Mackinac Financial (MFNC) 8-K Mackinac Financial Corporation Reports Third Quarter and Nine Months 2007 Results

EXHIBIT 99

PRESS RELEASE

For Release:	October 25, 2007
Nasdaq:	MFNC
Contact:	Investor Relations at (888) 343-8147
Website:	www.bankmbank.com

MACKINAC FINANCIAL CORPORATION
REPORTS THIRD QUARTER AND NINE MONTHS 2007 RESULTS

(Manistique, Michigan) — Mackinac Financial Corporation (Nasdaq: MFNC), the bank holding company for mBank (the “Bank”) today announced third quarter 2007 income of $8.055 million or $2.35 per share compared to net income of $.690 million, or $.20 per share for the third quarter of 2006. Net income for the first nine months of 2007 totaled $9.636 million, or $2.81 per share, compared to $1.378 million, or $.40 per share, for the same period in 2006. The results of operations for the first nine months of 2007 include the recognition of a deferred tax benefit in the amount of $7.500 million, $470,000, of proceeds from the settlement of a lawsuit against the Corporation’s former accountants, and a provision for loan losses of $400,000. The third quarter provision was impacted by one commercial credit which originated prior to the current management team. The loan, which currently is performing as agreed, is secured solely by a hotel property. The borrower has indicated their intent to default the loan unless a request for restructuring is granted. An appraisal was obtained as part of negotiations with the borrower which indicated some deterioration in the value of the underlying asset. These facts, coupled with our continued growth in outstanding loans, led management to conclude that a provision is necessary. During the comparable nine month period in 2006, the Bank recorded a $600,000 negative provision for loan losses in recognition of improved credit quality, as well as a $500,000 provision for the benefit of income taxes. Excluding these items provides a more revealing picture of operating results. The adjusted figures show net income in the first nine months of 2007 of $2.066 million, or $.60 per share, compared to an adjusted net income of $.278 million, or $.08 per share, for the same period in 2006. The adjusted 2007 third quarter figures show net income of $.955 million, or $.28 per share, compared to $.190 million, or $.06 per share, in the third quarter of 2006.

Paul Tobias, Chairman and Chief Executive Officer, commented, “We are extremely pleased that we have attained the earnings momentum necessary for us to recognize the deferred tax benefit related to NOL and tax credit carry-forwards. We have established, with our current asset base, the foundation for continued profitability as evidenced by our sixth consecutive quarter of core earnings.”

Tobias continued, “Our core earnings have been enhanced with increases in our net interest margin due to our strong pricing discipline. Growth within our organization is secondary to our increased profitability objectives. We continue to monitor the progress of Michigan’s economy and ongoing foreclosure trends related to consumer mortgage lending. As a bank focused on commercial lending, we are also monitoring, as part of our normal underwriting discipline, the valuation of our commercial real estate collateral and its importance in our loan grading system. While we are aware of the increased credit issues within our industry and within Michigan, we have not experienced any significant deterioration in our overall credit quality and our nonperforming assets are well below peer levels. We were not participants in the subprime mortgage industry.”

Total assets of the Corporation at September 30, 2007 were $401.213 million, up 10.47 percent from the $363.191 million in total assets reported at September 30, 2006. Third quarter-end total assets were up 4.81 percent from the $382.791 million of total assets at year-end 2006.

Total loans at September 30, 2007 were $344.149 million, a 17.61% increase from the $292.614 million at September 30, 2006. Total loans at the end of the third quarter of 2007 increased $21.658 million, or 6.69 percent from year-end 2006 total loans of $322.581 million. Tobias stated, “We are satisfied with our net loan growth thus far in 2007 and remain optimistic about future growth opportunities given our continued new loan production and pipeline activity. We experienced significant loan paydowns and refinancings earlier in 2007 due in part to our decision to hold the line on pricing and our unwillingness to compromise credit quality in the midst of an economic slowdown. We continue to have new loan opportunities, but feel it is prudent to exercise growth constraints in times of economic uncertainty. We expect to continue to grow loans over our long term planning horizon, but we have placed the emphasis on deposit growth and margin improvement in the current credit environment.”

