Mackinac Financial (MFNC) 8-K Mackinac Financial Corporation Reports Second Quarter and Six Months 2009 Results

Exhibit 99

PRESS RELEASE

For Release:	July 30, 2009
Nasdaq:	MFNC
Contact:	Investor Relations at (888) 343-8147
Website:	www.bankmbank.com

MACKINAC FINANCIAL CORPORATION
REPORTS SECOND QUARTER AND SIX MONTHS 2009 RESULTS

(Manistique, Michigan) — Mackinac Financial Corporation (Nasdaq: MFNC), the bank holding company for mBank (the “Bank”) today announced second quarter 2009 income of $.461 million or $ .13 per share compared to net income of $1.769 million, or $.52 per share for the second quarter of 2008. Net income for the first six months of 2009 totaled $ .551 million, or $.16 per share, compared to $1.908 million, or $.56 per share, for the same period in 2008.

The quarter and six month results for 2009 includes the FDIC special assessment which was charged to all banking organizations based upon asset size, and amounted to $.215 million for mBank. The quarter and six month results for 2008 include the positive effect, $3.475 million, of a lawsuit settlement and the negative effects, $.425 million, of a severance agreement. Operating results for the six month period in 2009 includes a $.700 million provision compared to $.750 million in the same period in 2008. Excluding the FDIC special assessment for 2009 and the lawsuit settlement and severance payment in 2008, our adjusted six month net income in 2009 would be $.691 million, or $.20 income per share compared to a loss of $.213 million, or a loss of $.06 per share in the 2008 six month period.

Weighted average shares totaled 3,419,736 year to date and for the second quarter in 2009 compared to 3,424,314 for the six month period and 3,419,935 at the second quarter of 2008.

Net interest margin in the second quarter of 2009 increased to $4.051 million, or 3.58% compared to $3.118 million, or 3.19% in the second quarter of 2008. For the six month period the net interest margin totaled $7.546 million, or 3.47% compared to $6.163 million or 3.16% for the same period in 2008. This increased margin was due to a combination of a significant reduction in funding costs partially offset by decreased rates on earning assets. Paul Tobias, Chairman and Chief Executive officer, commented, “We are pleased with the continued improvement in our net interest margin, which reflects pricing discipline on new and renewed loans in addition to the lower rates on wholesale deposits. We expect this trend to continue.”

Noninterest income, totaled $.439 million in the second quarter of 2009, compared to $3.747 million the first quarter 2008. Included in noninterest income for the second quarter and six months ended periods of 2008 was

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the $3.475 million lawsuit settlement. Excluding this settlement, 2009 six month noninterest income exceeded 2008 by $.258 million, or 44.33%. Noninterest expense in the second quarter and for the six month period of 2009 was relatively unchanged from 2008 levels when excluding the increase in FDIC insurance premiums of $.331 million in 2009 and the severance payment of $.425 million incurred in 2008.

Total assets of the Corporation at June 30, 2009 were $506.304 million, up $68.977 million, or 15.77% from the $437.327 million in total assets reported at June 30, 2008 and up $54.873 million, or 12.16%, from total assets of $451.431 million at year-end 2008. Asset totals at June 30, 2009 reflect increased balances of investment securities of approximately $48 million.

Loans at June 30, 2009 totaled $372.004 million, a 2.73% increase from the $362.122 million at June 30, 2008, and a slight increase from year-end loans of $370.280 million. Kelly George, President and Chief Executive Officer of mBank stated, “Loan growth in the first half was retarded by large paydowns amounting to $9.2 million, along with normal loan principal reductions of $15.3 million. Given the current economic environment, and tough requirements for loan pricing and credit quality, we are pleased with current year to date production which totaled $34.2 million with approximately 67% originating in the Upper Peninsula. In general, the Upper Peninsula has not experienced the economic downturn and collateral deterioration that has occurred elsewhere in Michigan. We continue to see loan opportunities, not only in the Upper Peninsula, but also in lower Michigan, as competitive banks withdraw from Michigan opportunities. Our current pipeline is extremely promising with more than $50 million of what we believe are good bankable loans, some already approved and others in the review process. A part of our success in loan production is attributed to our expertise with the SBA 504 and 7A programs. These programs benefit us with new loan opportunities along with a secondary source of balance sheet liquidity and the potential for significant fee income when the guaranteed portion is sold. ”

Total deposits of $413.152 million at June 30, 2009 were up 15.74% from deposits of $356.976 million on June 30, 2008. Deposits were up $42.055 million, or 11.33% from year-end 2008 deposits of $371.097 million. Total 2009 deposit growth reflects increases in noncore funding of $33.917 million and increases in core deposits of $8.138 million, or 3.67%. The increased brokered deposits were utilized to fund increased investment balances.

Nonperforming assets at the end of the second quarter of 2009 totaled $14.825 million, 2.93% of total assets, an increase of $7.749 million from 2008 year end balances, and down from first quarter 2009 balances of $15.252 million. Mr. George commented, “Our current level of nonperforming assets is not indicative of overall portfolio deterioration and while these balances are higher than we’d like, they are manageable considering the risk profile of our bank and Michigan’s economic environment. The majority of our nonperforming assets stem from several larger credit relationships in Southeastern Michigan which we believe were impacted by the market and the regional economy. We are also on top of our overall loan delinquencies(loans past due greater than 30 days), which stands at 1.80% of total loans. While we feel comfortable with overall credit quality, the rapid deterioration in borrower collateral values that we witnessed in the credits mentioned above has caused us to take a very cautious stance in the Southeast Michigan market place and to increase our monitoring efforts. We intend to manage our nonperforming assets in order to limit carrying costs and further collateral deterioration by aggressive disposition.”

Total shareholders’ equity at June 30, 2009 totaled $53.939 million, compared to $40.975 million on June 30, 2008. The increase of $12.964 million includes $11 million of preferred stock which was issued in April 2009. Book value of common shareholders’ equity was $12.55 per share at June 30, 2009, an increase of $2.80 per share since the recapitalization, priced at $9.75 in December 2004.

Mr. George commenting on upcoming events added, “Earlier this year we announced the sale of two of our Upper Peninsula branch offices, these sales will be completed in August and will result in an approximate 4%

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deposit premium. The sale of these branch offices will tighten up the footprint of our franchise, further reduce operating costs, and allow us to deploy capital to higher growth markets.”

Tobias concluded, “We are excited about our opportunities in these troubled economic times. We have the current asset base to support profitability with a strong capital position for future growth. We will explore opportunities for FDIC assisted deposit and loan transactions to expand our markets, while staying the course with solid organic growth opportunities within our current markets. As always, our initiatives will be governed by the ultimate strategy of preserving and increasing value for our shareholders.”

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $500 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 12 branch locations; eight 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.

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

	For The Period Ended
	June 30,			December 31,			June 30,
	2009			2008			2008
(Dollars in thousands, except per share data)	(Unaudited)						(Unaudited)
Selected Financial Condition Data (at end of period):
Assets	$	506,304		$	451,431		$	437,327
Loans		372,004			370,280			362,122
Investment securities		95,620			47,490			23,230
Deposits		413,152			371,097			356,976
Borrowings		36,210			36,210			36,280
Shareholders’ Equity		53,939			41,552			40,975
Selected Statements of Income Data(six months and year ended):
Net interest income	$	7,546		$	12,864		$	6,163
Income before taxes and preferred dividend		967			2,659			2,808
Net income		551			1,872			1,908
Income per common share – Basic		.16			.55			.56
Income per common share – Diluted		.16			.55			.56
Three Months Ended:
Net interest income	$	4,051		$	3,330		$	3,118
Income before taxes and preferred dividend		870			(423	)		2,644
Net income		461			(252	)		1,769
Income per common share – Basic		.13			(.07	)		.52
Income per common share – Diluted		.13			(.07	)		.52
Selected Financial Ratios and Other Data (six months and year ended):
Performance Ratios:
Net interest margin		3.47	%		3.23	%		3.16	%
Efficiency ratio		79.25			85.51			91.85
Return on average assets		.23			.44			.92
Return on average common equity		2.42			4.61			9.61
Average total assets	$	473,074		$	425,343		$	417,964
Average total common shareholders’ equity	$	45,856		$	40,630		$	39,945
Average loans to average deposits ratio		95.90	%		105.61	%		107.72	%
Common Share Data (at end of period):
Market price per common share	$	4.50		$	4.40		$	7.00
Book value per common share	$	12.55		$	12.15		$	11.98
Common shares outstanding		3,419,736			3,419,736			3,419,736
Weighted average shares outstanding		3,419,736			3,422,012			3,424,314
Other Data (at end of period):
Allowance for loan losses	$	4,119		$	4,277		$	3,585
Non-performing assets	$	14,825		$	7,076		$	8,008
Allowance for loan losses to total loans		1.11	%		1.16	%		.99	%
Non-performing assets to total assets		2.93	%		1.57	%		1.83	%
Number of:
Branch locations		11			12			12
FTE Employees		102			100			96

