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Mackinac Financial (MFNC) |
Mackinac Financial Corporation Reports First Quarter 2009 Results
Marketwire
Apr 30, 2009
MANISTIQUE, MI -- (Marketwire) -- 04/30/09 -- Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for mBank (the "Bank") today announced first quarter 2009 income of $.090 million or $.03 per share compared to net income of $.139 million, or $.04 per share for the first quarter of 2008. Operating results for the first quarter of 2009 included a provision for loan losses of $.550 million. There was no provision for the first quarter of 2008. Weighted average shares outstanding amounted to 3,419,736 in the first quarter of 2009 and 3,428,695 in the first quarter of 2008.
Net interest margin in the first quarter of 2009 increased to $3.495 million, or 3.35%, compared to $3.045 million, or 3.13%, in the first quarter of 2008. This increase was primarily due to a reduction in funding costs between periods, as interest rates on brokered deposits declined. Paul Tobias, Chairman and Chief Executive Officer, commented, "We are pleased with the improvement in our net interest margin, which reflects not only the benefits received from decreased pricing on wholesale deposits, but also the positive impact of our disciplined internal loan and deposit pricing. In this low interest rate environment, we have been diligent in setting interest rate floors on loans and have aggressively lowered rates on deposit products, which will translate into increased margin contribution in future periods."
Noninterest income, at $.391 million in the first quarter of 2009, increased $.081 million from the first quarter 2008 level of $.310 million, largely due to increased service fees. Noninterest expense of $3.239 million reflects an increase in FDIC insurance premiums of $.116 million for the first quarter of 2009 and in total showed a moderate increase of $.048 million, or 1.5%, from the first quarter of 2008.
Total assets of the Corporation at March 31, 2009 were $466.375 million, up 11.79% from the $417.175 million in total assets reported at March 31, 2008. First quarter 2009 total assets were up 3.31% from the $451.431 million of total assets at year end 2008.
Total loans at March 31, 2009 were $370.776 million, a 2.98% increase from the $360.056 million at March 31, 2008. Total loans at the end of the first quarter of 2009 were up slightly from year-end 2008 total loans of $370.280 million. Tobias stated, "Loan growth in the first quarter was impacted by $14.425 million in paydowns; however, our first quarter new loan production was relatively strong at $9.390 million, with almost all new production occurring in the Upper Peninsula, which has not had the severe level of economic downturn that other parts of the state have experienced. We will be seeking loan growth opportunities in 2009 but will continue to adhere to our strict credit standards and pricing."
Total deposits of $385.757 million at March 31, 2009 were up 18.31% from deposits of $326.047 million on March 31, 2008. Deposits were up 3.95% from year-end 2008 deposits of $371.097 million. Deposit growth increases in the 2009 first quarter were due to increases in wholesale brokered deposits of $11.123 million and growth in bank deposits of $3.537 million, primarily low cost transactional deposits. Deposit balances increased by $59.710 million from March 2008 to March 2009, with increased brokered deposits accounting for substantially all of the growth.
Nonperforming assets at the end of the first quarter of 2009 totaled $15.252 million which was up $8.176 million from 2008 year end balances. The increase in nonperforming assets in the first quarter includes two large commercial credit relationships in Southeast Michigan, with a total balance of $5.8 million. Tobias, commenting on credit quality, stated, "The Southeastern Michigan market continues to weaken. Real estate values have fallen rapidly. Our additions to nonperforming assets reflect two credits where original collateral values have decreased to the point where we needed to add to our reserve for loan losses. We are actively involved with these borrowers and are taking all necessary steps to collect our principal and minimize earnings impact."
Shareholders' equity at March 31, 2009 totaled $41.864 million, or $12.24 per share, compared to $39.633 million, or $11.56 per share on March 31, 2008.
Tobias concluded, "We start 2009 with a cautious, but positive outlook for the future. Our net interest margin will provide a solid platform for enhanced earnings; however, we are concerned about the economy, which continues to stress our borrowers. Late in April, we received the $11 million proceeds from the issuance of Series A Preferred Stock to the U.S. Treasury. This capital will be used to increase the strong capital position of the Bank. The Bank will use the capital to grow loans. In addition, the capital will allow the Corporation to consider acquisitions of deposit franchises that would enhance our funding mix."
Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $450 million and whose common stock is traded on the NASDAQ stock market as "MFNC." The principal subsidiary of the Corporation is mBank. Headquartered in Manistique, Michigan, mBank has 13 branch locations; nine in the Upper Peninsula, three in the Northern Lower Peninsula and one in Oakland County, Michigan. The Company's banking services include commercial lending and treasury management products and services geared toward small to mid-sized businesses, as well as a full array of personal and business deposit products and consumer loans.
Forward-Looking Statements
This release contains certain forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "will," and variations of such words and similar expressions are intended to identify forward-looking statements: as defined by the Private Securities Litigation Reform Act of 1995. These statements reflect management's current beliefs as to expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could cause a difference include among others: changes in the national and local economies or market conditions; changes in interest rates and banking regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhancements from mergers and acquisitions, bank consolidations, branch closings and other sources may not be fully realized at all or within specified time frames as well as other risks and uncertainties including but not limited to those detailed from time to time in filings of the Company with the Securities and Exchange Commission. These and other factors may cause decisions and actual results to differ materially from current expectations. Mackinac Financial Corporation undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
For The Period Ended
---------------------------------------
March 31, December 31, March 31,
2009 2008 2008
----------- ----------- -----------
(Unaudited) (Unaudited)
Selected Financial Condition Data
(at end of period):
Assets $ 466,375 $ 451,431 $ 417,175
Loans 370,776 370,280 360,056
Investment securities 51,071 47,490 24,581
Deposits 385,757 371,097 326,047
Borrowings 36,210 36,210 48,849
Shareholders' Equity 41,864 41,552 39,633
Selected Statements of Income
Data:
Net interest income $ 3,495 $ 12,864 $ 3,045
Income before taxes 97 2,659 164
Net income 90 1,872 139
Income per common share - Basic .03 .55 .04
Income per common share - Diluted .03 .55 .04
Weighted average shares
outstanding 3,419,736 3,422,012 3,428,695
Selected Financial Ratios and
Other Data:
Performance Ratios:
Net interest margin 3.35% 3.23% 3.13%
Efficiency ratio 82.36 85.51 95.34
Return on average assets .08 .44 .13
Return on average equity .87 4.61 1.42
Average total assets $ 454,741 $ 425,343 $ 417,682
Average total shareholders' equity 41,813 40,630 39,491
Average loans to average deposits
ratio 99.54% 105.61% 106.48%
Common Share Data (at end of
period):
Market price per common share $ 4.00 $ 4.40 $ 8.50
Book value per common share $ 12.24 $ 12.15 $ 11.56
Common shares outstanding 3,419,736 3,419,736 3,428,695
Other Data (at end of period):
Allowance for loan losses $ 4,793 $ 4,277 $ 3,924
Non-performing assets $ 15,252 $ 7,076 $ 4,518
Allowance for loan losses to total
loans 1.29% 1.16% 1.09%
Non-performing assets to total
assets 3.27% 1.57% 1.08%
Number of:
Branch locations 13 12 12
FTE Employees 101 100 103
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31, March 31,
(Dollars in thousands) 2009 2008 2008
----------- ----------- -----------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 21,394 $ 10,112 $ 6,849
Federal funds sold - - 1,568
----------- ----------- -----------
Cash and cash equivalents 21,394 10,112 8,417
Interest-bearing deposits in other
financial institutions 569 582 382
Securities available for sale 51,071 47,490 24,581
Federal Home Loan Bank stock 3,794 3,794 3,794
Loans:
Commercial 295,595 296,088 291,980
Mortgage 71,554 70,447 64,624
Installment 3,627 3,745 3,452
----------- ----------- -----------
Total Loans 370,776 370,280 360,056
Allowance for loan losses (4,793) (4,277) (3,924)
