Mackinac Financial (MFNC) 8-K Mackinac Financial Corporation Reports Strong Results for the 2012 Third Quarter and Nine Month Periods

Exhibit 99

       

PRESS RELEASE

MACKINAC FINANCIAL CORPORATION REPORTS STRONG RESULTS FOR THE 2012
THIRD QUARTER AND NINE MONTH PERIODS

For Release:	November 1, 2012
Nasdaq:	MFNC
Contact:	Ernie R. Krueger, (906) 341-7158 /ekrueger@bankmbank.com
Website:	www.bankmbank.com

Manistique, Michigan — Mackinac Financial Corporation (Nasdaq: MFNC), the bank holding company for mBank (the “Bank”), today announced third quarter 2012 income of $.897 million or $.19 per share compared to net income of $.707 million, or $.21 per share for the third quarter of 2011. Nine month 2012 operating results totaled $5.536 million, or $1.44 per shares, which included a $3.0 million valuation adjustment to the deferred tax asset.  Operating results excluding the deferred tax asset for the first nine months of 2012 totaled $2.536 million or $.66 per share compared to $1.566 million or $.46 per share for the same period in 2011. The Corporation’s subsidiary mBank recorded net income of $1.329 million for the quarter and $3.577 million, excluding the valuation adjustment to deferred taxes, for the first nine months of this year compared to $2.439 million for the same period in 2011.

Total assets of the Corporation at September 30, 2012 were $551.117 million, up 10.53% from the $498.598 million reported at September 30, 2011 and up 10.60% from the $498.311 million of total assets at year-end 2011.

Some highlights for the first nine months of 2012 results include:

·Consummation of a common stock rights offering and the investment by Steinhardt Capital Investors, LLLP with the issuance of 2,140,178 shares for net proceeds of $11.500 million.

·New loan production of $145 million which encompasses all types of originations. Balance sheet growth equated to $32.7 million this fiscal year and $42 million from the third quarter of 2011.

·Continued success with the sale of SBA and USDA loan guarantees with sales generating $1.126 million for the first 9 months of the year.

·Continued core deposit growth of $24 million from 2011 year end

·Nine month secondary mortgage loan income of $.844 million, compared to $.394 million in the same period of 2011.

·Improved net interest margin at 4.19% compared to 3.95% for the first nine months of 2011.

·Improved credit quality with a Texas Ratio of 11.26% compared to 24.28% one year ago, with nonperforming assets of $8.801 million in 2012 compared to $14.885 million a year ago.

·Opening of our new standalone Escanaba branch banking center relocated from an in-store Menards location in August, and also the opening of our new loan production office in Traverse City in September. Both locations are considered core commerce center hubs of their respective markets, where we feel additional client generation avenues will yield long term benefits to maximize the Corporation’s value.

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Loan Production

Total loans at September 30, 2012 were $433.958 million, a 10.73% increase from the $391.903 million at September 30, 2011 and up $32.712 million from year-end 2011 total loans of $401.246 million.  The Corporation had total loan production for all loan types of $145 million in the first nine months of this year.  Comprising the total production were $73 million in commercial loans, and $72 million in consumer, $67 million of which were mortgages.  The Upper Peninsula continues to drive a large majority of the new originations, totaling $93 million, with Southeast Michigan production of $27 million, and the Northern Lower Peninsula with $25 million.  Commenting on new loan opportunities, Kelly W. George, President and Chief Executive Officer of mBank, stated, “We are extremely pleased with our success in loan production thus far in 2012. Our loan production has been all encompassing, including new home purchases and refinances, small business expansion and working capital advances, and also a fair amount of loan relationships we have been able to procure from some of our competition. Our balance sheet growth would have been greater considering our production, but we are still experiencing unexpected large loan pay downs as a result of excess cash flow from some of our stronger commercial credits and we have also had some loans that exited the bank due to competitive pricing or loan structures that we felt did not adhere to our policy standards and credit culture. In addition to the $434 million in balance sheet loans, we also have $60 million of SBA/USDA loans and $78 million of secondary market mortgage loans that we have sold but retain servicing on that respectively adds to our totals loans under management of $572 million. The servicing of these loans also provides another source of sustained noninterest income.”

Secondary Market Mortgage Lending

The Corporation made a concentrated effort several years ago to augment this line of business through some key personnel additions and technology enhancements.  These efforts appear to be making a strong foothold as the Corporation is well ahead of 2011 in terms of secondary market mortgage loans produced and sold. Thus far in 2012, the Corporation produced $45.6 million in secondary market mortgage loans compared to $21.6 million in the 2011 nine month period. Gains and fees from secondary mortgage activity totaled $.844 million in 2012 compared to $.394 million in 2011.  In addition, the Corporation also received $.121 million in fees on its secondary market servicing portfolio.

SBA/USDA Program Lending

The Corporation continues to have success in this line of business as in years past with 2012 nine month gains from sales of SBA/USDA guaranteed loan balances amounting to $1.126 million compared to $1.469 million in 2011. Total SBA/USDA loans equated to $19.370 million for the first 9 months of this year compared to $23.806 million in 2011.  The servicing of this portfolio generates an additional $.269 million in income for the Corporation.

Nonperforming Loans / Assets

Nonperforming loans totaled $5.290 million, 1.23% of total loans at September 30, 2012 compared to $9.673 million, or 2.47% of total loans at September 30, 2011 and down $2.703 million from December 31, 2011.  Nonperforming assets were reduced by $6.084 million from a year ago and stood at 1.60% of total assets equating to $8.801 million.  Total loan delinquencies resided at 1.00% or $4.320 million, almost solely made up of non-accrual commercial loans.  George, commenting on credit quality, stated, “We are pleased with our continued reduction in the level of nonperforming assets and the overall payment performance on our total loan portfolio which has shown steady improvement since the peak of the economic downturn late in 2008.  Our current level of nonperforming assets and associated costs are now more in line with a normal business climate and we annually evaluate the underlying collateral of these assets to maintain appropriate carrying values until disposition. We continue to diligently pursue final resolution of our remaining nonperforming assets and are extremely proactive with customers that may be experiencing some financial stress in order to mitigate new problem assets.”

Margin Analysis

Net interest margin in the first nine months of 2012 increased to $14.712 million, at 4.19%, compared to $13.028 million, or 3.95%, in the same period in 2011.  The interest margin increase was largely due to decreased funding costs.  George, commenting on margin items, stated, “We expect some margin pressure in future periods from a national economic policy that fosters a low interest rate environment. This has limited investment options and reduced our loan portfolio yields in this prolonged economic cycle.  We are experiencing pressure from existing borrowers and with new credit opportunities for

2

longer fixed rate terms and lower variable rate floors. Our challenge is to continue growing our loan portfolio with a balance of fixed and variable rates structured to mitigate long term interest rate risk when an upward movement begins to occur.”

Deposits

Total deposits of $439.363 million at September 30, 2012 increased 8.47% from deposits of $405.058 million on September 30, 2011.  Total deposits on September 30, 2012 were up $34.574 million from year-end 2011 deposits of $404.789 million.  The overall increase in deposits for the nine months of 2012 is comprised of an increase in noncore deposits of $10.798 million and increased core deposits of $23.776 million. George, commenting on core deposits, stated, “In 2012 we have continued to experience a good  core deposit growth, though lower than in previous years, partially due to proactive rate reductions on deposit products that led to some balance reductions from price driven deposit customers. Our balance sheet liquidity is strong, and we have been able to fund the majority of our balance sheet growth with core deposits.”

