Mackinac Financial (MFNC) 8-K Mackinac Financial Corporation Reports First Quarter 2007 Results

EXHIBIT 99

PRESS RELEASE

For Release:	April 26, 2007
Nasdaq:	MFNC
Contact:	Investor Relations at (888) 343-8147
Website:	www.bankmbank.com

MACKINAC FINANCIAL CORPORATION
REPORTS FIRST QUARTER 2007 RESULTS

(Manistique, Michigan) — Mackinac Financial Corporation (Nasdaq: MFNC), the bank holding company for mBank (the “Bank”) today announced first quarter 2007 income of $1.035 million or $.30 per share compared to net income of $.498 million, or $.15 per share for the first quarter of 2006. Weighted average shares outstanding amounted to 3,428,695 in both periods.

The results of operations for the first quarter of 2007 include the proceeds received, $470,000, in the settlement of a lawsuit against the Corporation’s former accountants. The first quarter 2006 results include a $600,000 negative loan loss provision. Excluding the lawsuit settlement and the provision adjustment, the net income in the first quarter of 2007 amounted to $.568 million, compared to a loss of .102 million for the same period in 2006.

Paul Tobias, Chairman and Chief Executive Officer, commented, “We are pleased that our earnings are beginning to reflect the progress we have made in growing our loan portfolio and capturing deposit market share. Our 2007 operating plan calls for additional growth in loans and deposits and an improved deposit mix. If we accomplish our goals we expect our profitability to continue to improve.”

Total assets of the Corporation at March 31, 2007 were $375.644 million, up 12.27 percent from the $334.591 million in total assets reported at March 31, 2006. First quarter-end total assets were down 1.87 percent from the $382.791 million of total assets at year-end 2006.

Total loans at March 31, 2007 were $318.421 million, a 20.4% increase from the $264.471 million at March 31, 2006. Total loans at the end of the first quarter of 2007 decreased $4.160 million, or 1.29 percent from year-end 2006 total loans of $322.581 million. Tobias stated, “Loan growth in the first quarter was retarded by large paydowns amounting to $22.8 million; however, our first quarter new loan production was strong at $26.6 million, which should translate into solid growth in the near term as these loans fund. We are also seeing good loan demand in all of our markets and expect to see solid loan production for the remainder of 2007 in spite of the troubles in our Michigan economy.”

Total deposits of $304.412 million at March 31, 2007 were up 13.61 percent from deposits of $267.954 million on March 31, 2006. Deposits were down 2.56 percent from year-end 2006 deposits of $312.421 million. Deposit growth declined in the 2007 first quarter largely due to decreases in wholesale brokered deposits totaling $10.8 million. Our core deposit account balances actually increased by $1.920 million in the first quarter. Mr. Tobias added, “As we grow our loan portfolio, we are working hard to develop core deposit funding in order to maintain adequate interest margins and support our increased profitability objectives. We continue to supplement our northern branch system by offering highly competitive rates, lower fees and account costs, efficient internet banking, remote deposit capture, and courier services. We have recently added three treasury management specialists to further enhance our ability to generate business related deposits.”

Nonperforming assets at the end of the first quarter of 2007 totaled $4.989 million which was up $2.024 million from 2006 year end balances. This first quarter increase is not indicative of any overall deterioration in portfolio credit quality and is still relatively low by comparative peer standards, at 1.33%. Tobias, commenting on credit quality, stated, “The nonperforming assets are credits that we have been following since the recapitalization and we believe that we are adequately reserved. The strength of credit in our portfolio allows our lending staff to concentrate on new loan production. Our credit process also includes an aggressive early resolution process for nonperforming assets, which limits our losses.

Shareholders’ equity at March 31, 2007 totaled $29.932 million, or $8.73 per share, compared to $27.173 million, or $7.93 per share on March 31, 2006.

Tobias concluded, “We are pleased with our first quarter net income results. Loan balances, as mentioned were significantly impacted by large loan paydowns and we do expect that we will resume our recent growth trends in the second quarter and for the remainder of 2007. We also expect increased core deposit growth aided by our recent staffing additions, to help us continue to move towards and then beyond peer profitability levels.”