----------- ----------- -----------
Net loans 365,983 366,003 356,132
Premises and equipment 11,134 11,189 11,511
Other real estate held for sale 2,199 2,189 1,137
Other assets 10,231 10,072 11,221
----------- ----------- -----------
TOTAL ASSETS $ 466,375 $ 451,431 $ 417,175
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES:
Deposits:
Noninterest bearing deposits $ 31,541 $ 30,099 $ 26,876
NOW, money market, checking 75,026 70,584 81,952
Savings 19,585 20,730 11,530
CDs < $100,000 70,708 73,752 83,087
CDs > $100,000 26,886 25,044 22,010
Brokered 162,011 150,888 100,592
----------- ----------- -----------
Total deposits 385,757 371,097 326,047
Borrowings:
Federal funds purchased - - 10,410
Short-term - - 2,159
Long-term 36,210 36,210 36,280
----------- ----------- -----------
Total borrowings 36,210 36,210 48,849
Other liabilities 2,544 2,572 2,646
----------- ----------- -----------
Total liabilities 424,511 409,879 377,542
SHAREHOLDERS' EQUITY:
Preferred stock - No par value:
Authorized 500,000 shares, no
shares outstanding
Common stock and additional
paid in capital - No par value
Authorized - 18,000,000
shares
Issued and outstanding -
3,419,736; 3,419,736, and
3,428,695 respectively 42,833 42,815 42,862
Accumulated deficit (1,619) (1,708) (3,441)
Accumulated other
comprehensive income (loss) 650 445 212
----------- ----------- -----------
Total shareholders' equity 41,864 41,552 39,633
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 466,375 $ 451,431 $ 417,175
=========== =========== ===========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
--------------------------
(Dollars in thousands except per share data) 2009 2008
------------ ------------
(Unaudited) (Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable $ 5,002 $ 6,100
Tax-exempt 90 108
Interest on securities:
Taxable 459 266
Tax-exempt 1 1
Other interest income 2 89
------------ ------------
Total interest income 5,554 6,564
------------ ------------
INTEREST EXPENSE:
Deposits 1,778 3,065
Borrowings 281 454
------------ ------------
Total interest expense 2,059 3,519
------------ ------------
Net interest income 3,495 3,045
Provision for loan losses 550 -
------------ ------------
Net interest income after provision for loan
losses 2,945 3,045
------------ ------------
NONINTEREST INCOME:
Service fees 243 174
Net security gains - 65
Net gains on sale of secondary market loans 58 48
Other 90 23
------------ ------------
Total noninterest income 391 310
------------ ------------
NONINTEREST EXPENSE:
Salaries and employee benefits 1,597 1,807
Occupancy 378 355
Furniture and equipment 189 178
Data processing 220 221
Professional service fees 153 153
Loan and deposit 261 110
Telephone 43 45
Advertising 78 60
Other 320 262
------------ ------------
Total noninterest expense 3,239 3,191
------------ ------------
Income before provision for income taxes 97 164
Provision for income taxes 7 25
------------ ------------
NET INCOME $ 90 $ 139
============ ============
INCOME PER COMMON SHARE:
Basic $ .03 $ .04
============ ============
Diluted $ .03 $ .04
============ ============
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
March 31, December 31, March 31,
2009 2008 2008
----------- ----------- -----------
Commercial Loans
Real estate - operators of
nonresidential buildings $ 40,457 $ 41,299 $ 43,167
Hospitality and tourism 35,224 35,086 35,760
Real estate agents and managers 28,012 29,292 30,235
Operators of nonresidential buildings 13,512 13,467 9,039
Other 151,732 145,831 146,226
----------- ----------- -----------
Total Commercial Loans 268,937 264,975 264,427
1-4 family residential real estate 65,792 65,595 59,532
Consumer 3,627 3,745 3,452
Construction
Commercial 26,658 31,113 27,553
Consumer 5,762 4,852 5,092
----------- ----------- -----------
Total Loans $ 370,776 $ 370,280 $ 360,056
=========== =========== ===========
Credit Quality (at end of period):
March 31, December 31, March 31,
2009 2008 2008
---------- ---------- ----------
Nonperforming Assets:
Nonaccrual loans $ 12,461 $ 4,887 $ 3,381
Loans past due 90 days or more - - -
