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:
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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.