Manistique, Michigan – Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2019 net income of $13.85 million, or $1.29 per share, compared to 2018 net income of $8.37 million, or $.94 per share.
The 2019 results include the effects of a $140 thousand one-time non-cash amortization related to an acquired tax credit impacting tax expense (and tax rate). The 2018 results included expenses related to the acquisitions of First Federal of Northern Michigan (“FFNM”), and Lincoln Community Bank (“Lincoln”), which had a collective after-tax impact of $2.46 million on earnings. Adjusted core income (net of the one-time non-cash expense) for 2019 was $13.99 million, or $1.30 per share compared to 2018 adjusted core income (net of the transaction related expense) of $10.83 million, or $1.22 per share.
Weighted average shares outstanding for 2019 were 10,737,653 compared to 8,891,967 for 2018. Weighted average shares outstanding for the fourth quarter 2019 were 10,748,712 compared to 10,712,745 for the same period of 2018. The Corporation issued 2,146,378 new shares for the FFNM purchase in May, 2018 and issued an additional 2,225,807 shares in the common stock offering completed in June, 2018.
The Corporation had fourth quarter 2019 net income of $3.30 million, or $.31 per share, compared to 2018 fourth quarter net income of $3.36 million, or $.31 per share. The 2019 fourth quarter results include the effects of the $140 thousand one-time non-cash amortization of an acquired tax credit. The 2018 fourth quarter results were impacted by acquisition related expenses of $386 thousand on an after-tax basis. Adjusted core income (net of the one-time expenses) for the fourth quarter 2019 was $3.44 million, or $.32 per share, while 2018 fourth quarter income, excluding tax-affected transaction related expenses, was $3.75 million, or $.35 per share.
Total assets of the Corporation at December 31, 2019 were $1.32 billion, compared to $1.32 billion at December 31, 2018. Shareholders’ equity at December 31, 2019 totaled $161.92 million, compared to $152.07 million at December 31, 2018. Book value per share outstanding equated to $15.06 at year-end 2019, compared to $14.20 per share outstanding a year ago. Tangible book value at year-end 2019 was $137.30 million, or $12.77 per share outstanding compared to $124.33 million, or $11.61 per share, at year-end 2018.
- mBank, the Corporation’s primary asset, recorded net income of $15.07 million in 2019, which resulted in an ROAA of 1.13%, compared to $9.04 million in 2018. Bank-level income was also impacted by the one-time $140 thousand tax credit amortization. In December, 2018, mBank had an internal tax allocation expense between it and the Corporation (MFNC) of $1.34 million. Adjusted core net income for 2019 was $15.21 million, compared to 2018 adjusted core net income (including total adjustments for the tax reallocation and transaction related expenses of $3.16 million on an after-tax basis) of $12.20 million. Adjusted bank core net income grew approximately 25% resulting in adjusted ROAA of 1.16% for 2019.
- Strong bank deposit activity drove increases of $56.28 million (or 5.9%) in 2019 through more proactive sales activity in the Treasury Management line of business and increased marketing efforts in key retail markets.
- Reliance on higher-cost brokered deposits continues to decrease significantly from $136.76 million, or 12.46% of total deposits at year-end 2018, to $58.62 million, or 5.44% of total deposits at year-end 2019.
- Overall new loan production for 2019 was $385.55 million, compared to $286.88 million for 2018, an increase of $98.67 million, or 34%.
- Fourth quarter 2019 net interest margin remained solid at 4.39%. Core operating margin for the fourth quarter, which is net of accretive yield from purchase accounting treatment on acquired loans (“accretion”), was 4.23%.