Mackinac Financial Corporation is a registered bank holding company which owns mBank. The Bank has 13 offices; 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 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
	March 31,			December 31,			March 31,
	2007			2006			2006
	(Unaudited)						(Unaudited)
Selected Financial Condition Data (at end of period):
Total assets	$	375,644		$	382,791		$	334,591
Total loans		318,421			322,581			264,471
Total deposits		304,412			312,421			267,954
Borrowings and subordinated debentures		38,307			38,307			36,417
Total shareholders’ equity		29,932			28,790			27,173
Selected Statements of Income Data:
Net interest income	$	3,178		$	11,593		$	3,279
Income (loss) before taxes		1,035			1,216			498
Net income (loss)		1,035			1,716			498
Income (loss) per common share — Basic		.30			.50			.15
Income (loss) per common share — Diluted		.30			.50			.15
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin		3.55	%		3.51	%		3.62	%
Efficiency ratio		82.40			93.95			82.88
Return on average assets		1.10			.49			.63
Return on average equity		14.35			6.19			7.47
Average total assets	$	380,403		$	347,927		$	319,007
Average total shareholders’ equity		29,254			27,744			27,055
Average loans to average deposits ratio		102.73	%		99.77	%		126.73	%
Common Share Data (at end of period):
Market price per common share	$	9.26		$	11.50		$	9.81
Book value per common share	$	8.73		$	8.40		$	7.93
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	$	4,975		$	5,006		$	5,415
Non-performing assets	$	4,989		$	2,965		$	952
Allowance for loan losses to total loans		1.56	%		1.55	%		2.05	%
Non-performing assets to total assets		1.33	%		.77	%		.28	%
Number of:
Branch locations		13			13			13
FTE Employees		104			99			105

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,			March 31,
(Dollars in thousands)	2007			2006			2006
	(unaudited)						(unaudited)
ASSETS
Cash and due from banks	$	5,647		$	4,865		$	6,220
Federal funds sold		6,330			5,841			12,000
Cash and cash equivalents		11,977			10,706			18,220
Interest-bearing deposits in other financial institutions		856			856			853
Securities available for sale		28,511			32,769			34,140
Federal Home Loan Bank stock		3,794			3,794			4,855
Loans:
Commercial		261,246			261,726			212,052
Mortgage		54,204			58,014			50,119
Installment		2,971			2,841			2,300
Total Loans		318,421			322,581			264,471
Allowance for loan losses		(4,975	)		(5,006	)		(5,415	)
Net loans		313,446			317,575			259,056
Premises and equipment		12,252			12,453			12,318
Other real estate held for sale		127			26			952
Other assets		4,681			4,612			4,197
TOTAL ASSETS	$	375,644		$	382,791		$	334,591
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Non-interest-bearing deposits	$	23,416		$	23,471		$	20,463
Interest-bearing deposits
NOW and Money Market		70,558			73,188			67,467
Savings		13,488			13,365			15,304
CDs<$100,000		94,067			89,585			80,204
CDs>$100,000		24,475			23,645			15,246
Brokered		78,408			89,167			69,270
Total deposits		304,412			312,421			267,954
Borrowings		38,307			38,307			36,417
Other liabilities		2,993			3,273			3,047
Total liabilities		345,712			354,001			307,418
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		42,750			42,722			42,489
Accumulated deficit		(12,709	)		(13,745	)		(14,961	)
Accumulated other comprehensive (loss)		(109	)		(187	)		(355	)
Total shareholders’ equity		29,932			28,790			27,173
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	375,644		$	382,791		$	334,591

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share data)	Three Months Ended
	March 31,
	2007		2006
	(Unaudited)		(Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable	$	6,233	$	4,499
Tax-exempt		171		194
Interest on securities:
Taxable		301		273
Tax-exempt		—		41
Other interest income		200		168
Total interest income		6,905		5,175
INTEREST EXPENSE:
Deposits		3,222		2,080
Borrowings		505		416
Total interest expense		3,727		2,496
Net interest income		3,178		2,679
Provision for loan losses		—		(600	)
Net interest income after provision for loan losses		3,178		3,279
OTHER INCOME:
Service fees		161		111
Net security gains		—		—
Net gains on sale of secondary market loans		108		40
Other		644		65
Total other income		913		216
OTHER EXPENSES:
Salaries and employee benefits		1,738		1,594
Occupancy		334		317
Furniture and equipment		157		156
Data processing		171		154
Professional service fees		151		200
Loan and deposit		72		129
Telephone		58		49
Advertising		92		70
Other		283		328
Total other expenses		3,056		2,997
Income before provision for income taxes		1,035		498
Provision for (benefit of) income taxes		—		—
NET INCOME	$	1,035	$	498
INCOME PER COMMON SHARE:
Basic	$	.30	$	.15
Diluted	$	.30	$	.15

