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Mackinac Financial Corporation Reports 2016 Fourth Quarter and Annual Results

Manistique, Michigan – Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2016 net income of $4.48 million, or $.72 per share, compared to net income $5.60 million, or $.90 per share, in 2015. The 2016 results include expenses related to the acquisitions of Niagara Bancorporation, Inc. (“Niagara”) and First National Bank of Eagle River (“Eagle River”). Year-to-date transaction related expenses, largely associated with the early termination of the Eagle River data processing system, totaled $3.10 million with an after-tax impact of $2.05 million on earnings that equated to $.33 per share. Adjusted core net income (exclusive of all transaction-related expenses) for 2016 was $6.53 million, or $1.05 per share.

Net income for the fourth quarter ended December 31, 2016 increased 6.6% to $1.70 million, or $0.27 per share, compared to $1.60 million, or $0.26 per share, in the prior year period. Acquisition-related expenses of $.18 million in the fourth quarter reduced net income by $.11 million, or $0.02 per share, on an after tax basis. The adjusted core net income for the fourth quarter of 2016 (exclusive of all transaction related expenses) was $1.81 million, or $0.29 per share. No further transaction related expenses are anticipated from Eagle River or Niagara in 2017.

mBank, the Corporation’s primary asset, recorded net income of $6.05 million in 2016, compared to $6.94 million, in 2015. Acquisition-related expenses totaled $2.66 million, with an after-tax impact of $1.75 million. Adjusted core net income (exclusive of all transaction-related expenses) for 2016 was $7.80 million.

Total assets of the Corporation at December, 31 2016 were $983.52 million, compared to $739.27 million at December 31, 2015. Shareholders’ equity at December 31, 2016 totaled $78.61 million, compared to $76.60 million at December 31, 2015. The book value per share equated to $12.55 compared to $12.32 per share a year ago. Year-end tangible book value was $11.29 per share and the per share market price was $13.47, or 119%. Weighted average shares outstanding totaled 6,236,067 for year-end 2016 compared to 6,241,921 for the same period in 2015.

Key highlights for the 2016 results include:
  • The 2016 acquisitions of Niagara and Eagle River added approximately $194 million in assets, $115 million in loan balances and $163 million in core deposits to the Corporation. Since the December 2014 Peninsula Financial Corporation acquisition, the Corporation has grown assets, including organic growth, approximately $370 million from $613.94 million to the current $983.52 million, an increase of 60%.
  • Total interest income of $37.98 million for 2016 compared to $33.51 million for the same period in 2015.
  • Total new loan production for 2016 was $301.9 million versus $234.70 million for the same period in 2015, an increase of $67.20 million, or 29%.
  • Net Interest Margin remains very good at 4.19%. Net interest income before loan provisions increased from $29.12 million in 2015 to $33.10 million in 2016, a 14% increase.
  • Credit quality at the bank remains strong with a Texas Ratio of 11.76% compared to 6.34% one year ago, and nonperforming assets of $8.91 million, or .91% of total assets, compared to $4.86 million, or .66 % of total assets, for the same period in 2015. The change in credit quality metrics is predominately due to the acquired loan portfolios of Eagle River and Niagara. The Corporation’s pre-transaction diligence has been accurate to date as to the purchase accountings marks associated with both loan portfolios, and management remains comfortable with the overall carrying values.
  • Increased contribution from secondary mortgage market activity with loans totaling $53.2 million. 2016 Income from this source totaled $1.58 million compared to $1.07 million for 2015, equating to an increase of 47% in overall production.
  • Gains on sold SBA (Small Business Administration) loan premiums for 2016 were $.90 million compared to $.61 million for the same period of 2015.

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