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Mackinac Financial Corporation Reports 2019 Second Quarter Results

Manistique, Michigan – Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2019 second quarter net income of $3.67 million, or $.34 per share, compared to 2018 second quarter net income of $396 thousand, or $.05 per share. The 2018 second quarter results included expenses related to the acquisition of First Federal of Northern Michigan (“FFNM”), which had an after-tax impact of $1.56 million on earnings. Adjusted net income (net of transaction related expenses) for the second quarter of 2018 was $1.96 million or $.25 per share. Second quarter 2019 net income compared to 2018 adjusted net income increased by $1.71 million, or 87%.

Income for the first two quarters of 2019 was $6.84 million, or $.64 per share, compared to $1.93 million, or $.27 per share for the same period of 2018. When giving effect to transaction related expenses, adjusted six-month net income for 2018 was $3.64 million or $.50 per share.

Weighted average shares outstanding for the second quarter 2019 were 10,740,712, compared to 7,769,720 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 related to the common stock offering completed in June 2018.

Total assets of the Corporation at June 2019 were $1.33 billion, compared to $1.27 billion at June 30, 2018. Shareholders’ equity at June 30, 2019 totaled $157.84 million, compared to $148.87 million at June 30, 2018. Book value per share equated to $14.70 at the end of the second quarter 2019, compared to $13.90 per share a year ago. Tangible book value at quarter-end was $133.24 million, or $12.40 per share, compared to $123.97 million, or $11.57 per share at the end of the second quarter 2018.

Additional notes:

  • mBank, the Corporation’s primary asset, recorded year-to-date net income of $7.37 million for the first six months of 2019, compared to $3.25 million for the same period of 2018. The 2018 six-month results included expenses related to the acquisition of FFNM, which had an after-tax impact of $1.23 million on earnings. Adjusted bank net income (net of transaction related expenses) for the first half of 2018 was $4.48 million, equating to a year-over-year increase of $2.89 million, or 65%. The increase in net income equated to an improvement in Return on Average Assets at the bank from .63% (.86% as adjusted) for the first six months of 2018 to 1.13% for the same period of 2019.
  • The Corporation achieved loan growth of $21.84 million through June 30, 2019. As expected, the majority of this growth occurred in the second quarter. The growth was driven by new loan production of $184.5 million in the first half of 2019 comprised of $81.4 million in the first quarter and $103.1 million in the second quarter. New loan production was $59.0 million for the second quarter of 2018 and $103.9 million in the first six months of 2018.
  • Total core bank deposits have increased $42.08 million in the first six months of 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 $151.68 million, or 14.94% of total deposits at the end of the second quarter 2018 to $136.76 million, or 12.46% of total deposits at year-end 2018, to a second quarter 2019 balance of $114.10 million, or 10.23% of total deposits.
  • Second quarter 2019 net interest margin remained strong at 4.76%. Core operating margin for the second quarter, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and a small amount of interest income recognized from the resolution of some non-accrual loans, was 4.43%.
  • The Corporation was added to the Russell 2000 Index in June 2019 when the index finalized its annual reconstitution.
 
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