Noninterest Income/Expense

Noninterest income, at $3.060 million in the first nine months of 2012, increased $.129 million from the same period in 2011 which totaled $2.931 million. The largest driver of noninterest income in 2012 was secondary market mortgage activities and gains from SBA/USDA loan sales. Income from secondary mortgage activities totaled $1.136 million in 2012 compared to $.694 million in 2011.  SBA/USDA loan sale gains were behind 2011 with year to date gains of $1.126 million compared to 2011 gains of $1.469 million.

Noninterest expense, at $12.408 million in the first nine months of 2012, increased $.659 million, or 5.61% from the same period in 2011.  Increased expenses were noted in data processing, professional services associated with the divesture auction of our TARP securities and nominal employment costs. The FDIC premiums were reduced by 53.11% in the first nine months of 2012 to $.354 million down from $.755 million in the same period in 2011. George commenting on areas of increased expenses, “We are diligent in our efforts to manage our operating expenses that has been increasingly challenging due to increased overall costs associated with the banking climate, along with an ever changing need for upgrading our technology to stay ahead and thwart cyber/internet fraud while maintaining operational efficiencies.”

Capital

In August, the Corporation consummated the common stock rights offering and the capital investment by Steinhardt Capital Investors, LLLP with the issuance of 2,140,178 shares of common stock for $11.500 million. Total shareholders’ equity at September 30, 2012 totaled $72.945 million, compared to $55.479 million on September 30, 2011, an increase of $17.466 million, or 31.48%.  Book value of common shareholders’ equity was $11.14 per share at September 30, 2012 compared to $13.05 per share at September 30, 2011 and compared to $46.148 million, or $12.97 per share on December 31, 2011. The Corporation and the Bank are both “well-capitalized” with Tier 1 Capital at the Corporation of 11.93% and 9.26% at the Bank.

Paul D. Tobias, Chairman and Chief Executive Officer, concluded, “We are proud of our operating results thus far in 2012. We have continued our great success in the generation of new loans and have been able to grow our balances during extremely challenging times. We expect to close the year strong since our pipeline is robust with both balance sheet and secondary market loans. Looking forward, we are positioned well for expansion with our recent capital raise of $11.5 million from our rights offering and the investment from the Steinhardt family. This new capitalization and the access to the capital and the funding that accompany an association with the Steinhardts will be significant catalysts in the execution of our long-term strategic plan for franchise growth and increasing shareholder value.”

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $550 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 11 branch locations; seven in the Upper Peninsula, three in the Northern Lower Peninsula and one in Oakland County, Michigan.  The Corporation’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.

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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

	September 30,			December 31,			September 30,
(Dollars in thousands, except per share data)	2012			2011			2011
	(Unaudited)						(Unaudited)
Selected Financial Condition Data (at end of period):
Assets	$	551,117		$	498,311		$	498,598
Loans	433,958			401,246			391,903
Investment securities	42,476			38,727			37,022
Deposits	439,363			404,789			405,058
Borrowings	35,925			35,997			35,997
Common Shareholders’ Equity	61,945			44,342			44,613
Shareholders’ equity	72,945			55,263			55,479
Selected Statements of Income Data (nine months and year ended):
Net interest income	$	14,712		$	17,929		$	13,028
Income before taxes and preferred dividend	4,569			3,316			3,210
Net income	5,536			1,452			1,566
Income per common share - Basic	1.44			.42			.46
Income per common share - Diluted	1.39			.41			.45
Weighted average shares outstanding	3,857,002			3,419,736			3,419,736
Weighted average shares outstanding- Diluted	3,976,852			3,500,204			3,503,347
Three Months Ended:
Net interest income	$	4,930		4,901			4,709
Income before taxes and preferred dividend	1,562			105			1,355
Net income	897			(114		)	707
Income per common share - Basic	.19			(.03		)	.21
Income per common share - Diluted	.18			(.03		)	.20
Weighted average shares outstanding	4,722,029			3,419,736			3,419,736
Weighted average shares outstanding- Diluted	4,858,215			3,480,347			3,509,581
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin	4.19		%	4.06		%	3.95		%
Efficiency ratio	67.07			68.43			68.73
Return on average assets	1.42			.30			.43
Return on average common equity	15.21			3.30			4.81
Return on average equity	12.41			2.66			3.85
Average total assets	$	520,387		$	489,539		$	490,293
Average common shareholders’ equity	48,604			43,940			43,563
Average total shareholders’ equity	59,582			54,561			54,340
Average loans to average deposits ratio	98.90		%	98.05		%	96.96		%
Common Share Data at end of period:
Market price per common share	$	7.60		$	5.42		$	5.46
Book value per common share	$	11.14		$	12.97		$	13.05
Common shares outstanding	5,559,914			3,419,736			3,419,736
Other Data at end of period:
Allowance for loan losses	$	5,186		$	5,251		$	5,838
Non-performing assets	$	8,801		$	11,155		$	14,885
Allowance for loan losses to total loans	1.20		%	1.31		%	1.49		%
Non-performing assets to total assets	1.60		%	2.24		%	2.99		%
Texas ratio	11.26		%	18.43		%	24.28		%
Number of:
Branch locations	11			11			11
FTE Employees	121			116			114