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,			June 30,
	2008			2008			2008
(Dollars in thousands)	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	12,189		$	10,112		$	7,115
Federal funds sold		—			—			19,274
Cash and cash equivalents		12,189			10,112			26,389
Interest-bearing deposits in other financial institutions		618			582			387
Securities available for sale		95,620			47,490			23,230
Federal Home Loan Bank stock		3,794			3,794			3,794
Loans:
Commercial		296,392			296,088			292,645
Mortgage		71,777			70,447			65,869
Installment		3,835			3,745			3,608
Total Loans		372,004			370,280			362,122
Allowance for loan losses		(4,119	)		(4,277	)		(3,585	)
Net loans		367,885			366,003			358,537
Premises and equipment		11,064			11,189			11,377
Other real estate held for sale		4,950			2,189			3,395
Other assets		10,184			10,072			10,218
TOTAL ASSETS	$	506,304		$	451,431		$	437,327
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Noninterest bearing deposits	$	33,368		$	30,099		$	27,741
NOW, money market, checking		75,974			70,584			78,703
Savings		21,411			20,730			15,171
CDs<$100,000		72,139			73,752			78,678
CDs>$100,000		25,455			25,044			28,252
Brokered		184,805			150,888			128,431
Total deposits		413,152			371,097			356,976
Borrowings:
Federal funds purchased		—			—			—
Short-term		—			—			—
Long-term		36,210			36,210			36,280
Total borrowings		36,210			36,210			36,280
Other liabilities		3,003			2,572			3,096
Total liabilities		452,365			409,879			396,352
TOTAL SHAREHOLDERS’ EQUITY		53,939			41,552			40,975
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	506,304		$	451,431		$	437,327

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in thousands except per share data)	2009		2008		2009		2008
	(Unaudited)				(Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable	$	5,104	$	5,604	$	10,106	$	11,704
Tax-exempt		84		102		174		210
Interest on securities:
Taxable		673		271		1,132		537
Tax-exempt		3		2		4		3
Other interest income		14		81		16		170
Total interest income		5,878		6,060		11,432		12,624
INTEREST EXPENSE:
Deposits		1,566		2,551		3,344		5,616
Borrowings		261		391		542		845
Total interest expense		1,827		2,942		3,886		6,461
Net interest income		4,051		3,118		7,546		6,163
Provision for loan losses		150		750		700		750
Net interest income after provision for loan losses		3,901		2,368		6,846		5,413
OTHER INCOME:
Service fees		271		194		514		368
Net security gains		—		—		—		65
Net gains on sale of secondary market loans		84		49		142		97
Proceeds from lawsuit settlements		—		3,475		—		3,475
Other		84		29		174		52
Total other income		439		3,747		830		4,057
OTHER EXPENSES:
Salaries and employee benefits		1,561		2,075		3,158		3,882
Occupancy		355		348		733		703
Furniture and equipment		222		190		411		368
Data processing		224		216		444		437
Professional service fees		144		79		297		232
Loan and deposit		512		144		773		254
Telephone		46		39		89		84
Advertising		80		60		158		120
Other		326		320		646		582
Total other expenses		3,470		3,471		6,709		6,662
Income before provision for income taxes		870		2,644		967		2,808
Provision for (benefit of) income taxes		271		875		278		900
NET INCOME		599		1,769		689		1,908
Preferred dividend expense		138		—		138		—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	461	$	1,769	$	551	$	1,908
INCOME PER COMMON SHARE:
Basic	$	.13	$	.52	$	.16	$	.56
Diluted	$	.13	$	.52	$	.16	$	.56

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY

(Dollars in thousands)

Loan Portfolio Balances (at end of period):

	June 30,			December 31,			June 30,
	2009			2008			2008
Commercial Loans
Real estate — operators of nonresidential buildings	$	44,087		$	41,299		$	41,778
Hospitality and tourism		35,033			35,086			35,053
Real estate agents and managers		24,614			29,292			27,495
Operators of nonresidential buildings		13,525			13,467			15,238
Other		153,008			145,831			144,017
Total Commercial Loans		270,267			264,975			263,581
1-4 family residential real estate		65,564			65,595			60,882
Consumer		3,835			3,745			3,608
Construction
Commercial		26,125			31,113			29,064
Consumer		6,213			4,852			4,987
Total Loans	$	372,004		$	370,280		$	362,122
Credit Quality (at end of period):
	June 30,			December 31,			June 30,
	2009			2008			2008
Nonperforming Assets :
Nonaccrual loans	$	9,283		$	4,887		$	4,613
Loans past due 90 days or more		—			—			—
Restructured loans		592			—			—
Total nonperforming loans		9,875			4,887			4,613
Other real estate owned		4,950			2,189			3,395
Total nonperforming assets	$	14,825		$	7,076		$	8,008
Nonperforming loans as a % of loans		2.65	%		1.32	%		1.27	%
Nonperforming assets as a % of assets		2.93	%		1.57	%		1.83	%
Reserve for Loan Losses:
At period end	$	4,119		$	4,277		$	3,585
As a % of average loans		1.11	%		1.16	%		1.00	%
As a % of nonperforming loans		41.71	%		87.52	%		77.72	%
As a % of nonaccrual loans		44.37	%		87.52	%		77.72	%
Charge-off Information (year to date):
Average loans		371,278			361,324			360,176
Net charge-offs		858			2,169			1,310
Charge-offs as a % of average loans		.23	%		.60	%		.36	%