Restructured loans 592 - -
---------- ---------- ----------
Total nonperforming loans 13,053 4,887 3,381
Other real estate owned 2,199 2,189 1,137
---------- ---------- ----------
Total nonperforming assets $ 15,252 $ 7,076 $ 4,518
========== ========== ==========
Nonperforming loans as a % of loans 3.52% 1.32% .94%
---------- ---------- ----------
Nonperforming assets as a % of assets 3.27% 1.57% 1.08%
---------- ---------- ----------
Reserve for Loan Losses:
At period end $ 4,793 $ 4,277 $ 3,924
---------- ---------- ----------
As a % of loans 1.29% 1.16% 1.09%
---------- ---------- ----------
As a % of nonperforming loans 36.72% 87.52% 116.06%
---------- ---------- ----------
As a % of nonaccrual loans 38.46% 87.52% 116.06%
========== ========== ==========
Charge-off Information (year to date):
Average loans 370,943 361,324 357,778
---------- ---------- ----------
Net charge-offs 34 2,169 222
---------- ---------- ----------
Charge-offs as a % of average loans .01% .60% .06%
---------- ---------- ----------
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
December September
March 31, 31, 30, June 30, March 31,
2009 2008 2008 2008 2008
--------- --------- --------- --------- ---------
BALANCE SHEET
(Dollars in
thousands)
Total loans $ 370,776 $ 370,280 $ 361,521 $ 362,122 $ 360,056
Allowance for loan
losses (4,793) (4,277) (3,385) (3,585) (3,924)
--------- --------- --------- --------- ---------
Total loans, net 365,983 366,003 358,136 358,537 356,132
Intangible assets 26 46 65 85 104
Total assets 466,375 451,431 440,953 437,327 417,175
Core deposits 196,860 195,165 208,940 200,293 203,445
Noncore deposits (1) 188,897 175,932 151,754 156,683 122,602
--------- --------- --------- --------- ---------
Total deposits 385,757 371,097 360,694 356,976 326,047
Total borrowings 36,210 36,210 36,210 36,280 48,849
Total shareholders'
equity 41,864 41,552 41,427 40,975 39,633
Total shares
outstanding 3,419,736 3,419,736 3,419,736 3,419,736 3,428,695
AVERAGE BALANCES
(Dollars in
thousands)
Assets $ 454,741 $ 441,583 $ 423,702 $ 418,246 $ 417,682
Loans 370,943 366,077 358,844 362,574 357,778
Deposits 372,670 358,213 341,377 332,725 336,016
Equity 41,813 41,516 41,097 40,399 39,491
INCOME STATEMENT
(Dollars in
thousands)
Net interest income $ 3,495 $ 3,330 $ 3,371 $ 3,118 $ 3,045
Provision for loan
losses 550 1,100 450 750 -
--------- --------- --------- --------- ---------
Net interest
income after
provision 2,945 2,230 2,921 2,368 3,045
Total noninterest
income 391 308 288 3,747 310
Total noninterest
expense 3,239 2,961 2,935 3,471 3,191
--------- --------- --------- --------- ---------
Income before taxes 97 (423) 274 2,644 164
Provision for
income taxes 7 (171) 58 875 25
--------- --------- --------- --------- ---------
Net income $ 90 $ (252) $ 216 $ 1,769 $ 139
========= ========= ========= ========= =========
PER SHARE DATA
Earnings - basic $ .03 $ (.07) $ .06 $ .52 $ .04
Earnings - diluted .03 (.07) .06 .52 .04
Book value 12.24 12.15 12.11 11.98 11.56
Market value,
closing price 4.00 4.40 5.26 7.00 8.50
ASSET QUALITY
RATIOS
Nonperforming
loans/total loans 3.52% 1.32 % 1.29% 1.27% .94%
Nonperforming
assets/total
assets 3.27 1.57 1.45 1.83 1.08
Allowance for loan
losses/total loans 1.29 1.16 .94 .99 1.09
Allowance for loan
losses/nonperform-
ing loans 36.72 87.52 72.81 77.22 116.06
PROFITABILITY
RATIOS
Return on average
assets .08% (.23)% .20% 1.70% .13%
Return on average
equity .87 (2.42) 2.08 17.62 1.42
Net interest margin 3.35 3.20 3.39 3.19 3.13
Efficiency ratio 82.36 80.30 79.12 88.45 95.34
Average
loans/average
deposits 99.54 102.20 105.12 108.97 106.48
CAPITAL ADEQUACY
RATIOS
Tier 1 leverage
ratio 7.86% 8.01 % 8.31% 8.56% 7.85%
Tier 1 capital to
risk weighted
assets 9.31 9.25 9.40 9.48 8.84
Total capital to
risk weighted
assets 10.56 10.38 10.31 10.45 9.92
Average
equity/average
assets 9.20 9.40 9.70 9.66 9.45
Tangible
equity/tangible
assets 8.97 9.20 9.38 9.35 9.48
(1) Noncore deposits includesInternet CDs, brokered deposits and CDs
greater than $100,000
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