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			September 30,
	2012			2011			2011
	(Unaudited)						(Unaudited)
ASSETS
Cash and due from banks	$	31,403		$	20,071		$	30,122
Federal funds sold	16,002			13,999			12,000
Cash and cash equivalents	47,405			34,070			42,122
Interest-bearing deposits in other financial institutions	10			10			10
Securities available for sale	42,476			38,727			37,022
Federal Home Loan Bank stock	3,060			3,060			3,060
Loans:
Commercial	329,891			311,215			312,678
Mortgage	93,446			83,106			72,379
Consumer	10,621			6,925			6,846
Total Loans	433,958			401,246			391,903
Allowance for loan losses	(5,186		)	(5,251		)	(5,838		)
Net loans	428,772			395,995			386,065
Premises and equipment	10,744			9,627			9,507
Other real estate held for sale	3,511			3,162			5,212
Deferred Tax Asset	9,670			8,427			8,349
Other assets	5,469			5,233			7,251
TOTAL ASSETS	$	551,117		$	498,311		$	498,598
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest bearing deposits	$	62,306		$	51,273		$	53,736
NOW, money market, interest checking	152,286			152,563			157,596
Savings	15,783			14,203			15,618
CDs<$100,000	142,125			130,685			119,893
CDs>$100,000	25,390			23,229			24,138
Brokered	41,473			32,836			34,077
Total deposits	439,363			404,789			405,058
Borrowings	35,925			35,997			35,997
Other liabilities	2,884			2,262			2,064
Total liabilities	478,172			443,048			443,119
SHAREHOLDERS’ EQUITY:
Preferred stock - No par value:
Authorized 500,000 shares, Issued and outstanding - 11,000 shares	11,000			10,921			10,866
Common stock and additional paid in capital - No par value
Authorized - 18,000,000 shares
Issued and outstanding - 5,559,914, 3,419,736 and 3,419,736 shares respectively	55,047			43,525			43,525
Retained earnings	6,028			492			607
Accumulated other comprehensive income	870			325			481
Total shareholders’ equity	72,945			55,263			55,479
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	551,117		$	498,311		$	498,598