Total deposits of $321.371 million at September 30, 2007 were up 9.50 percent from deposits of $293.494 million on September 30, 2006. Deposits were up $8.950 million, 2.87 percent from year-end 2006 deposits of $312.421 million. Total 2007 deposit growth reflects decreases in noncore funding of $10.079 million and increases in core deposits of $19.029 million, or 9.53%. Mr. Tobias added, “The growth of core deposit balances continues to be a primary focal point in order to increase margin contribution. In 2007, we have been successful in the growth of core deposits to fund 100% of current year loan growth. Continued growth of core deposits, especially transactional account balances, will have the biggest impact on increased profitability and franchise value. We continue to build a culture that focuses on profitable relationships anchored by core deposits.”

Nonperforming loans at the end of the third quarter of 2007 totaled $3.172 million (.92% of loans), an increase of $.233 million from 2006 year end balances. This 2007 increase in nonperforming assets is not indicative of significant deterioration in portfolio credit quality and is still relatively low by comparative peer standards. Current nonperforming loan balances include one large commercial credit relationship which represents 56% of the total, approximately $1.8 million. The loans associated with this relationship originated before the current management team was in place. We have allocated specific reserve balances to these loans, which we believe covers our potential principal loss. Tobias, commenting on credit quality stated, “We remain confident that our credit process is a major strength. This process includes an aggressive early resolution process for nonperforming assets, which limits our losses.”

The net interest margin continues to show steady improvement, increasing from 3.36% in the third quarter of 2006 to 3.71% in the third quarter of 2007. Mr. Tobias commented, “The steady margin improvement is a clear illustration of the positive results achieved from loan and deposit pricing decisions and an improved deposit mix.”

Shareholders’ equity at September 30, 2007 totaled $38.697 million, or $11.29 per share, compared to $28.226 million, or $8.23 per share on September 30, 2006.

Tobias concluded, “We are pleased with our nine months earnings results. Our emphasis continues to be on core deposit growth. We recently expanded our deposit gathering efforts with courier services to small and medium sized businesses in addition to selective second quarter staffing additions. We continue to review opportunities to improve noninterest income. We have been moderately successful in generating fees from sales of loans to the secondary market, as well as the guaranteed portion of SBA loans. The contribution from increased noninterest income, expense control, and our diligence in pricing will move us toward our profitability objectives. We remain committed to our goal of increased profitability and shareholder value.”

Mackinac Financial Corporation is a registered bank holding company which owns mBank. The Bank has 12 offices; 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 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 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
	September 30,			December 31,			September 30,
	2007			2006			2006
	(Unaudited)						(Unaudited)
Selected Financial Condition Data (at end of period):
Total assets	$	401,213		$	382,791		$	363,191
Total loans		344,149			322,581			292,614
Total deposits		321,371			312,421			293,494
Borrowings and subordinated debentures		38,239			38,307			38,307
Total shareholders’ equity		38,697			28,790			28,226
Selected Statements of Income Data(nine months and year ended):
Net interest income	$	10,007		$	11,593		$	8,566
Income before taxes		2,136			1,216			878
Net income		9,636			1,716			1,378
Income per common share — Basic		2.81			.50			.40
Income per common share — Diluted		2.81			.50			.40
Three Months Ended:
Net interest income	$	3,560		$	3,027		$	2,952
Income before taxes		555			338			190
Net income		8,055			338			690
Income per common share — Basic		2.35			.10			.20
Income per common share — Diluted		2.35			.10			.20
Selected Financial Ratios and Other Data(nine months and year ended):
Performance Ratios:
Net interest margin		3.62	%		3.51	%		3.53	%
Efficiency ratio		79.94			93.95			93.83
Return on average assets		3.32			.49			.54
Return on average equity		42.07			6.19			6.71
Average total assets	$	387,597		$	347,927		$	341,646
Average total shareholders’ equity	$	30,627		$	27,744		$	27,440
Average loans to average deposits ratio		103.89	%		99.77	%		98.86	%
Common Share Data (at end of period):
Market price per common share	$	8.75		$	11.50		$	10.56
Book value per common share	$	11.29		$	8.40		$	8.23
Common shares outstanding		3,428,695			3,428,695			3,428,695
Weighted average shares outstanding		3,428,695			3,428,695			3,428,695
Other Data (at end of period):
Allowance for loan losses	$	5,022		$	5,006		$	5,316
Non-performing assets	$	3,623		$	2,965		$	2,091
Allowance for loan losses to total loans		1.46	%		1.55	%		1.82	%
Non-performing assets to total assets		.90	%		.77	%		.58	%
Number of:
Branch locations		13			13			13
FTE Employees		105			99			97