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

	June 30,			March 31,			December 31,			September 30,			June 30,
	2009			2009			2008			2008			2008
BALANCE SHEET(Dollars in thousands)
Total loans	$	372,004		$	370,776		$	370,280		$	361,521		$	362,122
Allowance for loan losses		(4,119	)		(4,793	)		(4,277	)		(3,385	)		(3,585	)
Total loans, net		367,885			365,983			366,003			358,136			358,537
Intangible assets		6			26			46			65			85
Total assets		506,304			466,375			451,431			440,953			437,327
Core deposits		202,892			196,860			195,165			208,940			200,293
Noncore deposits(1)		210,260			188,897			175,932			151,754			156,683
Total deposits		413,152			385,757			371,097			360,694			356,976
Total borrowings		36,210			36,210			36,210			36,210			36,280
Total shareholders’ equity		53,939			41,864			41,552			41,427			40,975
Total shares outstanding		3,419,736			3,419,736			3,419,736			3,419,736			3,419,736
AVERAGE BALANCES(Dollars in thousands)
Assets	$	491,205		$	454,741		$	441,583		$	423,702		$	418,246
Loans		371,609			370,943			366,077			358,844			362,574
Deposits		401,510			372,670			358,213			341,377			332,725
Equity		49,855			41,813			41,516			41,097			40,399
INCOME STATEMENT(Dollars in thousands)
Net interest income	$	4,051		$	3,495		$	3,330		$	3,371		$	3,118
Provision for loan losses		150			550			1,100			450			750
Net interest income after provision		3,901			2,945			2,230			2,921			2,368
Total noninterest income		439			391			308			288			3,747
Total noninterest expense		3,470			3,239			2,961			2,935			3,471
Income before taxes		870			97			(423	)		274			2,644
Provision for income taxes		271			7			(171	)		58			875
Preferred dividend expense		138			—			—			—			—
Net income	$	461		$	90		$	(252	)	$	216		$	1,769
PER SHARE DATA
Earnings — basic	$	.13		$	.03		$	(.07	)	$	.06		$	.52
Earnings — diluted		.13			.03			(.07	)		.06			.52
Book value per common share		12.55			12.24			12.15			12.11			11.98
Market value, closing price		4.50			4.00			4.40			5.26			7.00
ASSET QUALITY RATIOS
Nonperforming loans/total loans		2.65	%		3.52	%		1.32	%		1.29	%		1.27	%
Nonperforming assets/total assets		2.93			3.27			1.57			1.45			1.83
Allowance for loan losses/total loans		1.11			1.29			1.16			.94			.99
Allowance for loan losses/nonperforming loans		41.71			36.72			87.52			72.81			77.22
PROFITABILITY RATIOS
Return on average assets		.38	%		.08	%		(.23)	%		.20	%		1.70	%
Return on average equity		3.71			.87			(2.42	)		2.08			17.62
Net interest margin		3.58			3.35			3.20			3.39			3.19
Efficiency ratio		76.55			82.36			80.30			79.12			88.45
Average loans/average deposits		92.55			99.54			102.20			105.12			108.97
CAPITAL ADEQUACY RATIOS
Tier 1 leverage ratio		9.65	%		7.86	%		8.01	%		8.31	%		8.56	%
Tier 1 capital to risk weighted assets		11.94			9.31			9.25			9.40			9.48
Total capital to risk weighted assets		13.00			10.56			10.38			10.31			10.45
Average equity/average assets		10.15			9.20			9.40			9.70			9.66
Tangible equity/tangible assets		10.65			8.97			9.20			9.38			9.35

⁽¹⁾ Noncore deposits includes Internet CDs, brokered deposits and CDs greater than $100,000

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

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