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,
	2007		2006		2006
Commercial Loans
Real estate — operators of nonresidential buildings	$	44,155	$	44,308	$	32,440
Hospitality and tourism		33,726		30,826		38,045
Real estate agents and managers		27,313		25,071		12,350
New car dealers		10,139		10,086		9,988
Other		105,937		115,426		98,224
Total Commercial Loans		221,270		225,717		191,047
1-4 family residential real estate		54,204		58,014		50,119
Consumer		2,971		2,841		2,300
Construction		39,976		36,009		21,005
Total Loans	$	318,421	$	322,581	$	264,471

Credit Quality (at end of period):

	March 31,			December 31,			March 31,
	2007			2006			2006
Nonperforming Assets :
Nonaccrual loans	$	4,142		$	2,899		$	—
Loans past due 90 days or more		720			40			—
Restructured loans		—			—			—
Total nonperforming loans		4,862			2,939			—
Other real estate owned		127			26			952
Total nonperforming assets	$	4,989		$	2,965		$	952
Nonperforming loans as a % of loans		1.53	%		.91	%		—	%
Nonperforming assets as a % of assets		1.33	%		.77	%		.28	%
Reserve for Loan Losses:
At period end	$	4,975		$	5,006		$	5,415
As a % of loans		1.56	%		1.55	%		2.05	%
As a % of nonperforming loans		102.32	%		170.33	%		N/M	%
As a % of nonaccrual loans		120.11	%		172.68	%		N/M	%

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

	QUARTER ENDED
	March 31,			December 31,			September 30,			June 30,			March 31,
	2007			2006			2006			2006			2006
BALANCE SHEET(Dollars in thousands)
Total loans	$	318,421		$	322,581		$	292,614		$	283,110		$	264,471
Allowance for loan losses		(4,975	)		(5,006	)		(5,316	)		(5,415	)		(5,415	)
Total loans, net		313,446			317,575			287,298			277,695			259,056
Intangible assets		182			205			237			268			299
Total assets		375,644			382,791			363,191			352,497			334,591
Core deposits		201,529			199,609			195,774			185,784			183,438
Noncore deposits(1)		102,883			112,812			97,720			98,380			84,516
Total deposits		304,412			312,421			293,494			284,164			267,954
Total borrowings		38,307			38,307			38,307			37,617			36,417
Total shareholders’ equity		29,932			28,790			28,226			27,179			27,173
Total shares outstanding		3,428,695			3,428,695			3,428,695			3,428,695			3,428,695
INCOME STATEMENT(Dollars in thousands)
Net interest income	$	3,178		$	3,027		$	2,952		$	2,935		$	2,679
Provision for loan losses		—			(261	)		—			—			(600	)
Net interest income after provision		3,178			3,288			2,952			2,935			3,279
Total noninterest income		913			276			240			251			216
Total noninterest expense		3,056			3,226			3,002			2,996			2,997
Income before taxes		1,035			338			190			190			498
Provision for income taxes		—			—			(500	)		—			—
Net income	$	1,035		$	338		$	690		$	190		$	498
PER SHARE DATA
Earnings per share — basic	$	.30		$	.10		$	.20		$	.05		$	.15
Earnings per share — diluted		.30			.10			.20			.05			.15
Book value per share		8.73			8.40			8.23			7.93			7.93
ASSET QUALITY RATIOS
Nonperforming loans/total loans		1.53	%		.91	%		.71	%		.16	%		N/M	%
Nonperforming assets/total assets		1.33			.77			.58			.14			.28
Allowance for loan losses/total loans		1.56			1.55			1.82			1.91			2.05
Allowance for loan losses/nonperforming loans		102.32			170.33			257.43			1,214.13			N/M
PROFITABILITY RATIOS
Return on average assets		1.10	%		.37	%		.75	%		.22	%		.63	%
Return on average equity		14.35			4.68			9.76			2.82			7.47
Net interest margin		3.55			3.44			3.36			3.62			3.62
Efficiency ratio		82.40			94.60			91.17			91.41			99.37
Average loans/average deposits		102.73			102.29			97.51			99.67			98.44
CAPITAL ADEQUACY RATIOS
Leverage ratio		7.85	%		7.85	%		7.81	%		8.04	%		8.54	%
Tier 1 capital ratio		9.16			8.77			9.36			9.28			9.74
Total capital ratio		10.41			10.02			10.62			10.54			11.00
Average equity/average assets		7.69			7.81			7.73			7.94			8.48
Tangible equity/tangible assets		7.74			7.47			7.71			7.64			8.04

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

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS