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Mackinac Financial Corporation Reports 2020 First Quarter Results and Provides COVID-19 Update

Manistique, Michigan – Reflecting on this quarter and moving forward into 2020, we first acknowledge how the COVID-19 pandemic has impacted the daily operations and the lives of all our employees and clients in a swift and uncertain manner. Mackinac Financial Corporation (Nasdaq: MFNC) (“we”, or the “Corporation”) the bank holding company for mBank (“the Bank”), continues to actively work to assist its staff members, clients, communities and shareholders during this challenging time. In addition to the customary earnings discussion, further information about the Corporation’s COVID-19 pandemic response and ongoing monitoring is contained throughout the release.

The Corporation today announced 2020 first quarter net income of $3.05 million, or $.28 per share, compared to 2019 first quarter net income of $3.17 million, or $.30 per share. Weighted average shares outstanding for the first quarter of 2020 were 10,717,967 compared to 10,720,127 for the same period of 2019.

Total assets of the Corporation at March 31, 2020 were $1.36 billion, compared to $1.32 billion at March 31, 2019. Shareholders’ equity at March 31, 2020 totaled $160.06 million, compared to $154.75 million at March 31, 2019. Book value per share outstanding equated to $15.20 at the end of the first quarter 2020, compared to $14.41 per share outstanding a year ago. Tangible book value at quarter-end was $135.61 million, or $12.87 per share outstanding, compared to $129.97 million, or $12.10 per share outstanding at the end of the first quarter 2019.

Additional notes:

  • mBank, the Corporation’s primary asset, recorded net income of $3.40 million for the first quarter of 2020.
  • The Corporation repurchased 240,644 shares under its share repurchase program during the first quarter at an average price of $11.34. It has since paused its repurchase activity.
  • Though not reflected in the first quarter results, we have funded approximately $160 million of Payroll Protection Program (PPP) loans. These loans are supporting over one thousand small businesses throughout our footprint with the majority of recipients residing in the Upper Peninsula and Northern Michigan.
  • Non-interest income was very solid for the quarter including secondary market mortgage fees of $538K and premiums on the sale of Small Business Administration (SBA) guaranteed loans of $710K.
  • The residential mortgage pipeline resides at very robust levels and we expect strong output from this line of business as we look to upcoming quarters.
  • Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments, was 4.32%.
  • The first quarter provision for loan losses was $100 thousand. While this amount was consistent with past quarters, as a result of COVID-19, the qualitative factors for economic conditions were adjusted within the Allowance for Loan Losses (ALLL) calculation and methodology. The Corporation is not currently required to utilize CECL and management will actively refine the provision and loan reserves as client impact and broader economic data from the pandemic become more clear in the second quarter and beyond.
 
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