Mackinac Financial Corporation Reports Second Quarter and Six Months 2008 Results
SOURCE:
Mackinac Financial Corporation
2008-07-30 14:18:00
MANISTIQUE, MI–(EMWNews – July 30, 2008) – Mackinac Financial Corporation (
second quarter 2008 income of $1.769 million or $.52 per share compared to
net income of $.546 million, or $.16 per share for the second quarter of
2007. Net income for the first six months of 2008 totaled $1.908 million,
or $.56 per share, compared to $1.581 million, or $.46 per share, for the
same period in 2007. Book value as of June 30, 2008 is $11.98 per share, an
increase of $2.23 per share since the recapitalization, which was priced at
$9.75 per share in December of 2004.
The quarter and six month results for 2008 include the positive effect,
$3.475 million, of a lawsuit settlement, the negative effects, $.425
million, of a severance agreement and a $.750 million loan loss provision.
The results of operations for the first six months of 2007 include $470,000
of proceeds from the settlement of a lawsuit against the Corporation’s
former accountants.
Weighted average shares totaled 3,424,314 year to date and 3,419,933 for
the second quarter in 2008 compared to 3,428,695 for both periods in 2007.
Paul Tobias, Chairman and Chief Executive Officer, commented, “Our business
model has been to leverage our Upper Peninsula loan and deposit base while
building a franchise in Southeast Michigan. In the past two years, our
ability to make loans has outpaced our ability to raise deposits in Oakland
County. This imbalance has caused us to use wholesale deposits as a
funding source. Changes in interest rates in late 2007 and early 2008
caused our net interest margin to shrink. We are making progress in
growing our base of demand accounts, but this effort will take time. Along
with progress in this area, we are pleased to report the following:
— With two exceptions in Southeast Michigan, our asset quality remains
good
— We have been successful repricing and increasing our loan spreads when
loans renew
— A large majority of our loans and deposits remain in the Upper Peninsula
of Michigan, which continues to grow and present relationship
opportunities.
— We are fortunate that the proceeds of the above mentioned lawsuit will
substantially offset the negative impact of falling interest rates on our
net interest margin, but this is a onetime benefit.
While we continue to work on growing our base of deposit customers, we are
also focused on lowering our cost of doing business. To date in 2008,
management has acted to lower the annual run rate of personnel and other
operating expenses by approximately $.750 million.”
The net interest margin in the second quarter was 3.19%, a modest
improvement of 6 basis points from the first quarter of 2008. The net
interest margin, due to our asset sensitive position, was significantly
impacted by lower rates in the first six months of 2008, as reflected in a
36 basis point decline from the fourth quarter of 2007 interest margin of
3.55%.
Total assets of the Corporation at June 30, 2008 were $437.327 million, up
$44.008 million, or 11.19% from the $393.319 million in total assets
reported at June 30, 2007 and up $28.447 million, or 6.96%, from total
assets of $408.880 million at year-end 2007. Asset balances as of June 30,
2008 reflect increased balances of short term investments of $19.318
million for added liquidity.
Loans at June 30, 2008 totaled $362.122 million, a 6.85% increase from the
$338.896 million at June 30, 2007, and an increase of $7.043 million, or
1.98%, from year-end loans of $355.079 million. Tobias stated, “Loan
growth in the first half was retarded by large paydowns amounting to $9.2
million, along with normal loan principal reductions of $15.3 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 $34.2 million. Also worth noting is the number of
new loan opportunities, approximately 50% of total production, we have seen
in the Upper Peninsula. We are especially pleased with the economic
development in and around Marquette County, where we currently have two
branch office locations. In general, the Upper Peninsula has not
experienced the economic downturn and collateral deterioration that has
occurred elsewhere in Michigan. In Marquette and the western Upper
Peninsula, we are experiencing growth opportunities.”
Total deposits of $356.976 million at June 30, 2008 were up 11.12% from
deposits of $321.246 million on June 30, 2007. Deposits were up $36.149
million, or 11.27% from year-end 2007 deposits of $320.827 million. Total
2008 deposit growth reflects increases in noncore funding of $35.665
million and increases in core deposits of $.484 million, or 2.42%.
Nonperforming assets at the end of the second quarter of 2008 totaled
$8.008 million, 1.83% of total assets, an increase of $2.774 million from
2007 year end balances. This 2008 increase in nonperforming assets is not
indicative of significant deterioration in portfolio credit quality and is
still relatively low by comparative peer standards. Tobias, commenting on
credit quality, stated, “The increase in our nonperforming assets is the
result of two large credit relationships from Southeastern Michigan which
we believe were impacted by the market and the regional economy. While we
feel comfortable with our loan loss reserve, the rapid deterioration in
borrower collateral values that we witnessed in the credits mentioned above
has caused us to take a very cautious stance in the market place and to
increase our monitoring efforts. To that end, we reorganized our credit
staffing in Southeastern Michigan and increased our loan committee
oversight of the credit decision making process. Our quarter end numbers
are a reflection of this process, and we intend to manage our nonperforming
assets in order to limit carrying costs and further collateral
deterioration by aggressive disposition.”
