Mackinac Financial Corporation Announces Annual Results for 2004MANISTIQUE, MI -- 03/02/2005 -- Mackinac Financial Corporation (NASDAQ: MFNC), the holding company for North Country Bank and Trust, has reported a net loss of $1.595 million, or $3.23 per share, for the year ended December 31, 2004, compared to a net loss of $9.588 million, or $27.32 per share, for 2003.
The 2004 operational results, although disappointing, represent a loss reduction of $7.993 million from that reported in 2003.
Paul Tobias, Chairman and Chief Executive Officer commented, "2004 was a year of great change for Mackinac Financial Corporation. The year began with a new and dedicated turn-around management team, led by Jim Bess, President of the Corporation. This management team dealt with the issues of high levels of nonperforming assets and the need to shrink the Bank to survive. Jim and his able team significantly reduced nonperforming assets and successfully shrunk the Bank to preserve liquidity and offer a chance for survival. Their efforts were rewarded in December when a new group of investors purchased $30 million of common stock in a private placement."
Total assets of the Corporation declined from $422.539 million at the end of 2003 to $339.497 million at 2004 year-end. The decrease in assets is largely due to a combination of deposit reductions through branch sales and closures along with the sale of nonperforming assets. The Corporation's shareholders' equity showed a $24.030 million increase, primarily as a result of the proceeds from the private placement.
Tobias stated, "We are excited about our future prospects. We have restructured the Corporation's risk profile by selling the majority of its problem assets." Nonperforming assets at 2004 year-end totaled $6.037 million, or 1.78% of assets, compared to $50.438 million, or 11.94% of assets, at the end of 2003. "The reductions in nonperforming assets and the current interest rate environment will help us to show continued improvement in our net interest margin. We recently paid off $45 million in fixed rate Federal Home Loan Bank advances which will also provide added margin improvement. More importantly, we have a great team and one that is growing. We have added a very talented and experienced commercial lender in Oakland County where we opened a loan production office as a part of the operational plan initiated with the recapitalization. Additionally, we are currently interviewing candidates for our promising Northern Michigan markets."
Commenting further, Tobias added, "Our plan is simple and that is to return to our roots as a customer responsive community bank that makes good loans. We are poised to launch a new identity with a branding and marketing campaign designed to recapture lost market share in Northern Michigan. We will be revising our loan and deposit products to make us more competitive. We believe that we can compete very effectively in all of our markets using 'big bank' lending skills with delivery of products and services through first class community bankers."
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 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
Years Ended December 31, 2004 and 2003
(Dollars in Thousands)
(Unaudited)
(Dollars in thousands, except per share data)
For The Year December 31,
2004 2003
Selected Financial Condition Data ---------- ----------
(at end of period):
Total assets $ 339,497 $ 422,539
Total loans 203,832 297,846
Total deposits 215,650 305,794
Borrowings and subordinated debentures 85,039 99,476
Total shareholders' equity 34,730 10,700
Selected Statements of Income Data:
Net interest income $ 8,238 $ 9,626
Loss before taxes (1,448) (7,259)
Net loss (1,595) (9,588)
Loss per common share - Basic (3.23) (27.32)
Loss per common share - Diluted (3.19) (27.32)
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin 2.57% 2.25%
Efficiency ratio 103.05 150.82
Return on average assets (.44) (1.96)
Return on average equity (18.64) (59.15)
Average total assets $ 365,024 $ 489,184
Average total shareholders' equity 8,555 16,210
Average loans to average deposits ratio 97.40% 99.30%
Common Share Data at end of period:
Market price per common share $ 17.97 $ 35.20
