,740,712 
                
Other Data at end of period:               
Allowance for loan losses  $5,355   $5,308   $5,306 
Non-performing assets  $8,350   $7,377   $6,798 
Allowance for loan losses to total loans   .53%   .49%   .50%
Non-performing assets to total assets   .55%   .56%   .51%
Texas ratio   4.22%   4.41%   4.91%
                
Number of:               
Branch locations   29    29    29 
FTE Employees   315    304    301 

 

 

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31,   June 30, 
   2020   2019   2019 
   (Unaudited)       (Unaudited) 
ASSETS               
                
Cash and due from banks  $126,398   $49,794   $60,680 
Federal funds sold   28,110    32    10 
Cash and cash equivalents   154,508    49,826    60,690 
                
Interest-bearing deposits in other financial institutions   7,831    10,295    12,465 
Securities available for sale   108,703    107,972    110,348 
Federal Home Loan Bank stock   4,924    4,924    4,924 
                
Loans:               
Commercial   878,521    765,524    755,176 
Mortgage   255,524    272,014    284,864 
Consumer   19,745    21,238    20,663 
Total Loans   1,153,790    1,058,776    1,060,703 
Allowance for loan losses   (5,355)   (5,308)   (5,306)
Net loans   1,148,435    1,053,468    1,055,397 
                
Premises and equipment   25,448    23,608    23,166 
Other real estate held for sale   2,226    2,194    2,125 
Deferred tax asset   1,727    3,732    4,609 
Deposit based intangibles   4,706    5,043    5,380 
Goodwill   19,574    19,574    19,574 
Other assets   40,391    39,433    32,045 
                
TOTAL ASSETS  $1,518,473   $1,320,069   $1,330,723 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY               
                
LIABILITIES:               
Deposits:               
Noninterest bearing deposits  $385,811   $287,611   $276,776 
NOW, money market, interest checking   386,029    373,165    344,213 
Savings   123,771    109,548    111,438 
CDs<$250,000   226,971    233,956    256,689 
CDs>$250,000   14,488    12,775    11,640 
Brokered   90,482    58,622    114,097 
Total deposits   1,227,552    1,075,677    1,114,853 
                
Federal funds purchased       6,225     
Borrowings   114,466    64,551    46,232 
Other liabilities   12,298    11,697    11,798 
Total liabilities   1,354,316    1,158,150    1,172,883 
                
SHAREHOLDERS’ EQUITY:               
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,533,589; 10,748,712 and 10,740,712 respectively   127,213    129,564    129,262 
Retained earnings   35,295    31,740    27,734 
Accumulated other comprehensive income (loss)               
Unrealized (losses) gains on available for sale securities   2,059    1,025    1,062 
Minimum pension liability   (410)   (410)   (218)
Total shareholders’ equity   164,157    161,919    157,840 
                
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $1,518,473   $1,320,069   $1,330,723 

 

 

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2020   2019   2020   2019 
   (Unaudited)   (Unaudited) 
INTEREST INCOME:                    
Interest and fees on loans:                    
Taxable  $15,549   $15,586   $30,162   $30,181 
Tax-exempt   55    42    129    89 
Interest on securities:                    
Taxable   560    680    1,180    1,383 
Tax-exempt   152    85    240    183 
Other interest income   125    367    395    752 
Total interest income   16,441    16,760    32,106    32,588 
                     
INTEREST EXPENSE:                    
Deposits   1,707    2,515    3,634    4,869 
Borrowings   276    248    617    486 
Total interest expense   1,983    2,763    4,251    5,355 
                     
Net interest income   14,458    13,997    27,855    27,233 
Provision for loan losses   100    200    200    300 
Net interest income after provision for loan losses   14,358    13,797    27,655    26,933 
                     
OTHER INCOME:                    
Deposit service fees   236    408    640    814 
Income from loans sold on the secondary market   1,511    355    2,049    667 
SBA/USDA loan sale gains   274    29    984    154 
Mortgage servicing amortization   204    128    393    248 
Other   142    190    238    344 
Total other income   2,367    1,110    4,304    2,227 
                     
OTHER EXPENSE:                    
Salaries and employee benefits   7,009    5,511    13,060    10,946 
Occupancy   1,008    1,004    2,132    2,085 
Furniture and equipment   804    723    1,606    1,441 
Data processing   852    708    1,677    1,417 
Advertising   312    214    524    523 
Professional service fees   574    547    1,072    981 
Loan origination expenses and deposit and card related fees   406    184    787    363 
Writedowns and losses on other real estate held for sale   30    73    34    101 
FDIC insurance assessment   165    77    315    211 
Communications expense   224    232    437    460 
Other   968    990    2,080    1,979 
Total other expenses   12,352    10,263    23,724    20,507 
                     
Income before provision for income taxes   4,373    4,644    8,235    8,653 
Provision for income taxes   919    975    1,730    1,817 
                     
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS  $3,454   $3,669   $6,505   $6,836 
                     
INCOME PER COMMON SHARE:                    
Basic  $.33   $.34   $.61   $.64 
Diluted  $.33   $.34   $.61   $.64 

 

 

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, 
   2020   2019   2019 
   (Unaudited)   (Audited)   (Unaudited) 
Commercial Loans:               
Real estate - operators of nonresidential buildings  $136,299   $141,965   $143,897 
Hospitality and tourism   98,981    97,721    92,809 
Lessors of residential buildings   48,852    51,085    49,489 
Gasoline stations and convenience stores   28,463    27,176    26,974 
Logging   22,283    22,136    21,666 
Commercial construction   38,712    40,107    36,803 
Other   504,931    385,334    383,538 
Total Commercial Loans   878,521    765,524    755,176 
                
1-4 family residential real estate   235,467    253,918    273,813 
Consumer   19,745    21,238    20,663 
Consumer construction   20,057    18,096    11,051 
                
Total Loans  $1,153,790   $1,058,776   $1,060,703 

 

Credit Quality (at end of period):

 

   June 30,   December 31,   June 30, 
   2020   2019   2019 
   (Unaudited)   (Audited)   (Unaudited) 
Nonperforming Assets :               
Nonaccrual loans  $6,124   $5,172   $4,673 
Loans past due 90 days or more   -    11    - 
Restructured loans   -    -    - 
Total nonperforming loans   6,124    5,183    4,673 
Other real estate owned   2,226    2,194    2,125 
Total nonperforming assets  $8,350   $7,377   $6,798 
Nonperforming loans as a % of loans   .53%   .49%   .44%
Nonperforming assets as a % of assets   .55%   .56%   .51%
Reserve for Loan Losses:               
At period end  $5,355   $5,308   $5,306 
As a % of outstanding loans   .46%   .50%   .50%
As a % of nonperforming loans   87.44%   102.41%   113.55%
As a % of nonaccrual loans   87.44%   102.63%   113.55%
Texas Ratio   4.22%   4.41%   4.91%
                
Charge-off Information (year to date):               
Average loans  $1,097,382   $1,047,439   $1,049,383 
Net charge-offs (recoveries)  $153   $260   $177 
Charge-offs as a % of average               
loans, annualized   .03%   .02%   .03%

 

 

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

 

   QUARTER ENDED 
   (Unaudited) 
   June 30,   March 31,   December 31,   September 30,   June 30, 
   2020   2020   2019   2019   2019 
BALANCE SHEET (Dollars in thousands)                         
                          
Total loans  $1,153,790   $1,044,177   $1,058,776   $1,059,942   $1,060,703 
Allowance for loan losses   (5,355)   (5,292)   (5,308)   (5,308)   (5,306)
Total loans, net   1,148,435    1,038,885    1,053,468    1,054,634    1,055,397 
Total assets   1,518,473    1,356,381    1,320,069    1,355,383    1,330,723 
Core deposits   1,122,582    984,936    1,004,280    1,022,115    989,116 
Noncore deposits   104,970    110,445    71,397    91,464    125,737 
Total deposits   1,227,552    1,095,381    1,075,677    1,113,579    1,114,853 
Total borrowings   114,466    67,120    64,551    70,079    46,232 
Total shareholders' equity   164,157    160,060    161,919    160,165    157,840 
Total tangible equity   139,877    135,612    137,302    135,379    133,236 
Total shares outstanding   10,533,589    10,533,589    10,748,712    10,740,712    10,740,712 
Weighted average shares outstanding   10,533,589    10,717,967    10,748,712    10,740,712    10,740,712 
                          
AVERAGE BALANCES (Dollars in thousands)                         
                          
Assets  $1,501,423   $1,321,134   $1,347,916   $1,354,220   $1,326,827 
Earning assets   1,290,012    1,171,551    1,205,241    1,204,782    1,179,584 
Loans   1,147,620    1,047,144    1,081,294    1,065,337    1,051,998 
Noninterest bearing deposits   346,180    284,677    283,259    284,354    260,441 
Deposits   1,211,694    1,076,206    1,080,359    1,124,433    1,103,413 
Equity   161,811    162,661    161,588    159,453    156,491 
                          
INCOME STATEMENT (Dollars in thousands)                         
                          
Net interest income  $14,458   $13,397   $13,350   $13,324   $13,997 
Provision for loan losses   100    100    35    50    200 
Net interest income after provision   14,358    13,297    13,315    13,274    13,797 
Total noninterest income   2,367    1,937    1,848    1,878    1,110 
Total noninterest expense   12,352    11,372    10,813    10,444    10,263 
Income before taxes   4,373    3,862    4,350    4,708    4,644 
Provision for income taxes   919    811    1,054    989    975 
Net income available to common shareholders  $3,454   $3,051   $3,296   $3,719   $3,669 
Income pre-tax, pre-provision  $4,473   $3,962   $4,385   $4,758   $4,844 
                          
PER SHARE DATA                         
                          
Earnings per common share  $.33   $.28   $.31   $.35   $.34 
Book value  per common share   15.58    15.20    15.06    14.91    14.70 
Tangible book value per share   13.28    12.87    12.77    12.60    12.40 
Market value, closing price   10.37    10.45    17.56    15.46    15.80 
Dividends per share   .140    .140    .140    .140    .120 
                          
ASSET QUALITY RATIOS                         
                          
Nonperforming loans/total loans   .53%   .61%   .49%   .46%   .44%
Nonperforming assets/total assets   .55    .64    .56    .55    .51 
Allowance for loan losses/total loans   .46    .51    .50    .50    .50 
Allowance for loan losses/nonperforming loans   87.44    82.48    102.41    109.33    113.55 
Texas ratio   4.22    6.13    4.41    5.31    4.91 
                          
PROFITABILITY RATIOS                         
                          
Return on average assets   .93%   .93%   .97%   1.09%   1.11%
Return on average equity   8.58    7.54    8.09    9.25    9.40 
Net interest margin   4.51    4.60    4.39    4.39    4.76 
Average loans/average deposits   94.71    97.30    100.09    94.74    95.34 
                          
CAPITAL ADEQUACY RATIOS                         
                          
Tier 1 leverage ratio   9.45%   10.20%   10.09%   9.81%   9.74%
Tier 1 capital to risk weighted assets   13.27    12.89    12.71    12.39    12.20 
Total capital to risk weighted assets   13.79    13.41    13.22    12.90    12.72 
Average equity/average assets (for the quarter)   10.78    12.31    11.99    11.77    11.80 

 

 

v3.20.2
Cover
Jul. 30, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Jul. 30, 2020
Entity File Number 0-20167
Entity Registrant Name MACKINAC FINANCIAL CORPORATION
Entity Central Index Key 0000036506
Entity Tax Identification Number 38-2062816
Entity Incorporation, State or Country Code MI
Entity Address, Address Line One 130 SOUTH CEDAR STREET
Entity Address, City or Town MANISTIQUE
Entity Address, State or Province MI
Entity Address, Postal Zip Code 49854
City Area Code 888
Local Phone Number 343-8147
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol MFNC
Security Exchange Name NASDAQ
Entity Emerging Growth Company false