Shareholders’ equity at June 30, 2008 totaled $40.975 million, or $11.98
per share, compared to $30.485 million, or $8.89 per share on June 30,
2007. Tobias commented, “Since the recapitalization in December 2004, the
Corporation has increased book value from $9.75 to $11.98 per share, or
22.9%. We cannot control the market value of our shares but we believe
that we can continue to grow the book value of your company, and as we
execute our plan, the market will correctly value the company based upon
both book value and core earnings multiples.”
Tobias concluded, “We are proud of our performance in these troubled times.
While we have had some credit deterioration, we believe it is controlled
and reserved for and that the aggregate levels of nonperformers and the
potential future provision risk is small when compared to peers and the
banking industry in general. While our business model is currently overly
reliant on purchased CDs, we are focused on core deposit growth, and we
expect the mix to change.”
Mackinac Financial Corporation is a registered bank holding company formed
under the Bank Holding Company Act of 1956 with assets in excess of $400
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 12 branch locations; eight
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
----------------------------------------
June 30, December 31, June 30,
2008 2007 2007
------------ ----------- -----------
(Unaudited) (Unaudited)
Selected Financial Condition Data
(at end of period):
Total assets $ 437,327 $ 408,880 $ 393,319
Total loans 362,122 355,079 338,896
Total deposits 356,976 320,827 321,246
Borrowings and subordinated
debentures 36,280 45,949 38,307
Total shareholders' equity 40,975 39,321 30,485
Selected Statements of Income Data
(six months and year ended):
Net interest income $ 6,163 $ 13,417 $ 6,447
Income before taxes 2,808 2,923 1,581
Net income 1,908 10,163 1,581
Income per common share - Basic .56 2.96 .46
Income per common share - Diluted .56 2.96 .46
Three Months Ended:
Net interest income $ 3,118 $ 3,410 $ 3,269
Income before taxes 2,644 787 546
Net income 1,769 527 546
Income per common share - Basic .52 .15 .16
Income per common share - Diluted .52 .15 .16
Selected Financial Ratios and
Other Data (six months and year
ended):
Performance Ratios:
Net interest margin 3.16% 3.60% 3.57%
Efficiency ratio 91.85 79.46 82.79
Return on average assets .92 2.59 .84
Return on average equity 9.61 31.05 10.68
Average total assets $ 417,964 $ 392,313 $ 381,238
Average total shareholders' equity $ 39,945 $ 32,731 $ 29,836
Average loans to average deposits
ratio 107.72% 104.94% 103.84%
Common Share Data (at end of
period):
Market price per common share $ 7.00 $ 8.98 $ 9.45
Book value per common share $ 11.98 $ 11.47 $ 8.89
Common shares outstanding 3,419,736 3,428,695 3,428,695
Weighted average shares
outstanding 3,424,314 3,428,695 3,428,695
Other Data (at end of period):
Allowance for loan losses $ 3,585 $ 4,146 $ 4,920
Non-performing assets $ 8,008 $ 5,234 $ 5,126
Allowance for loan losses to total
loans .99% 1.17% 1.45%
Non-performing assets to total
assets 1.83% 1.28% 1.30%
Number of:
Branch locations 12 12 13
FTE Employees 96 100 106
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31, June 30,
(Dollars in thousands) 2008 2007 2007
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 7,115 $ 6,196 $ 7,518
Federal funds sold 19,274 166 3,489
----------- ----------- -----------
Cash and cash equivalents 26,389 6,362 11,007
Interest-bearing deposits in other
financial institutions 387 1,810 3,687
Securities available for sale 23,230 21,597 24,086
Federal Home Loan Bank stock 3,794 3,794 3,794
Loans:
Commercial 292,645 288,839 274,783
Mortgage 65,869 62,703 60,575
Installment 3,608 3,537 3,538
----------- ----------- -----------
Total Loans 362,122 355,079 338,896
Allowance for loan losses (3,585) (4,146) (4,920)
----------- ----------- -----------
Net loans 358,537 350,933 333,976
Premises and equipment 11,377 11,609 12,471
Other real estate held for sale 3,395 1,226 77
Other assets 10,218 11,549 4,221
----------- ----------- -----------
TOTAL ASSETS $ 437,327 $ 408,880 $ 393,319
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 27,741 $ 25,557 $ 28,811
Interest-bearing deposits:
NOW, Money Market, Checking 78,703 81,160 73,994
Savings 15,171 12,485 12,422
CDs < $100,000 78,678 80,607 96,546
CDs > $100,000 28,252 22,355 24,879
Brokered 128,431 98,663 84,594
----------- ----------- -----------
Total deposits 356,976 320,827 321,246
Borrowings:
Federal funds purchased - 7,710 -
Short-term - 1,959 -
Long-term 36,280 36,280 38,307
----------- ----------- -----------
Total borrowings 36,280 45,949 38,307
Other liabilities 3,096 2,783 3,281
----------- ----------- -----------
Total liabilities 396,352 369,559 362,834
Shareholders' equity:
Preferred stock - No par value:
Authorized 500,000 shares,
no shares outstanding
Common stock and additional
paid-in capital - No par value
Authorized - 18,000,000 shares
Issued and outstanding -
3,419,736; 3,428,695;
and 3,428,695 shares,
respectively 42,773 42,843 42,780
Accumulated deficit (1,672) (3,582) (12,162)
Accumulated other
comprehensive income (loss) (126) 60 (133)
----------- ----------- -----------
Total shareholders' equity 40,975 39,321 30,485
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 437,327 $ 408,880 $ 393,319
=========== =========== ===========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share Three Months Six Months
data) Ended Ended
June 30, June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable $ 5,604 $ 6,448 $ 11,704 $ 12,681
Tax-exempt 102 143 210 314
Interest on securities:
Taxable 271 293 537 594
Tax-exempt 2 - 3 -
Other interest income 81 166 170 366
-------- -------- -------- --------
Total interest income 6,060 7,050 12,624 13,955
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 2,551 3,267 5,616 6,489
Borrowings 391 514 845 1,019
-------- -------- -------- --------
Total interest expense 2,942 3,781 6,461 7,508
-------- -------- -------- --------
Net interest income 3,118 3,269 6,163 6,447
Provision for loan losses 750 - 750 -
-------- -------- -------- --------
Net interest income after provision
for loan losses 2,368 3,269 5,413 6,447
-------- -------- -------- --------
OTHER INCOME:
Service fees 194 185 368 346
Net security gains - - 65 -
Net gains on sale of secondary
market loans 49 91 97 199
Proceeds from lawsuit settlements 3,475 - 3,475 470
Other 29 66 52 240
-------- -------- -------- --------
Total other income 3,747 342 4,057 1,255
-------- -------- -------- --------
OTHER EXPENSES:
Salaries and employee benefits 2,075 1,672 3,882 3,410
Occupancy 348 327 703 661
Furniture and equipment 190 166 368 323
Data processing 216 210 437 381
Professional service fees 79 174 232 325
Loan and deposit 144 79 254 151
Telephone 39 59 84 117
Advertising 60 91 120 183
Other 320 287 582 570
-------- -------- -------- --------
Total other expenses 3,471 3,065 6,662 6,121
-------- -------- -------- --------
Income before provision for income taxes 2,644 546 2,808 1,581
Provision for (benefit of) income taxes 875 - 900 -
-------- -------- -------- --------
NET INCOME $ 1,769 $ 546 $ 1,908 $ 1,581
======== ======== ======== ========
INCOME PER COMMON SHARE:
Basic $ .52 $ .16 $ .56 $ .46
======== ======== ======== ========
Diluted $ .52 $ .16 $ .56 $ .46
======== ======== ======== ========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
June 30, December 31, June 30,
2008 2007 2007
---------- ---------- ----------
Commercial Loans
Real estate - operators of nonresidential
buildings $ 41,778 $ 41,597 $ 41,662
Hospitality and tourism 35,053 37,604 37,286
Real estate agents and managers 27,495 29,571 31,937
New car dealers 10,716 10,569 10,270
Other 148,539 130,546 117,058
---------- ---------- ----------
Total Commercial Loans 263,581 249,887 238,213
1-4 family residential real estate 60,882 57,613 55,090
Consumer 3,608 3,537 3,538
Construction
Commercial 29,064 38,952 36,570
Consumer 4,987 5,090 5,485
---------- ---------- ----------
Total Loans $ 362,122 $ 355,079 $ 338,896
========== ========== ==========
Credit Quality (at end of period):
June 30, December 31, June 30,
2008 2007 2007
--------- --------- ---------
Nonperforming Assets:
Nonaccrual loans $ 4,613 $ 3,298 $ 4,758
Loans past due 90 days or more - 710 291
--------- --------- ---------