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			September 30,
	2007			2006			2006
	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	7,364		$	4,865		$	5,537
Federal funds sold		947			5,841			11,949
Cash and cash equivalents		8,311			10,706			17,486
Interest-bearing deposits in other financial institutions		6,995			856			889
Securities available for sale		17,973			32,769			36,129
Federal Home Loan Bank stock		3,794			3,794			4,152
Loans:
Commercial		285,680			261,726			238,481
Mortgage		54,962			58,014			51,341
Installment		3,507			2,841			2,792
Total Loans		344,149			322,581			292,614
Allowance for loan losses		(5,022	)		(5,006	)		(5,316	)
Net loans		339,127			317,575			287,298
Premises and equipment		12,733			12,453			12,643
Other real estate held for sale		451			26			26
Other assets		11,829			4,612			4,568
TOTAL ASSETS	$	401,213		$	382,791		$	363,191
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Non-interest-bearing deposits	$	28,325		$	23,471		$	22,826
Interest-bearing deposits:
NOW and Money Market		87,262			73,188			73,797
Savings		12,831			13,365			13,915
CDs<$100,000		90,220			89,585			85,236
CDs>$100,000		24,432			23,645			20,305
Brokered		78,301			89,167			77,415
Total deposits		321,371			312,421			293,494
Borrowings		38,239			38,307			38,307
Other liabilities		2,906			3,273			3,164
Total liabilities		362,516			354,001			334,965
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 — 3,428,695 shares		42,810			42,722			42,646
Accumulated deficit		(4,107	)		(13,745	)		(14,083	)
Accumulated other comprehensive (loss)		(6	)		(187	)		(337	)
Total shareholders’ equity		38,697			28,790			28,226
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	401,213		$	382,791		$	363,191

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
INTEREST INCOME:
Interest and fees on loans:
Taxable	$	6,929		$	5,635		$	19,610		$	15,316
Tax-exempt		118			189			432			575
Interest on securities
Taxable		263			306			857			852
Tax-exempt		—			5			—			87
Other interest		209			268			575			631
Total interest income		7,519			6,403			21,474			17,461
INTEREST EXPENSE:
Deposits		3,443			2,951			9,932			7,540
Borrowings		516			500			1,535			1,355
Total interest expense		3,959			3,451			11,467			8,895
Net interest income		3,560			2,952			10,007			8,566
Provision for loan losses		400			—			400			(600	)
Net interest income after provision for loan losses		3,160			2,952			9,607			9,166
OTHER INCOME:
Service fees		169			133			515			365
Net gains on sale of secondary market loans		165			66			364			149
Proceeds from settlement of lawsuit		—			—			470			—
Other		62			41			302			193
Total other income		396			240			1,651			707
OTHER EXPENSE:
Salaries and employee benefits		1,695			1,487			5,106			4,577
Occupancy		322			333			983			943
Furniture and equipment		178			159			501			470
Data processing		196			176			577			512
Professional service fees		78			341			403			955
Loan and deposit		63			78			214			305
Telephone		68			55			185			155
Advertising		97			70			280			247
Other		304			303			873			831
Total other expense		3,001			3,002			9,122			8,995
Income before income taxes		555			190			2,136			878
Provision for (benefit of) income taxes		(7,500	)		(500	)		(7,500	)		(500	)
NET INCOME	$	8,055		$	690		$	9,636		$	1,378
INCOME PER COMMON SHARE:
Basic	$	2.35		$	.20		$	2.81		$	.40
Diluted	$	2.35		$	.20		$	2.81		$	.40

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY

(Dollars in thousands)

Loan Portfolio Balances (at end of period):

	September 30,		December 31,		September 30,
	2007		2006		2006
Commercial Loans
Real estate — operators of nonresidential buildings	$	43,422	$	44,308	$	35,965
Hospitality and tourism		37,479		30,826		37,287
Real estate agents and managers		25,662		25,071		19,744
Offices of holding companies		10,831		4,989		1,496
Other		122,460		120,523		110,894
Total Commercial Loans		239,854		225,717		205,386
1-4 family residential real estate		54,962		58,014		51,341
Construction		45,826		36,009		33,095
Consumer		3,507		2,841		2,792
Total Loans	$	344,149	$	322,581	$	292,614
Average loans for the period	$	327,810	$	278,953	$	271,351

Credit Quality (at end of period):