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2012		2011		2012			2011
	(Unaudited)				(Unaudited)
INTEREST INCOME:
Interest and fees on loans:
Taxable	$	5,803	$	5,584	$	17,256		$	15,918
Tax-exempt	28		35		90			114
Interest on securities:
Taxable	226		304		728			878
Tax-exempt	6		7		20			21
Other interest income	41		26		96			89
Total interest income	6,104		5,956		18,190			17,020
INTEREST EXPENSE:
Deposits	1,011		1,091		2,986			3,541
Borrowings	163		156		492			452
Total interest expense	1,174		1,247		3,478			3,993
Net interest income	4,930		4,709		14,712			13,027
Provision for loan losses	150		400		795			1,000
Net interest income after provision for loan losses	4,780		4,309		13,917			12,027
OTHER INCOME:
Deposit service fees	155		180		538			616
Income from secondary market loans sold	320		195		844			394
SBA/USDA loan sale gains	506		283		1,126			1,469
Mortgage servicing income	92		300		292			300
Other	76		48		260			152
Total other income	1,149		1,006		3,060			2,931
OTHER EXPENSE:
Salaries and employee benefits	2,063		1,811		6,041			5,441
Occupancy	370		334		1,050			1,048
Furniture and equipment	213		197		660			612
Data processing	253		177		739			532
Professional service fees	210		165		700			550
Loan and deposit	195		288		674			719
Writedowns and losses on other real estate held for sale	265		296		450			728
FDIC insurance assessment	36		215		354			755
Telephone	56		51		168			160
Advertising	96		93		292			292
Other	610		333		1,280			912
Total other expenses	4,367		3,960		12,408			11,749
Income before provision for income taxes	1,562		1,355		4,569			3,209
Provision for income taxes	528		455		(1,458		)	1,071
NET INCOME	1,034		900		6,027			2,138
Preferred dividend and accretion of discount	137		193		491			573
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	897	$	707	$	5,536		$	1,565
INCOME PER COMMON SHARE:
Basic	$	.19	$	.21	$	1.44		$	.46
Diluted	$	.18	$	.20	$	1.39		$	.45

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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,
	2012		2011		2011
	(Unaudited)		(Unaudited)		(Audited)
Commercial Loans:
Real estate - operators of nonresidential buildings	$	88,505	$	75,391	$	62,567
Hospitality and tourism	36,950		33,306		33,867
Real estate agents and managers	12,336		10,617		16,433
Lessors of nonresidential buildings	12,326		16,499		19,771
Other	158,017		155,657		166,497
Total Commercial Loans	308,134		291,470		299,135
1-4 family residential real estate	86,643		77,332		78,759
Consumer	10,621		6,925		6,268
Construction
Commercial	21,757		19,745		—
Consumer	6,803		5,774		7,741
Total Loans	$	433,958	$	401,246	$	391,903

Credit Quality (at end of period):

	September 30,			December 31,			September 30,
	2012			2011			2011
	(Unaudited)			(Unaudited)			(Unaudited)
Nonperforming Assets :
Nonaccrual loans	$	3,122		$	5,490		$	5,954
Loans past due 90 days or more	—			—			—
Restructured loans	2,168			2,503			3,719
Total nonperforming loans	5,290			7,993			9,673
Other real estate owned	3,511			3,162			5,212
Total nonperforming assets	$	8,801		$	11,155		$	14,885
Nonperforming loans as a % of loans	1.22		%	1.99		%	2.47		%
Nonperforming assets as a % of assets	1.60		%	2.24		%	2.99		%
Reserve for Loan Losses:
At period end	$	5,186		$	5,251		$	5,838
As a % of average loans	1.24		%	1.35		%	1.19		%
As a % of nonperforming loans	98.03		%	65.69		%	60.35		%
As a % of nonaccrual loans	166.11		%	95.65		%	98.05		%
Texas Ratio	11.26		%	18.43		%	24.28		%
Charge-off Information (year to date):
Average loans	$	417,159		$	388,115		$	385,391
Net charge-offs	$	860		$	3,662		$	1,775
Charge-offs as a % of average
loans, annualized	.28		%	.94		%	.62		%

