MANISTIQUE, MI -- (Marketwire) -- 05/02/12 -- Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for mBank (the "Bank"), today announced first quarter 2012 income of $.498 million or $.15 per share compared to net income of $.256 million, or $.07 per share for the first quarter of 2011. The Corporation's primary asset, mBank, recorded net income of $.800 million for the first quarter of 2012. The first quarter results include a provision for loan losses of $.495 million and negligible ORE writedowns and losses. Operating results for the same period in 2011 include no provision for loan losses, and $.467 million of ORE writedowns and losses.
Total shareholders' equity at March 31, 2012 totaled $56.095 million, compared to $54.097 million on March 31, 2011, an increase of $1.998 million, or 3.69%. Book value of common shareholders' equity was $13.19 per share at March 31, 2012 compared to $12.67 per share at March 31, 2011.
Weighted average shares outstanding totaled 3,419,736 for both periods. The common stock warrants outstanding of 379,310 shares were slightly dilutive, at approximately $.01 per share, for the 2012 first quarter, as the market value of our stock remained above the $4.35 strike price.
Some highlights for the first quarter include:
- Strong loan production, with loan balances increasing by $13.156 million. A good backlog of over $20 million of new loans has been adjudicated and is ready to close in the next 60 days. Some of these loans are SBA transactions which will lead to improved noninterest income levels for the next couple quarters.
- Improved net interest margin at 4.17% compared to 3.92% for the first quarter of 2011.
- Core deposit growth of $6.462 million.
- Secondary mortgage loan income of $.262 million, compared to $.079 million in the first quarter of 2011.
- Improved credit quality with a Texas Ratio of 16.84% compared to 24.96% one year ago.
Loans and Non-performing Assets
Total loans at March 31, 2012 were $414.402 million, a 10.62% increase from the $374.609 million at March 31, 2011 and up $13.156 million from year-end 2011 total loans of $401.246 million. Commenting on loan growth, Kelly W. George, President and CEO of mBank, stated, "We are seeing good loan opportunities in all of our markets, but are especially pleased with the resurgence of good commercial lending opportunities in Southeast Michigan, which bodes well for our organization and is a good economic indicator for the State of Michigan. We are also highly encouraged with the 1-4 family mortgage lending momentum continuing from late last year during a traditionally slow time of the year in our Northern markets. This should bode well for increased lending activities as we enter our peak mortgage lending periods within the late second and third quarters."
Nonperforming loans totaled $6.857 million, 1.65% of total loans at March 31, 2012 compared to $9.964 million, or 2.66% of total loans at March 31, 2011 and down $1.136 million from December 31, 2011. Nonperforming assets were reduced by $4.694 million from a year ago and stood at 2.04% of total assets. Total loan delinquencies resided at 1.17% or $4.8 million, almost solely made up of non-accrual commercial loans. George, commenting on credit quality, stated, "We believe that we will have further reductions of our nonperforming assets as the economy continues to improve and ORE properties become more marketable. Our nonperforming assets are manageable and our associated costs are now more in line with a normal business climate."
Margin Analysis
Net interest margin in the first quarter of 2012 increased to $4.763 million, 4.17%, compared to $4.141 million, or 3.92%, in the first quarter of 2011. The interest margin increase was largely due to decreased funding costs. George stated, "We expect some margin pressure as we progress through the year due to increased competition on pricing for new loans and renewals. More banks are now on the offense and we expect pricing to be very competitive."
Deposits
Total deposits of $412.088 million at March 31, 2012 increased by 2.82% from deposits of $400.783 million on March 31, 2011. Total deposits on March 31, 2012 deposits were up $7.299 million from year-end 2011 deposits of $404.789 million. The overall increase in deposits for the first three months of 2012 is comprised of an increase in noncore deposits of $.837 million and increased core deposits of $6.462 million. George, commenting on core deposits, stated, "We are now into the third full year of a low interest rate environment. Our liabilities have all repriced and we believe we are at the low point of this economic cycle. Our strategy going forward will focus on deposit retention and further reduction of interest rate risk."
Noninterest Income/Expense
Noninterest income, at $.606 million in the first quarter of 2012, increased $.029 million from the first quarter 2011 level of $.577 million with the largest drivers of this income coming from the secondary market mortgage area, which totaled $.298 million in the first quarter.
Noninterest expense, at $3.834 million in the first quarter of 2012, decreased $.225 million, or 5.54% from the first quarter of 2011. The Corporation continues to look for ways to control costs and remains below peer levels in terms of salary and benefits as a percentage of total assets residing at 1.58%.
Assets and Capital
Total assets of the Corporation at March 31, 2012 were $506.496 million, up 2.78 % from the $492.790 million reported at March 31, 2011 and up 1.64% from the $498.311 million of total assets at year-end 2011. Common Shareholders' equity at March 31, 2011 totaled $45.119 million, or $13.19 per share, compared to $43.340 million, or $12.67 per share on March 31, 2011. The Corporation and the Bank are both "well-capitalized" with Tier 1 Capital at the Corporation of 9.95% and 9.24% at the Bank.
Paul D. Tobias, Chairman and Chief Executive Officer, concluded, "We are pleased with our first quarter operating results. Our loan production is picking up and our pipeline is strong, which will lead to increased net interest income in future periods. Our credit quality continues to improve and we expect increased noninterest revenue, mainly from SBA/USDA loan sales later this year."
"Looking forward, we expect to complete our recently announced investment from the Steinhardt family and our common stock rights offering later in the second quarter. This will provide the funding necessary to eliminate our TARP preferred stock and the associated 379,310 common stock warrants which are substantially 'in the money.' This redemption and the access to the capital and the funding that accompanies an association with the Steinhardt's will be significant catalysts in the execution of our long-term strategic plan for franchise growth and increasing shareholder value."
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 11 branch locations; seven 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 March 31, December 31, March 31,
per share data) 2012 2011 2011
------------- ------------- -------------
(Unaudited) (Unaudited)
Selected Financial Condition
Data (at end of period):
Assets $ 506,496 $ 498,311 $ 492,790
Loans 414,402 401,246 374,609
Investment securities 36,788 38,727 37,543
Deposits 412,088 404,789 400,783
Borrowings 35,997 35,997 36,069
Common Shareholders' Equity 45,119 44,342 43,340
Shareholders' equity 56,095 55,263 54,097
Selected Statements of Income
Data:
Net interest income $ 4,763 $ 17,929 $ 4,141
Income before taxes and
preferred dividend 1,040 3,316 659
Net income 496 1,452 256
Income per common share - Basic .15 .42 .07
Income per common share -
Diluted .14 .41 .07
Weighted average shares
outstanding 3,419,736 3,419,736 3,419,736
Weighted average shares
outstanding- Diluted 3,524,953 3,500,204 3,419,736
Selected Financial Ratios and
Other Data:
Performance
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31, March 31,
2012 2011 2011
------------- ------------- -------------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 16,912 $ 20,071 $ 41,715
Federal funds sold 14,000 13,999 12,000
------------- ------------- -------------
Cash and cash equivalents 30,912 34,070 53,715
Interest-bearing deposits in
other financial institutions 10 10 734
Securities available for sale 36,788 38,727 37,543
Federal Home Loan Bank stock 3,060 3,060 3,423
Loans:
Commercial 318,810 311,215 287,760
Mortgage 81,953 83,106 81,404
Consumer 13,639 6,925 5,445
------------- ------------- -------------
Total Loans 414,402 401,246 374,609
Allowance for loan losses (5,382) (5,251) (6,184)
------------- ------------- -------------
Net loans 409,020 395,995 368,425
Premises and equipment 9,774 9,627 9,715
Other real estate held for sale 3,494 3,162 5,081
Deferred Tax Asset 7,958 8,427 8,773
Other assets 5,480 5,233 5,381
------------- ------------- -------------
TOTAL ASSETS $ 506,496 $ 498,311 $ 492,790
============= ============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES:
Deposits:
Noninterest bearing deposits $ 52,470 $ 51,273 $ 39,269
NOW, money market, interest
checking 151,614 152,563 154,420
Savings 13,601 14,203 17,691
CDs < $100,000 137,501 130,685 104,258
CDs > $100,000 24,066 23,229 21,803
Brokered 32,836 32,836 63,342
------------- ------------- -------------
Total deposits 412,088 404,789 400,783
Borrowings 35,997 35,997 36,069
Other liabilities 2,316 2,262 1,841
------------- ------------- -------------
Total liabilities 450,401 443,048 438,693
SHAREHOLDERS' EQUITY:
Preferred
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
---------------------------
2012 2011
------------- -------------
(Unaudited)
INTEREST INCOME:
Interest
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
March 31, December 31, March 31,
2012 2011 2011
------------- ------------- -------------
(Unaudited) (Unaudited) (Audited)
Commercial Loans:
Real estate - operators of
nonresidential buildings $ 78,769 $ 75,391 $ 58,132
Hospitality and tourism 33,452 33,306 35,016
Lessors of nonresidential
buildings 15,460 16,499 17,091
Real estate agents and managers 13,296 10,617 15,518
Other 155,717 155,657 138,565
------------- ------------- -------------
Total Commercial Loans 296,694 291,470 264,322
1-4 family residential real estate 81,953 77,332 75,663
Consumer 8,524 6,925 5,445
Construction
Commercial 22,116 19,745 23,438
Consumer 5,115 5,774 5,741
------------- ------------- -------------
Total Loans $ 414,402 $ 401,246 $ 374,609
============= ============= =============
Credit Quality (at end of period):
March 31, December 31, March 31,
2012 2011 2011
------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited)
Nonperforming Assets:
Nonaccrual loans $ 4,457 $ 5,490 $ 9,859
Loans past due 90 days or more - - -
Restructured loans 2,400 2,503 105
------------- ------------- -------------
Total nonperforming loans 6,857 7,993 9,964
Other real estate owned 3,494 3,162 5,081
------------- ------------- -------------
Total nonperforming assets $ 10,351 $ 11,155 $ 15,045
============= ============= =============
Nonperforming loans as a % of
loans 1.65% 1.99% 2.66%
------------- ------------- -------------
Nonperforming assets as a % of
assets 2.04% 2.24% 3.05%
------------- ------------- -------------
Reserve for Loan Losses:
At period end $ 5,382 $ 5,251 $ 6,184
------------- ------------- -------------
As a % of average loans 1.30% 1.35% 1.65%
------------- ------------- -------------
As a % of nonperforming loans 78.49% 65.69% 62.06%
------------- ------------- -------------
As a % of nonaccrual loans 120.75% 95.65% 62.72%
------------- ------------- -------------
Texas Ratio 16.84% 18.43% 24.96%
------------- ------------- -------------
Charge-off Information (year to
date):
Average loans $ 404,048 $ 388,115 $ 380,066
------------- ------------- -------------
Net charge-offs $ 364 $ 3,662 $ 429
------------- ------------- -------------
Charge-offs as a % of average
loans .10% .94% .11%
------------- ------------- -------------
QUARTER ENDED
(Unaudited)
March 31, December 31, September 30, June 30, March 31,
2012 2011 2011 2011 2011
---------- ---------- ---------- ---------- ----------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 414,402 $ 401,246 $ 391,903 $ 394,812 $ 374,609
Allowance for
loan losses (5,382) (5,251) (5,838) (6,155) (6,184)
---------- ---------- ---------- ---------- ----------
Total loans,
net 409,020 395,995 386,065 388,657 368,425
Intangible
assets - - - - -
Total assets 506,496 498,311 498,598 492,373 492,790
Core deposits 355,186 348,724 346,843 329,958 315,638
Noncore
deposits (1) 56,902 56,065 58,215 69,709 85,145
---------- ---------- ---------- ---------- ----------
Total deposits 412,088 404,789 405,058 399,667 400,783
Total
borrowings 35,997 35,997 35,997 36,069 36,069
Common
shareholders'
equity 45,119 44,342 44,613 43,973 43,340
Total
shareholders'
equity 56,095 55,263 55,479 54,784 54,097
Total shares
outstanding 3,419,736 3,419,736 3,419,736 3,419,736 3,419,736
AVERAGE
BALANCES
(Dollars in
thousands)
Assets $ 503,412 $ 487,304 $ 497,333 $ 494,481 $ 478,861
Loans 404,048 396,197 397,665 378,250 380,066
Deposits 409,250 390,940 403,957 401,549 386,743
Common Equity 44,469 44,325 44,105 43,354 43,138
Equity 55,418 55,219 54,998 54,138 53,870
INCOME
STATEMENT
(Dollars in
thousands)
Net interest
income $ 4,763 $ 4,901 $ 4,709 $ 4,178 $ 4,141
Provision for
loan losses 495 1,300 400 600 -
---------- ---------- ---------- ---------- ----------
Net interest
income after
provision 4,268 3,601 4,309 3,578 4,141
Total
noninterest
income 606 725 1,006 1,348 577
Total
noninterest
expense 3,834 4,221 3,960 3,729 4,059
---------- ---------- ---------- ---------- ----------
Income before
taxes 1,040 105 1,355 1,197 659
Provision for
income taxes 349 27 455 402 214
---------- ---------- ---------- ---------- ----------
Net income 691 78 900 795 445
---------- ---------- ---------- ---------- ----------
Preferred
dividend
expense 193 192 193 192 189
---------- ---------- ---------- ---------- ----------
Net income
(loss)
available to
common
shareholders $ 498 $ (114) $ 707 $ 603 $ 256
========== ========== ========== ========== ==========
PER SHARE DATA
Earnings $ .15 $ (.03) $ .21 $ .18 $ .07
Book value per
common share 13.19 12.97 13.05 12.86 12.67
Market value,
closing price 7.00 5.42 5.46 6.00 6.02
ASSET QUALITY
RATIOS
Nonperforming
loans/total
loans 1.65% 1.99% 2.47% 2.39% 2.66%
Nonperforming
assets/total
assets 2.04 2.24 2.99 2.89 3.05
Allowance for
loan
losses/total
loans 1.30 1.31 1.49 1.56 1.65
Allowance for
loan
losses/nonper-
forming loans 78.49 65.69 60.35 65.19 62.06
Texas ratio (2) 16.84 18.43 24.28 23.38 24.96
PROFITABILITY
RATIOS
Return on
average assets .40% (.09)% .56% .49% .22%
Return on
average common
equity 4.53 (1.02) 6.35 5.58 2.40
Return on
average equity 3.62 (.82) 5.10 4.47 1.92
Net interest
margin 4.17 4.38 4.14 3.79 3.92
Efficiency
ratio 71.01 69.04 67.39 67.84 75.73
Average
loans/average
deposits 98.73 101.34 98.44 94.20 98.27
CAPITAL
ADEQUACY
RATIOS
Tier 1 leverage
ratio 9.95% 10.08% 9.73% 9.50% 9.70%
Tier 1 capital
to risk
weighted
assets 11.55 11.62 11.65 11.40 11.61
Total capital
to risk
weighted
assets 12.80 12.87 12.97 12.66 12.86
Average
equity/average
assets 11.01 11.33 11.06 10.95 11.25
Tangible
equity/tangible
assets 11.01 11.33 11.06 10.95 11.25
(1) Noncore deposits includes Internet CDs, brokered deposits and CDs
greater than $100,000
(2) Texas ratio equals nonperforming assets divided by shareholders' equity
plus allowance for loan losses
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Contact:
Investor Relations
(888) 343-8147
Website: www.bankmbank.com