	September 30,			December 31,			September 30,
	2007			2006			2006
Nonperforming Assets :
Nonaccrual loans	$	3,136		$	2,899		$	2,065
Loans past due 90 days or more		36			40			—
Restructured loans		—			—			—
Total nonperforming loans		3,172			2,939			2,065
Other real estate owned		451			26			26
Total nonperforming assets	$	3,623		$	2,965		$	2,091
Nonperforming loans as a % of loans		.92	%		.91	%		.71	%
Nonperforming assets as a % of assets		.90	%		.77	%		.58	%
Reserve for Loan Losses:
At period end	$	5,022		$	5,006		$	5,316
As a % of loans		1.46	%		1.55	%		1.82	%
As a % of nonperforming loans		158.32	%		170.33	%		257.43	%
As a % of nonaccrual loans		160.14	%		172.68	%		257.43	%
Net charge-offs as a % of average loans		.12	%		.08	%		.07	%

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

	QUARTER ENDED
	(Unaudited)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2007			2007			2007			2006			2006
BALANCE SHEET(Dollars in thousands)
Total loans	$	344,149		$	338,896		$	318,421		$	322,581		$	292,614
Allowance for loan losses		(5,022	)		(4,920	)		(4,975	)		(5,006	)		(5,316	)
Total loans, net		339,127			333,976			313,446			317,575			287,298
Intangible assets		143			163			182			205			237
Total assets		401,213			393,319			375,644			382,791			363,191
Core deposits		218,638			211,773			201,529			199,609			195,774
Noncore deposits(1)		102,733			109,473			102,883			112,812			97,720
Total deposits		321,371			321,246			304,412			312,421			293,494
Total borrowings		38,239			38,307			38,307			38,307			38,307
Total shareholders’ equity		38,697			30,485			29,932			28,790			28,226
Total shares outstanding		3,428,695			3,428,695			3,428,695			3,428,695			3,428,695
AVERAGE BALANCES(Dollars in thousands)
Assets	$	400,105		$	382,065		$	380,403		$	366,566		$	362,632
Loans		340,391			324,721			318,072			301,508			289,210
Deposits		327,293			309,469			309,619			294,755			296,608
Equity		32,184			30,412			29,254			28,646			28,041
INCOME STATEMENT(Dollars in thousands)
Net interest income	$	3,560		$	3,269		$	3,178		$	3,027		$	2,952
Provision for loan losses		400			—			—			(261	)		—
Net interest income after provision		3,160			3,269			3,178			3,288			2,952
Total noninterest income		396			342			913			276			240
Total noninterest expense		3,001			3,065			3,056			3,226			3,002
Income before taxes		555			546			1,035			338			190
Provision for income taxes		(7,500	)		—			—			—			(500	)
Net income	$	8,055		$	546		$	1,035		$	338		$	690
PER SHARE DATA
Earnings — basic	$	2.35		$	.16		$	.30		$	.10		$	.20
Earnings — diluted		2.35			.16			.30			.10			.20
Book value		11.29			8.89			8.73			8.40			8.23
Market value, closing price		8.75			9.45			9.26			11.50			10.56
ASSET QUALITY RATIOS
Nonperforming loans/total loans		.92	%		1.49	%		1.53	%		.91	%		.71	%
Nonperforming assets/total assets		.90			1.30			1.33			.77			.58
Allowance for loan losses/total loans		1.46			1.45			1.56			1.55			1.82
Allowance for loan losses/nonperforming loans		158.32			97.45			102.32			170.33			257.43
PROFITABILITY RATIOS
Return on average assets		7.99	%		.57	%		1.10	%		.37	%		.75	%
Return on average equity		99.30			7.20			14.35			4.68			9.76
Net interest margin		3.71			3.60			3.55			3.44			3.36
Efficiency ratio		74.71			83.21			82.40			94.60			91.17
Average loans/average deposits		104.00			104.93			102.73			102.29			97.51
CAPITAL ADEQUACY RATIOS
Tier 1 leverage ratio		8.03	%		7.97	%		7.85	%		7.85	%		7.81	%
Tier 1 capital to risk weighted assets		9.03			8.85			9.16			8.77			9.36
Total capital to risk weighted assets		10.28			10.10			10.41			10.02			10.62
Average equity/average assets		8.04			7.96			7.69			7.81			7.73
Tangible equity/tangible assets, period end		9.61			7.71			7.92			7.47			7.71

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

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS