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Mackinac Financial Corporation Reports 2019 Third Quarter Results

Manistique, Michigan – Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2019 third quarter net income of $3.72 million, or $.35 per share, compared to 2018 third quarter net income of $3.07 million, or $.29 per share. The 2018 third quarter results included expenses related to the acquisitions of First Federal of Northern Michigan (“FFNM”) and Lincoln Community Bank (“Lincoln”), which had an after-tax impact of $276 thousand on earnings. Adjusted net income (net of transaction related expenses) for the third quarter of 2018 was $3.35 million or $.31 per share. Third quarter 2019 net income, compared to 2018 third quarter adjusted net income, increased by $373 thousand, or 11%.

Net income for the first three quarters of 2019 was $10.56 million, or $.98 per share, compared to $5.00 million, or $.60 per share for the same period of 2018. When giving effect to after-tax transaction related expenses of $2.08 million for the first three quarters, adjusted nine-month net income for 2018 was $7.08 million, or $.85 per share. The year-over-year increase in net income for the first three quarters was $3.47 million, or 49% when giving effect to the transaction expenses in 2018.

Total assets of the Corporation at September 30, 2019 were $1.36 billion, compared to $1.25 billion at September 30, 2018. Weighted average shares outstanding for the third quarter of 2019 were 10,740,712, compared to 10,712,745 for the same period of 2018. Shareholders’ equity at September 30, 2019 totaled $160.17 million, compared to $149.37 million at September 30, 2018. Book value per share equated to $14.91 at the end of the third quarter 2019, compared to $13.94 per share a year ago. Tangible book value at quarter-end was $135.38 million, or $12.60 per share, compared to $124.61 million, or $11.63 per share, at the end of the third quarter 2018.

Additional notes:

  • mBank, the Corporation’s primary asset, recorded year-to-date net income of $11.33 million for the first nine months of 2019, compared to $6.73 million for the same period of 2018. The 2018 nine-month results included expenses related to the acquisition of FFNM and Lincoln, which had an after-tax impact of $1.47 million on earnings. Adjusted bank net income (net of transaction related expenses) for the first three quarters of 2018 was $8.20 million, equating to a year-over-year increase of $3.13 million, or 38%. The increase in net income equated to an improvement in Return on Average Assets at the bank from .80% (.97% as adjusted) for the first nine months of 2018 to 1.14% for the same period of 2019.
  • On August 28, 2019 the Corporation announced a common stock repurchase program authorizing the buyback of up to 5% of outstanding MFNC shares. There is no guarantee as to the exact number of shares, if any, that will be repurchased by the Corporation, and the Corporation may discontinue purchases at any time that management determines additional purchases are not warranted. The Board’s approval of this program reflects its confidence in the Corporation’s intrinsic value. Repurchasing stock is one means of underscoring the Corporation’s commitment to enhancing shareholder value and it is a tool for proactive capital management.
  • On September 17, 2019 the Corporation’s board of directors declared a cash dividend of $.14 per common share for the third quarter of 2019. The dividend was an increase of $.02 per share from the prior quarter’s dividend and represents a 17% increase in the annualized dividend from $.48 per share to $.56 per share.
  • Total core bank deposits have increased $74.30 million (or 7.7%) in the first nine months of 2019 through more proactive sales activity in the treasury management line of business and increased marketing efforts in key retail markets where the Corporation has achieved some success in obtaining high value clients.
  • 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 a second quarter 2019 balance of $114.10 million, or 10.23% of total deposits, to $78.50 million, or 6.57% of total deposits as of the end of the third quarter of 2019.
  • Third quarter 2019 net interest margin remained solid at 4.39%. Core operating margin for the third quarter, which is net of accretive yield from purchase accounting treatment on acquired loans (“accretion”), was 4.26%.
 
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