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES

QUARTERLY FINANCIAL HIGHLIGHTS

	QUARTER ENDED
	(Unaudited)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2012			2012			2012			2011			2011
BALANCE SHEET (Dollars in thousands)
Total loans	$	433,958		$	419,453		$	414,402		$	401,246		$	391,903
Allowance for loan losses	(5,186		)	(5,083		)	(5,382		)	(5,251		)	(5,838		)
Total loans, net	428,772			414,370			409,020			395,995			386,065
Total assets	551,117			524,366			506,496			498,311			498,598
Core deposits	372,500			357,933			355,186			348,724			346,843
Noncore deposits (1)	66,863			67,448			56,902			56,065			58,215
Total deposits	439,363			425,381			412,088			404,789			405,058
Total borrowings	35,925			35,997			35,997			35,997			35,997
Common shareholders’ equity	61,945			49,352			45,119			44,342			44,613
Total shareholders’ equity	72,945			60,352			56,095			55,263			55,479
Total shares outstanding	5,559,914			3,419,736			3,419,736			3,419,736			3,419,736
Weighted average shares outstanding	4,722,029			3,419,736			3,419,736			3,419,736			3,419,736
AVERAGE BALANCES (Dollars in thousands)
Assets	$	545,788		$	511,681		$	503,412		$	487,304		$	497,333
Loans	424,461			422,887			404,048			396,197			397,665
Deposits	439,327			452,655			409,250			390,940			403,957
Common Equity	56,327			44,927			44,469			44,325			44,105
Equity	67,327			55,915			55,418			55,219			54,998
INCOME STATEMENT (Dollars in thousands)
Net interest income	$	4,930		$	5,019		$	4,763		$	4,901		$	4,709
Provision for loan losses	150			150			495			1,300			400
Net interest income after provision	4,780			4,869			4,268			3,601			4,309
Total noninterest income	1,149			1,305			606			725			1,006
Total noninterest expense	4,367			4,207			3,834			4,221			3,960
Income before taxes	1,562			1,967			1,040			105			1,355
Provision for income taxes	528			(2,335		)	349			27			455
Net income	1,034			4,302			691			78			900
Preferred dividend expense	137			161			193			192			193
Net income (loss) available to common shareholders	$	897		$	4,141		$	498		$	(114	)	$	707
PER SHARE DATA
Earnings	$	.19		$	1.21		$	.15		$	(.03	)	$	.21
Book value per common share	11.14			14.43			13.19			12.97			13.05
Market value, closing price	7.60			5.99			7.00			5.42			5.46
ASSET QUALITY RATIOS
Nonperforming loans/total loans	1.22		%	1.28		%	1.65		%	1.99		%	2.47		%
Nonperforming assets/total assets	1.60			1.70			2.04			2.24			2.99
Allowance for loan losses/total loans	1.20			1.21			1.30			1.31			1.49
Allowance for loan losses/nonperforming loans	98.03			94.57			78.49			65.69			60.35
Texas ratio (2)	11.26			13.59			16.84			18.43			24.28
PROFITABILITY RATIOS
Return on average assets	.65		%	3.21		%	.40		%	(.09		)%	.56		%
Return on average common equity	6.33			36.57			4.53			(1.02		)	6.35
Return on average equity	5.29			29.39			3.62			(.82		)	5.10
Net interest margin	4.10			4.30			4.17			4.38			4.14
Efficiency ratio	67.29			63.61			71.01			69.04			67.39
Average loans/average deposits	96.62			101.50			98.73			101.34			98.44
CAPITAL ADEQUACY RATIOS
Tier 1 leverage ratio	11.93		%	10.16		%	9.95		%	10.08		%	9.73		%
Tier 1 capital to risk weighted assets	14.02			12.87			11.55			11.62			11.65
Total capital to risk weighted assets	15.15			14.12			12.80			12.87			12.97
Average equity/average assets	12.34			10.93			11.01			11.33			11.06
Tangible equity/tangible assets	13.36			11.51			11.01			11.33			11.06

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

(2) Texas ratio equals nonperforming assets divided by shareholders' equity plus allowance for loan losses

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MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS

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