MANISTIQUE, MI -- (MARKET WIRE) -- 04/27/05 --
Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for North Country Bank and Trust (the
"Bank"), today announced a first quarter 2005 loss of $5.241 million or
$1.53 per share compared to a loss of $1.667 million, or $4.75 per share
for the first quarter of 2004. The results of operations for the first
quarter of 2005 include a penalty of $4.320 million on the prepayment of
$50.039 million of the FHLB borrowings. Excluding this prepayment penalty,
the net loss in the first quarter of 2005 amounted to $.921 million.
Paul Tobias, Chairman and Chief Executive Officer, commented, "The first
quarter of 2005 has been a period of transition and preparation. We are
excited at the progress we've made in the short period since the
recapitalization in December 2004. We have made the first step in
restructuring our balance sheet to reduce risk and improve future earnings
by prepaying long-term fixed rate FHLB borrowings. We have also been
successful in recruiting three additional commercial lenders which will
provide us with additional lending expertise in key markets, helping us to
attain our aggressive loan growth targets in 2005 and beyond. We are
looking forward to our upcoming announcement to change our Bank's name from
North Country Bank and Trust to mBank. We are planning an aggressive
marketing campaign which will include product revisions and competitive
pricing which will help us re-establish and expand our market presence."
Total assets of the Corporation at March 31, 2005 were $275.216 million,
down 31.3 percent from the $400.429 million in total assets reported at
March 31, 2004. First quarter-end total assets were down 18.9 percent from
the $339.497 million of total assets at year-end 2004.
Total loans at March 31, 2005 were $194.831 million, down from $255.021
million at March 31, 2004 or a 23.6 percent reduction. Total loans at the
end of the first quarter of 2005 declined $9.001 million, or 4.4 percent
from year-end 2004 total loans of $203.832 million. During the first
quarter of 2005, the Bank experienced an unusual level of payout and
refinancings, approximately $16.8 million. Tobias stated, "While we are
disappointed that we have experienced a higher level of loan run-off than
what we anticipated, we are very pleased with our commercial lending team
and the momentum that is building. Our loan officers in our existing
markets and in our new Oakland County market are seeing the volume and
types of opportunities that we hoped we would see."
Total deposits of $205.239 million at March 31, 2005 were down 28.5 percent
from deposits of $287.072 million on March 31, 2004. Deposits were down
$10.411 million, or 4.8 percent from year-end 2004 deposits of $215.650
million. The Bank experienced decreases in deposits during the first
quarter of 2005 largely due to seasonal runoff from municipal, individual,
and corporate tax deposits and maturing of Internet deposits. Mr. Tobias
added, "We expected that the deposit side of the business would be a
challenge and it is. Our strategy remains the same. We will continue to
staff and train our branch personnel and offer competitive products to our
customers through relationship oriented bankers. Our name change and
branding campaign will help us re-establish our deposit base and earn back
a fair share of our markets."
The Bank's credit quality has improved dramatically in the past twelve
months with nonperforming loans, as a percent of loans, at 1.17% compared
to 7.48% at March 31, 2004. The reduction of problem loans resulted from
extensive efforts by management in the past several quarters. Nonperforming
assets, which amounted to $50.438 million, or 11.94% of assets at December
31, 2003, were reduced to $3.787 million, 1.38% of assets at March 31,
2005. Tobias, commenting on credit quality, stated, "We have made
tremendous strides in this area. The improved credit quality of the Bank
allows our lending staff to concentrate on new loan production and is
expected to reduce operating expense in future periods."
Shareholders' equity at March 31, 2005 totaled $28.854 million, or $8.42
per share. The Corporation is well capitalized with Tier 1 capital in
excess of 9% and total risk-based capital in excess of 14%.
Tobias concluded, "We are pleased with our progress to date. We have taken
the first steps towards implementing our business plan, but still have the
challenge to execute. We have restructured our liabilities for less risk
and to improve our interest margin, we have hired additional lenders to
help attain loan growth and we will be initiating new loan and deposit
products to be more competitive in our markets. We are also anticipating a
data processing system conversion later in 2005 to reduce costs and enhance
our sales and customer service capabilities."
Mackinac Financial Corporation is a registered bank holding company which
owns North Country Bank and Trust. The Bank has 12 branches in Northern
Michigan and a commercial banking office in Bloomfield Hills, 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 checking and savings accounts, time deposits,
interest bearing transaction accounts, safe deposit facilities, real estate
mortgage lending, and direct and indirect consumer financing.
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 form 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,
2005 2004 2004
----------- ----------- -----------
(Unaudited) (Unaudited)
Selected Financial Condition Data
(at end of period):
Total assets $ 275,216 $ 339,497 $ 400,429
Total loans 194,831 203,832 255,021
Total deposits 205,239 215,650 287,072
Borrowings and subordinated
debentures 38,135 85,039 99,476
Total shareholders' equity 28,854 34,730 9,371
Selected Statements of Income
Data:
Net interest income $ 2,205 $ 8,238 $ 2,011
Loss before taxes 5,241 (1,448) (1,677)
Net loss 5,241 (1,595) (1,677)
Loss per common share - Basic (1.53) (3.23) (4.75)
Loss per common share - Diluted (1.53) (3.23) (4.75)
Selected Financial Ratios and
Other Data:
Performance Ratios:
Net interest margin 3.21% 2.57% 1.62%
Efficiency ratio 300.96 103.05 151.76
Return on average assets (7.16) (0.44) (1.62)
Return on average equity (69.25) (18.64) 70.37
Average total assets $ 296,856 $ 365,024 $ 414,832
Average total shareholders'
equity $ 30,692 $ 8,555 $ 7,664
Average loans to average
deposits ratio 95.54% 97.40% 97.10%
Common Share Data (at end of
period):
Market price per common share $ 18.13 $ 17.97 $ 39.80
Book value per common share $ 8.42 $ 10.13 $ 26.70
Common shares outstanding 3,428,695 3,428,695 350,958
Other Data (at end of period):
Allowance for loan losses $ 6,836 $ 6,966 $ 12,730
Non-performing assets $ 3,787 $ 6,037 $ 22,942
Allowance for loan losses to
total loans 3.51% 3.42% 4.99%
Non-performing assets to
total assets 1.38% 1.78% 5.73%
Number of:
Branch locations 12 12 22
* Historical per share data has been adjusted for the 1:20 reverse stock
split distributed in December 2004.
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except
per share data)
For The Period Ended
March 31, December 31, March 31,
2005 2004 2004
----------- ----------- -----------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 3,656 $ 4,230 $ 5,421
Federal funds sold 10,207 39,848 40,698
----------- ----------- -----------
Cash and cash equivalents 13,863 44,078 46,119
Interest-bearing deposits in other
financial institutions 14 18,535 12,695
Securities available for sale 52,298 57,075 65,305
Federal Home Loan Bank stock 4,805 4,754 4,601
Total loans 194,831 203,832 255,021
Allowance for loan losses (6,836) (6,966) (12,730)
----------- ----------- -----------
Net loans 187,995 196,866 242,291
Premises and equipment 10,588 10,739 13,222
Other real estate held for
sale 1,515 1,730 3,861
Other assets 4,138 5,720 12,335
----------- ----------- -----------
Total assets $ 275,216 $ 339,497 $ 400,429
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Non-interest-bearing
deposits $ 19,722 $ 20,956 $ 24,378
Interest-bearing
deposits 185,517 194,694 262,694
----------- ----------- -----------
Total deposits 205,239 215,650 287,072
Borrowings 38,135 85,039 87,026
Subordinated debentures 0 0 12,450
Other liabilities 2,988 4,078 4,510
----------- ----------- -----------
Total liabilities 246,362 304,767 391,058
Shareholders' equity:
Preferred stock - No par
value:
Authorized 500,000 shares,
no shares outstanding 0 0 0
Common stock - No par value:
Authorized 18,000,000 shares
Issued and outstanding -
3,428,695, 3,428,695 and
350,958 respectively 42,335 42,335 16,175
Accumulated deficit (13,338) (8,097) (8,169)
Accumulated other
comprehensive income (143) 492 1,365
----------- ----------- -----------
Total shareholders' equity 28,854 34,730 9,371
----------- ----------- -----------
Total liabilities and
shareholders' equity $ 275,216 $ 339,497 $ 400,429
=========== =========== ===========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data) Three Months Ended
March 31,
2005 2004
-------- --------
Interest income: (Unaudited) (Unaudited)
Interest and fees on loans:
Taxable $ 3,059 $ 3,796
Tax-exempt 242 319
Interest on securities:
Taxable 462 698
Tax-exempt 42 43
Other interest income 183 120
-------- --------
Total interest income 3,988 4,976
-------- --------
Interest expense:
Deposits 1,130 1,665
Borrowings 653 1,181
Subordinated debentures 0 119
-------- --------
Total interest expense 1,783 2,965
-------- --------
Net interest income 2,205 2,011
Provision for loan losses 0 0
-------- --------
Net interest income after provision for loan losses 2,205 2,011
-------- --------
Other income:
Service fees 161 293
Net security losses (1) 0
Other loan and lease income 7 5
Net gains on sale of loans 0 12
Gain on sale of property and equipment 2 0
Other operating income 15 353
-------- --------
Total other income 184 663
-------- --------
Other expenses:
Salaries, commissions, and related benefits 1,504 1,499
Furniture and equipment expense 159 258
Occupancy expense 226 347
Data processing 246 355
Accounting, legal, and consulting fees 318 406
Loan and deposit expense 293 493
Telephone 60 213
Advertising expense 139 17
Penalty on prepayment of FHLB borrowings 4,320 0
Other 365 753
-------- --------
Total other expenses 7,630 4,341
-------- --------
Loss before provision for income taxes (5,241) (1,667)
Provision for income taxes 0 0
-------- --------
Net loss $ (5,241) $ (1,667)
======== ========
Loss per common share:
Basic $ (1.53) $ (4.75)
======== ========
Diluted $ (1.53) $ (4.75)
======== ========
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,
2005 2004 2004
---------- ---------- ----------
Commercial Loans
Hospitality and tourism $ 45,390 $ 52,659 $ 54,418
Gaming 12,618 14,310 20,746
Petroleum 7,939 7,718 5,331
Forestry 5,486 2,245 1,300
Other 73,110 76,133 123,502
---------- ---------- ----------
Total Commercial Loans 144,543 153,065 205,297
1-4 family residential real
estate 45,425 45,292 46,221
Consumer 2,277 2,379 2,867
Construction 2,586 3,096 636
---------- ---------- ----------
Total Loans $ 194,831 $ 203,832 $ 255,021
========== ========== ==========
Credit Quality (at end of period):
March 31, December 31, March 31,
2005 2004 2004
---------- ---------- ----------
Nonperforming Assets
Nonaccrual loans $ 2,272 $ 4,307 $ 18,297
Loans past due 90 days or more 0 0 736
Restructured loans 0 0 48
---------- ---------- ----------
Total nonperforming loans 2,272 4,307 19,081
Other real estate owned 1,515 1,730 3,861
---------- ---------- ----------
Total nonperforming assets $ 3,787 $ 6,037 $ 22,942
========== ========== ==========
Nonperforming loans as a % of
loans 1.17% 2.11% 7.48%
---------- ---------- ----------
Nonperforming assets as a % of
assets 1.38% 1.78% 5.73%
---------- ---------- ----------
Reserve for Loan Losses:
At period end $ 6,836 $ 6,966 $ 12,730
---------- ---------- ----------
As a % of loans 3.51% 3.42% 4.99%
---------- ---------- ----------
As a % of nonperforming loans 300.88% 161.74% 66.72%
---------- ---------- ----------
As a % of nonaccrual loans 300.88% 161.74% 69.57%
---------- ---------- ----------
Contact:
Investor Relations
(800) 200-7032
Website: www.northcountrybank.com