Total nonperforming loans 4,613 4,008 5,049
Other real estate owned 3,395 1,226 77
--------- --------- ---------
Total nonperforming assets $ 8,008 $ 5,234 $ 5,126
========= ========= =========
Nonperforming loans as a % of loans 1.27% 1.13% 1.49%
--------- --------- ---------
Nonperforming assets as a % of assets 1.83% 1.28% 1.30%
--------- --------- ---------
Reserve for Loan Losses:
At period end $ 3,585 $ 4,146 $ 4,920
--------- --------- ---------
As a % of average loans 1.00% 1.24% 1.53%
--------- --------- ---------
As a % of nonperforming loans 77.72% 103.44% 97.45%
--------- --------- ---------
As a % of nonaccrual loans 77.72% 125.71% 103.41%
========= ========= =========
Charge-off Information (year to date):
Average loans 360,176 333,415 321,414
--------- --------- ---------
Net charge-offs 1,310 1,260 86
--------- --------- ---------
Charge-offs as a % of average loans .36% .38% .03%
--------- --------- ---------
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
QUARTER ENDED
-----------------------------------------------------
(Unaudited)
-----------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
--------- --------- --------- --------- ---------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 362,122 $ 360,056 $ 355,079 $ 344,149 $ 338,896
Allowance for loan
losses (3,585) (3,924) (4,146) (5,022) (4,920)
--------- --------- --------- --------- ---------
Total loans, net 358,537 356,132 350,933 339,127 333,976
Intangible assets 85 104 124 143 163
Total assets 437,327 417,175 4,088,880 401,213 393,319
Core deposits 200,293 203,445 199,809 218,638 211,773
Noncore deposits (1) 156,683 122,602 121,018 102,733 109,473
--------- --------- --------- --------- ---------
Total deposits 356,976 326,047 320,827 321,371 321,246
Total borrowings 36,280 48,849 45,949 38,239 38,307
Total shareholders'
equity 40,975 39,633 39,321 38,697 30,485
Total shares
outstanding 3,419,736 3,428,695 3,428,695 3,428,695 3,428,695
AVERAGE BALANCES
(Dollars in
thousands)
Assets $ 418,246 $ 417,682 $ 406,308 $ 400,105 $ 382,065
Loans 362,574 357,778 350,050 340,391 324,721
Deposits 332,725 336,016 324,194 327,293 309,469
Equity 40,399 39,491 38,973 32,184 30,412
INCOME STATEMENT
(Dollars in
thousands)
Net interest income $ 3,118 $ 3,045 $ 3,410 $ 3,560 $ 3,269
Provision for loan
losses 750 - - 400 -
--------- --------- --------- --------- ---------
Net interest
income after
provision 2,368 3,045 3,410 3,160 3,269
Total noninterest
income 3,747 310 355 396 342
Total noninterest
expense 3,471 3,191 2,978 3,001 3,065
--------- --------- --------- --------- ---------
Income before taxes 2,644 164 787 555 546
Provision for income
taxes 875 25 260 (7,500) -
--------- --------- --------- --------- ---------
Net income $ 1,769 $ 139 $ 527 $ 8,055 $ 546
========= ========= ========= ========= =========
PER SHARE DATA
Earnings - basic $ .52 $ .04 $ .15 $ 2.35 $ .46
Earnings - diluted .52 .04 .15 2.35 .46
Book value 11.98 11.56 11.47 11.29 8.89
Market value,
closing price 7.00 8.50 8.98 8.75 9.45
ASSET QUALITY RATIOS
Nonperforming
loans/total loans 1.27% 0.94% 1.13% .92% 1.49%
Nonperforming
assets/total assets 1.83 1.08 1.28 .90 1.30
Allowance for loan
losses/total loans .99 1.09 1.17 1.46 1.45
Allowance for loan
losses/nonperforming
loans 77.22 116.06 103.42 158.32 97.45
PROFITABILITY RATIOS
Return on average
assets 1.70% 0.13% .51% 7.99% .57%
Return on average
equity 17.62 1.42 5.36 99.30 7.20
Net interest margin 3.19 3.13 3.55 3.71 3.60
Efficiency ratio 88.45 95.34 78.02 74.71 83.21
Average loans/
average deposits 108.97 106.48 107.98 104.00 104.93
CAPITAL ADEQUACY RATIOS
Leverage ratio 8.56% 7.85% 8.05% 8.03% 7.97%
Tier 1 capital ratio 9.48 8.84 8.97 9.03 8.85
Total capital ratio 10.45 9.92 10.13 10.28 10.10
Average equity/
average assets 9.66 9.45 9.59 8.04 7.96
Tangible equity/
tangible assets 9.35 9.48 9.59 9.61 7.71
(1) Noncore deposits includes Internet CDs, brokered deposits and CDs
greater than $100,000
| Contact: Investor Relations (888) 343-8147 Website: www.bankmbank.com |
|
Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89
Get Unlimited Organic Website Traffic to your Website
TheNFG.com now offers Organic Lead Generation & Traffic Solutions