Book value per common share $ 10.13 $ 30.40
Common shares outstanding 3,428,695 350,958
Other Data at end of period:
Allowance for loan losses $ 6,966 $ 22,005
Non-performing assets 6,037 50,438
Allowance for loan losses to total loans 3.42% 7.39%
Non-performing assets to total assets 1.78% 11.94%
Number of:
Branch locations 12 22
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Years Ended December 31, 2004 and 2003
(Dollars in Thousands)
(Unaudited)
2004 2003
---- ----
ASSETS
Cash and due from banks $ 4,230 $ 7,433
Federal funds sold 39,848 15,600
--------- ---------
Cash and cash equivalents 44,078 23,033
Interest-bearing deposits in other
financial institutions 18,535 6,048
Securities available for sale 57,075 84,774
Federal Home Loan Bank stock 4,754 4,544
Total loans 203,832 297,846
Allowance for loan losses (6,966) (22,005)
--------- ---------
Net loans 196,866 275,841
Premises and equipment 10,739 13,747
Other real estate held for sale 1,730 4,356
Other assets 5,720 10,196
--------- ---------
TOTAL ASSETS $ 339,497 $ 422,539
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 20,956 $ 26,179
Interest-bearing deposits 194,694 279,615
--------- ---------
Total deposits 215,650 305,794
Borrowings 85,039 87,026
Subordinated debentures 0 12,450
Other liabilities 4,078 6,569
--------- ---------
Total liabilities 304,767 411,839
Shareholders' equity:
Preferred stock - No par value:
Authorized 500,000 shares, no
shares outstanding 0 0
Common stock and additional paid-in
capital - No par value
Authorized - 18,000,000 shares
Issued and outstanding - 3,428,695 and
350,958, respectively 42,335 16,175
Retained earnings (8,097) (6,502)
Accumulated other comprehensive income 492 1,027
--------- ---------
Total shareholders' equity 34,730 10,700
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 339,497 $ 422,539
========= =========
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2004, 2003, and 2002
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
2004 2003 2002
-------- -------- --------
Interest income:
Interest and fees on loans:
Taxable $ 14,517 $ 18,999 $ 29,615
Tax-exempt 1,180 1,534 2,256
Interest on securities:
Taxable 2,401 2,277 3,360
Tax-exempt 171 230 266
Other interest income 584 601 472
-------- -------- --------
Total interest income 18,853 23,641 35,969
-------- -------- --------
Interest expense:
Deposits 5,443 8,695 12,444
Borrowings 4,730 4,832 5,100
Subordinated debentures 442 488 545
-------- -------- --------
Total interest expense 10,615 14,015 18,089
-------- -------- --------
Net interest income 8,238 9,626 17,880
Provision for loan losses -0- -0- 26,658
-------- -------- --------
Net interest income after
provision for loan losses 8,238 9,626 (8,778)
-------- -------- --------
Other income:
Service fees 982 1,529 1,899
Loan and lease fees 17 58 1,095
Net security gains -0- 427 746
Net gains on sale of loans 39 136 506
Gain on sale of branches 205 -0- 464
Gain on settlement of
subordinated debentures 6,617 -0- -0-
Other 682 1,081 548
-------- -------- --------
Total other income 8,542 3,231 5,258
-------- -------- --------
Other expenses:
Salaries and employee benefits 8,032 5,973 7,589
Furniture and equipment 887 1,367 1,437
Occupancy 994 1,387 1,629
Data processing 1,220 1,517 1,894
Accounting, legal, and consulting fees 1,836 3,145 1,800
Loan and deposit 1,718 1,992 1,111
Telephone 382 1,382 1,305
Impairment loss on intangibles -0- 60 3,647
Impairment loss on other
real estate held for sale 265 400 2,418
Loss on sale of premises, equipment,
and other real estate held for sale 459 362 648
Advertising 115 182 545
Amortization of acquisition intangibles 308 460 420
Other 2,012 1,889 2,620
-------- -------- --------
Total other expenses 18,228 20,116 27,063
-------- -------- --------
Loss before provision for income taxes (1,448) (7,259) (30,583)
Provision for income taxes 147 2,329 (3,870)
-------- -------- --------
Net loss $ (1,595) $ (9,588) $(26,713)
======== ======== ========
Loss per common share:
Basic $ (3.23) $ (27.32) $ (76.11)
======== ======== ========
Diluted $ (3.23) $ (27.32) $ (76.11)
======== ======== ========
Contact:
Investor Relations
(800) 200-7032
Website: www.northcountrybank.com
