Mackinac Financial (MFNC) 10-K 12 Mar 20 2019 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Mar. 10, 2020	Jun. 30, 2019
Document and Entity Information
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Entity Registrant Name	MACKINAC FINANCIAL CORP /MI/
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,755,178
Entity Central Index Key	0000036506
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float			$ 169,703

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 49,794	$ 64,151
Federal funds sold	32	6
Cash and cash equivalents	49,826	64,157
Interest-bearing deposits in other financial institutions	10,295	13,452
Securities available for sale	107,972	116,748
Federal Home Loan Bank stock	4,924	4,924
Loans:
Commercial	765,524	717,032
Mortgage	272,014	301,461
Consumer	21,238	20,371
Total Loans	1,058,776	1,038,864
Allowance for loan losses	(5,308)	(5,183)
Net loans	1,053,468	1,033,681
Premises and equipment	23,608	22,783
Other real estate held for sale	2,194	3,119
Deferred tax asset	3,732	5,763
Deposit based intangibles	5,043	5,720
Goodwill	19,574	22,024
Other assets	39,433	25,669
TOTAL ASSETS	1,320,069	1,318,040
Deposits:
Noninterest bearing deposits	287,611	241,556
NOW, money market, interest checking	373,165	368,890
Savings	109,548	111,358
CDs less than $250,000	233,956	225,236
CDs more than $250,000	12,775	13,737
Brokered	58,622	136,760
Total deposits	1,075,677	1,097,537
Federal funds purchased	6,225	2,905
Borrowings	64,551	57,536
Other liabilities	11,697	7,993
Total liabilities	1,158,150	1,165,971
SHAREHOLDERS’ EQUITY:
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,748,712 and 10,712,745 respectively	129,564	129,066
Retained earnings	31,740	23,466
Accumulated other comprehensive income (loss)
Unrealized gains (losses) on available for sale securities	1,025	(245)
Minimum pension liability	(410)	(218)
Total shareholders’ equity	161,919	152,069
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,320,069	$ 1,318,040

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0	$ 0
Common stock, Authorized shares	18,000,000	18,000,000
Common stock, Shares issued	10,748,712	10,712,745
Common stock, Shares outstanding	10,748,712	10,712,745

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Interest and fees on loans:
Taxable	$ 59,673	$ 51,407
Tax-exempt	187	123
Interest on securities:
Taxable	2,708	2,408
Tax-exempt	343	338
Other interest income	1,473	1,101
Total interest income	64,384	55,377
INTEREST EXPENSE:
Deposits	9,436	6,492
Borrowings	1,041	1,755
Total interest expense	10,477	8,247
Net interest income	53,907	47,130
Provision for loan losses	385	500
Net interest income after provision for loan losses	53,522	46,630
OTHER INCOME:
Deposit service fees	1,586	1,441
Income from mortgage loans sold on the secondary market	1,889	1,289
SBA/USDA loan sale gains	908	661
Net mortgage servicing fees	193	197
Realized security gains	208
Other	1,169	675
Total other income	5,953	4,263
OTHER EXPENSE:
Salaries and employee benefits	22,743	20,064
Occupancy	4,069	3,640
Furniture and equipment	3,000	2,548
Data processing	2,717	2,503
Advertising	889	905
Professional service fees	2,100	1,575
Loan origination expenses and deposit and card related fees	1,546	1,166
Writedowns and losses on other real estate held for sale	212	182
FDIC insurance assessment	70	700
Communications	885	726
Transaction related expenses		2,951
Other	3,534	3,340
Total other expenses	41,765	40,300
Income before provision for income taxes	17,710	10,593
Provision for income taxes	3,860	2,226
NET INCOME	$ 13,850	$ 8,367
INCOME PER COMMON SHARE:
Basic (in dollars per share)	$ 1.29	$ 0.94
Diluted (in dollars per share)	$ 1.29	$ 0.94

CONSOLIDATED STATEMENTS COMPREH

CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME
Net income	$ 13,850	$ 8,367
Other comprehensive income
Unrealized gains arising during the period	1,816	(220)
Reclassification adjustment for securities gains included in net income	(208)
Tax effect	(338)	46
Net change in unrealized gains on available for sale securities	1,270	(174)
Defined benefit pension plan:
Net unrealized actuarial (loss) gain on defined benefit pension obligation	(243)	9
Tax effect	51	(6)
Changes from defined benefit pension plan	(192)	3
Other comprehensive loss, net of tax	1,078	(171)
Total comprehensive income	$ 14,928	$ 8,196

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands	Shares of Common Stock	Common Stock and Additional Paid in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance, beginning of period at Dec. 31, 2017		$ 61,981	$ 19,711	$ (292)	$ 81,400
Balance (in shares) at Dec. 31, 2017	6,294,930
Increase (Decrease) in Shareholders' Equity
Net income			8,367		8,367
Other comprehensive income (loss):
Net change in unrealized gain on securities available for sale				(174)	(174)
Actuarial loss on defined benefit pension obligation				3	3
Total comprehensive income				(171)	8,196
Stock compensation		533			533
Restricted stock award vesting (in shares)	45,630
FFNM acquisition		34,101			$ 34,101
FFNM acquisition (in shares)	2,146,378				2,146,378
Capital raise, net of offering costs		32,451			$ 32,451
Capital raise, net of offering costs (in shares)	2,225,807
Dividend on common stock			(4,612)		(4,612)
Balance, end of period at Dec. 31, 2018		129,066	23,466	(463)	152,069
Balance (in shares) at Dec. 31, 2018	10,712,745
Increase (Decrease) in Shareholders' Equity
Net income			13,850		13,850
Other comprehensive income (loss):
Net change in unrealized gain on securities available for sale				1,270	1,270
Actuarial loss on defined benefit pension obligation				(192)	(192)
Total comprehensive income				1,078	14,928
Stock compensation		498			498
Restricted stock award vesting (in shares)	35,967
Dividend on common stock			(5,576)		(5,576)
Balance, end of period at Dec. 31, 2019		$ 129,564	$ 31,740	$ 615	$ 161,919
Balance (in shares) at Dec. 31, 2019	10,748,712

CONSOLIDATED STATEMENTS OF CH_2

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2018USD ($)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Capital raise issuance cost	$ 2,050

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash Flows from Operating Activities:
Net income	$ 13,850	$ 8,367
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,880	2,607
Provision for loan losses	385	500
Deferred tax expense	1,374	874
Net realized security gains	(208)
(Gain) on sale of loans sold in the secondary market	(1,544)	(1,019)
Origination of loans held for sale in secondary market	(89,546)	(57,118)
Proceeds from sale of loans in the secondary market	86,926	58,137
Loss on sale other real estate held for sale	31	57
Writedown of other real estate held for sale	181	125
Stock compensation	498	533
Change in other assets	(10,934)	7,531
Change in other liabilities	3,704	37
Net cash provided by operating activities	7,597	20,631
Cash Flows from Investing Activities:
Net increase in loans	(17,649)	(6,148)
Net decrease in interest-bearing deposits in other financial institutions	3,157	5,807
Purchase of securities available for sale	(18,839)	(1,989)
Proceeds from maturities, sales, calls or paydowns of securities available for sale	29,374	63,404
Capital expenditures	(2,737)	(2,549)
Cash paid for acquisitions and reimbursement of fees, net of cash acquired		4,768
Proceeds from sale of premises, equipment, and other real estate	1,867	2,190
Net cash provided by (used in) investing activities	(4,827)	65,483
Cash Flows from Financing Activities:
Net (decrease) increase in deposits	(21,860)	(27,389)
(Decrease) increase in fed funds purchased	3,320	2,905
Dividend on common stock	(5,576)	(4,612)
Proceeds from FHLB borrowing	25,000
Proceeds from common stock offering		32,451
Principal payments on borrowings	(17,985)	(62,738)
Net cash (used in) provided by financing activities	(17,101)	(59,383)
Net (decrease) increase in cash and cash equivalents	(14,331)	26,731
Cash and cash equivalents at beginning of period	64,157	37,426
Cash and cash equivalents at end of period	49,826	64,157
Cash paid during the year for:
Interest	10,320	8,178
Income taxes	1,500	1,600
Business Combinations
Fair value of tangible assets acquired (noncash)		372,967
Goodwill and identifiable intangible assets acquired		20,192
Liabilities assumed		$ 349,464
Shares of common stock issued (in shares)		2,146,378
Noncash Investing and Financing Activities:
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale (net of adjustments made through the allowance for loan losses)	1,629	$ 1,878
Transfers of Other Real Estate Held for Sale to Fixed Assets	$ 1,013

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of Mackinac Financial Corporation (the “Corporation”) and Subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. Significant accounting policies are summarized below. Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, mBank (the “Bank”) and other minor subsidiaries, after elimination of intercompany transactions and accounts. Nature of Operations The Corporation’s and the Bank’s revenues and assets are derived primarily from banking activities. The Bank’s primary market area is the Upper Peninsula, the northern portion of the Lower Peninsula of Michigan, Northeastern Wisconsin and Oakland County in Lower Michigan. The Bank provides to its customers commercial, real estate, agricultural, and consumer loans, as well as a variety of traditional deposit products. Less than 1.0% of the Corporation’s business activity is with Canadian customers and denominated in Canadian dollars. While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s banking operations are considered by management to be aggregated in one reportable operating segment. Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of investment securities, the valuation of foreclosed real estate, deferred tax assets, mortgage servicing rights, and the assessment of goodwill for impairment. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing deposits in correspondent banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. Securities The Corporation’s debt securities are classified and accounted for as securities available for sale. These securities are stated at fair value. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Unrealized holding gains and losses on securities available for sale are reported as accumulated other comprehensive income within shareholders’ equity until realized. When it is determined that securities or other investments are impaired and the impairment is other than temporary, an impairment loss is recognized in earnings and a new basis in the affected security is established. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method. Federal Home Loan Bank Stock As a member of the Federal Home Loan Bank (FHLB) system, the Bank is required to hold stock in the FHLB based on the anticipated level of borrowings to be advanced. This stock is recorded at cost, which approximates fair value. Transfer of the stock is substantially restricted. Interest Income and Fees on Loans Interest income on loans is reported on the level-yield method and includes amortization of deferred loan fees and costs over the loan term. Net loan commitment fees or costs for commitment periods greater than one year are deferred and amortized into fee income or other expense on a straight-line basis over the commitment period. The accrual of interest on loans is discontinued when, in the opinion of management, it is probable that the borrower may be unable to meet payments as they become due as well as when required by regulatory provisions. Upon such discontinuance, all unpaid accrued interest is reversed. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest income on impaired and nonaccrual loans is recorded on a cash basis. Acquired Loans Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined based on the present value of amounts expected to be received, which incorporates assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, collateral values, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life. Performing acquired loans are accounted for under ASC Topic 310-20, Receivables – Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans. Servicing Rights Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based on the fair value of the rights compared to amortized cost. Impairment is determined by using prices for similar assets with similar characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based on discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. Allowance for Loan Losses The allowance for loan losses includes specific allowances related to loans which have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. The Corporation also has an unallocated allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for probable loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability. In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date. Troubled Debt Restructuring Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructure (TDR). A loan is a TDR when the Corporation, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Corporation would not otherwise consider. To make this determination, the Corporation must determine whether (a) the borrower is experiencing financial difficulties and (b) the Corporation granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties. Other Real Estate Held for Sale Other real estate held for sale consists of assets acquired through, or in lieu of, foreclosure and other long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. Other real estate held for sale is initially recorded at fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management or a third party, and the assets’ carrying values are adjusted to the lower of cost basis or fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-downs. Net revenue and expenses from operations of other real estate held for sale are included in other expense. Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Goodwill and Other Intangible Assets The excess of the cost of acquired entities over the fair value of identifiable assets acquired less liabilities assumed is recorded as goodwill. In accordance with ASC 350, amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill is annually tested for impairment. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life of ten years. Stock Compensation Plans On May 22, 2012, the Corporation’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock awards (“RSAs”), or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. Awards are made to certain other senior officers at the discretion of the Corporation's management. Compensation cost equal to the fair value of the award is recognized over the vesting period. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is composed of unrealized gains and losses on securities available for sale, and unrecognized actuarial gains and losses in the defined benefit pension plan, arising during the period. These gains and losses for the period are shown as a component of other comprehensive income. The accumulated gains and losses are reported as a component of equity, net of any tax effect. At December 31, 2019, the balance in accumulated other comprehensive income consisted of unrealized gains on available for sales securities of $1.025 million (net of income tax of $.272 million) and actuarial losses on the defined benefit pension obligation of $.410 million (net of income tax of $.109 million). At December 31, 2018, the balance in accumulated other comprehensive income consisted of unrealized losses on available for sale securities of $.245 million (net of income tax of $.065 million) and actuarial losses on the defined benefit pension obligation of $.218 million (net of income tax of $.058 million). Earnings per Common Share Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options and warrants were exercised and stock awards were fully vested and resulted in the issuance of common stock that then shared in our earnings, is computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, after giving effect for dilutive shares issued. The following shows the computation of basic and diluted earnings per share for the years ended December 31, 2019 and 2018 (dollars in thousands, except per share data): Year Ended December 31, 2019 2018 (Numerator): Net income $ 13,850 $ 8,367 (Denominator): Weighted average shares outstanding 10,737,653 8,891,967 Effect of restricted stock awards 19,854 29,691 Diluted weighted average shares outstanding 10,757,507 8,921,658 Income per common share: Basic $ 1.29 $ .94 Diluted $ 1.29 $ .94 Income Taxes Deferred income taxes have been provided under the balance sheet method. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected to reverse. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred asset will not be realized. Off-Balance-Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. For letters of credit, the Corporation recognizes a liability for the fair market value of the obligations it assumes under that guarantee. Recent Developments In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize an asset with right of use and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease guidance is effective for the Corporation’s year ending December 31, 2019 and was applied using modified retrospective transition method to the beginning of the earliest period presented. The Corporation recognized right-of-use assets and lease liabilities of approximately $4.462 million, representing substantially all of its operating lease commitments. The amount recognized will be impacted by assumptions around renewals and/or extensions. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote. ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance. ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice. New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Coporation’s consolidated financial condition and result of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the openin balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission). As the Corporation qualifies as a smaller reporting company, management plans to delay the implementation of CECL beyond 2020 and adjust the timetable of the various CECL implementation tasks. Management believes that the Corporation will benefit from additional time to parallel testing and refine credit loss estimation models. Reclassifications Certain amounts in the 2018 consolidated financial statements have been reclassified to conform to the 2019 presentation.

RESTRICTIONS ON CASH AND CASH E

RESTRICTIONS ON CASH AND CASH EQUIVALENTS	12 Months Ended
	Dec. 31, 2019
RESTRICTIONS ON CASH AND CASH EQUIVALENTS
RESTRICTIONS ON CASH AND CASH EQUIVALENTS	NOTE 2 — RESTRICTIONS ON CASH AND CASH EQUIVALENTS Cash and cash equivalents in the amount of $31.451 million were restricted on December 31, 2019 to meet the reserve requirements of the Federal Reserve System. In the normal course of business, the Corporation maintains cash and due from bank balances with correspondent banks. Balances in these accounts may exceed the Federal Deposit Insurance Corporation’s insured limit of $250,000. Management believes that these financial institutions have strong credit ratings and the credit risk related to these deposits is minimal.

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE	12 Months Ended
	Dec. 31, 2019
SECURITIES AVAILABLE FOR SALE
SECURITIES AVAILABLE FOR SALE	NOTE 3 — SECURITIES AVAILABLE FOR SALE The carrying value and estimated fair value of securities available for sale are as follows (dollars in thousands): Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2019 Corporate $ 20,779 $ 160 $ (1) $ 20,938 US Agencies 14,450 47 (1) 14,496 US Agencies - MBS 34,063 492 (29) 34,526 Obligations of states and political subdivisions 37,382 630 — 38,012 Total securities available for sale $ 106,674 $ 1,329 $ (31) $ 107,972 December 31, 2018 Corporate $ 20,198 $ 24 $ (158) $ 20,064 US Agencies 16,198 5 (233) 15,970 US Agencies - MBS 32,974 124 (258) 32,840 Obligations of states and political subdivisions 47,828 341 (295) 47,874 Total securities available for sale $ 117,198 $ 494 $ (944) $ 116,748 Following is information pertaining to securities with gross unrealized losses at December 31, 2019 and 2018 aggregated by investment category and length of time these individual securities have been in a loss position (dollars in thousands): Less Than Twelve Months Over Twelve Months Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value December 31, 2019 Corporate $ (1) $ 2,502 $ — $ — US Agencies — — (1) 500 US Agencies - MBS (9) 6,966 (19) 1,233 Obligations of states and political subdivisions — — (1) 115 Total securities available for sale $ (10) $ 9,468 $ (21) $ 1,848 December 31, 2018 Corporate (50) $ 4,969 $ (108) $ 11,876 US Agencies — 504 (233) 14,439 US Agencies - MBS (73) 3,903 (185) 6,908 Obligations of states and political subdivisions (29) 5,812 (266) 9,533 Total securities available for sale $ (152) $ 15,188 $ (792) $ 42,756 There were 26 securities in an unrealized loss position in 2019 and 132 in 2018. The gross unrealized losses in the current portfolio are considered temporary in nature and related to interest rate fluctuations. The Corporation has both the ability and intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses. Following is a summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses for the years ended December 31 (dollars in thousands): 2019 2018 Proceeds from sales and calls $ 5,805 $ 48,649 Gross gains on sales and calls 208 — Gross (losses) on sales and calls — — The carrying value and estimated fair value of securities available for sale at December 31, 2019, by contractual maturity, are shown below (dollars in thousands): Amortized Estimated Cost Fair Value Due in one year or less $ 21,532 $ 21,575 Due after one year through five years 40,063 40,664 Due after five years through ten years 10,019 10,189 Due after ten years 997 1,018 Subtotal 72,611 73,446 US Agencies - MBS 34,063 34,526 Total $ 106,674 $ 107,972 Contractual maturities may differ from expected maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities with a market value of $26.407 million are pledged as collateral to the Federal Home Loan Bank and $4.487 million are pledged to certain customer relationships. See Note 10 for information on securities pledged to secure borrowings from the Federal Home Loan Bank. The following is information pertaining to securities with gross unrealized losses at December 31, 2019 and 2018 (dollars in thousands): Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2019 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 1 $ 2,502 $ (1) — $ — $ — 1 $ 2,502 $ (1) US Agencies — — — 1 500 (1) 1 500 (1) US Agencies - MBS 10 6,966 (9) 13 1,233 (19) 23 8,199 (28) Obligations of states and political subdivisions — — — 1 115 (1) 1 115 (1) Total 11 $ 9,468 $ (10) 15 $ 1,848 $ (21) 26 $ 11,316 $ (31) Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2018 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 3 $ 4,969 $ (50) 5 $ 11,876 $ (108) 8 $ 16,845 $ (158) US Agencies 1 504 — 6 14,439 (233) 7 14,943 (233) US Agencies - MBS 20 3,903 (73) 33 6,908 (185) 53 10,811 (258) Obligations of states and political subdivisions 19 5,812 (29) 45 9,533 (266) 64 15,345 (295) Total 43 $ 15,188 $ (152) 89 $ 42,756 $ (792) 132 $ 57,944 $ (944)

LOANS

LOANS	12 Months Ended
	Dec. 31, 2019
LOANS
LOANS	NOTE 4 — LOANS The composition of loans at December 31 is as follows (dollars in thousands): 2019 2018 Commercial real estate $ 514,394 $ 496,207 Commercial, financial, and agricultural 211,023 191,060 Commercial construction 40,107 29,765 One to four family residential real estate 253,918 286,908 Consumer 21,238 20,371 Consumer construction 18,096 14,553 Total loans $ 1,058,776 $ 1,038,864 The Corporation completed the acquisition of Peninsula Financial Corporation, (“PFC”), on December 5, 2014, The First National Bank of Eagle River (“Eagle River”) on April 29, 2016, Niagara Bancorporation (“Niagara”) on August 31, 2016, First Federal of Northern Michigan Bancorp, Inc. (“FFNM”) on May 18, 2018, and Lincoln Community Bank (“Lincoln”) on October 1, 2018. The PFC acquired impaired loans totaled $13.290 million, the Eagle River acquired impaired loans totaled $3.401 million, and the Niagara acquired impaired loans totaled $2.105 million. The FFNM impaired loans totaled $5.440 million and the Lincoln impaired loans totaled $1.901 million. In 2019, the Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of accretable interest of approximately $.404 million. In 2018, The Corporation had positive resolution of acquired nonperforming loans, which resulted in the recognition of approximately $.546 million of accretable interest. The table below details the outstanding balances of the PFC acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 13,290 $ 53,849 $ 67,139 Nonaccretable difference (2,234) — (2,234) Expected cash flows 11,056 53,849 64,905 Accretable yield (744) (2,100) (2,844) Carrying balance at acquisition date $ 10,312 $ 51,749 $ 62,061 Loans acquired with deteriorated credit quality in the PFC transaction carried a balance of $1.718 million at December 31, 2019 and $2.369 million at December 31, 2018. The table below details the outstanding balances of the Eagle River acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 3,401 $ 80,737 $ 84,138 Nonaccretable difference (1,172) — (1,172) Expected cash flows 2,229 80,737 82,966 Accretable yield (391) (1,700) (2,091) Carrying balance at acquisition date $ 1,838 $ 79,037 $ 80,875 Loans acquired with deteriorated credit quality in the Eagle River transaction carried a balance of $1.716 million at December 31, 2019 and $1.963 million at December 31, 2018. The table below details the outstanding balances of the Niagara acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 2,105 $ 30,555 $ 32,660 Nonaccretable difference (265) — (265) Expected cash flows 1,840 30,555 32,395 Accretable yield (88) (600) (688) Carrying balance at acquisition date $ 1,752 $ 29,955 $ 31,707 Loans acquired with deteriorated credit quality in the Niagara transaction carried a balance of $.075 million at December 31, 2019 and $.237 million at December 31, 2018. The table below details the outstanding balances of the FFNM acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 5,440 $ 187,302 $ 192,742 Nonaccretable difference (2,100) — (2,100) Expected cash flows 3,340 187,302 190,642 Accretable yield (700) (4,498) (5,198) Carrying balance at acquisition date $ 2,640 $ 182,804 $ 185,444 Loans acquired with deteriorated credit quality in the FFNM transaction carried a balance of $5.119 million at December 31, 2019 and $7.720 million at December 31, 2018. The table below details the outstanding balances of the Lincoln acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 1,901 $ 37,700 $ 39,601 Nonaccretable difference (421) — (421) Expected cash flows 1,480 37,700 39,180 Accretable yield (140) (493) (633) Carrying balance at acquisition date $ 1,340 $ 37,207 $ 38,547 Loans acquired with deteriorated credit quality in the Lincoln transaction carried a balance of $.897 million at December 31, 2019 and $1.272 million at December 31, 2018. The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2019 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Accretion (90) — (90) (17) (16) (33) Reclassification from nonaccretable difference 67 — 67 13 — 13 Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Accretion (30) (69) (99) (214) (1,493) (1,707) Reclassification from nonaccretable difference 23 — 23 161 — 161 Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051 Accretion (128) (178) (306) (479) (1,756) (2,235) Reclassification from nonaccretable difference 96 — 96 360 — 360 Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2018 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ 149 $ — $ 149 $ 218 $ 603 $ 821 Accretion (86) — (86) (22) (587) (609) Reclassification from nonaccretable difference 65 — 65 17 — 17 Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ 38 $ 281 $ 319 $ — $ — $ — Acquisition — — — 700 4,498 5,198 Accretion (48) (212) (260) (515) (1,052) (1,567) Reclassification from nonaccretable difference 36 — 36 386 — 386 Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ — $ — $ — $ 405 $ 884 $ 1,289 Acquisition 140 493 633 840 4,991 5,831 Accretion — (51) (51) (671) (1,902) (2,573) Reclassification from nonaccretable difference — — — 504 — 504 Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051 A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2019 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Charge-offs (27) (103) — (152) — (228) — (510) Recoveries 159 4 2 49 — 36 — 250 Provision (625) 648 (32) 52 5 197 140 385 Ending balance ALLR $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Loans: Ending balance $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Ending balance ALLR (1,189) (1,197) (71) (148) (11) (13) (2,679) (5,308) Net loans $ 513,205 $ 209,826 $ 40,036 $ 253,770 $ 18,085 $ 21,225 $ (2,679) $ 1,053,468 Ending balance ALLR: Individually evaluated $ 497 $ 770 $ — $ — $ — $ — $ — $ 1,267 Collectively evaluated 692 427 71 148 11 13 2,679 4,041 Total $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Ending balance Loans: Individually evaluated $ 2,374 $ 1,475 $ — $ — $ — $ — $ — $ 3,849 Collectively evaluated 507,702 207,194 39,734 251,998 18,096 21,229 — 1,045,953 Acquired with deteriorated credit quality 4,318 2,354 373 1,920 — 9 — 8,974 Total $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2018 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ 1,650 $ 576 $ 54 $ 160 $ 6 $ 10 $ 2,623 $ 5,079 Charge-offs (198) (132) — (230) — (156) — (716) Recoveries 55 164 2 64 — 35 — 320 Provision 175 40 45 205 — 119 (84) 500 Ending balance ALLR $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Loans: Ending balance $ 496,207 $ 191,060 $ 29,765 $ 286,908 $ 14,553 $ 20,371 $ — $ 1,038,864 Ending balance ALLR (1,682) (648) (101) (199) (6) (8) (2,539) (5,183) Net loans $ 494,525 $ 190,412 $ 29,664 $ 286,709 $ 14,547 $ 20,363 $ (2,539) $ 1,033,681 Ending balance ALLR: Individually evaluated $ 486 $ 340 $ — $ — $ — $ — $ — $ 826 Collectively evaluated 1,196 308 101 199 6 8 2,539 4,357 Total $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Ending balance Loans: Individually evaluated $ 2,148 $ 577 $ — $ — $ — $ — $ — $ 2,725 Collectively evaluated 491,282 189,023 29,399 285,677 14,336 20,329 — 1,030,046 Acquired with deteriorated credit quality 2,777 1,460 366 1,231 217 42 — 6,093 Total $ 496,207 $ 191,060 $ 29,765 $ 286,908 $ 14,553 $ 20,371 $ — $ 1,038,864 Impaired loans, by definition, are individually evaluated. As part of the management of the loan portfolio, risk ratings are assigned to all commercial loans. Through the loan review process, ratings are modified as believed to be appropriate to reflect changes in the credit. Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating to each loan at the time of origination and review loans on a regular basis to determine each loan’s credit risk rating on a scale of 1 through 8, with higher scores indicating higher risk. The credit risk rating structure used is shown below. In the context of the credit risk rating structure, the term Classified is defined as a problem loan which may or may not be in a nonaccrual status, dependent upon current payment status and collectability. Strong (1) Borrower is not vulnerable to sudden economic or technological changes. They have “strong” balance sheets and are within an industry that is very typical for our markets or type of lending culture. Borrowers also have “strong” financial and cash flow performance and excellent collateral (low loan to value or readily available to liquidate collateral) in conjunction with an impeccable repayment history. Good (2) Borrower shows limited vulnerability to sudden economic change. These borrowers have “above average” financial and cash flow performance and a very good repayment history. The balance sheet of the company is also very good as compared to peer and the company is in an industry that is familiar to our markets or our type of lending. The collateral securing the deal is also very good in terms of its type, loan to value, etc. Average (3) Borrower is typically a well-seasoned business, however may be susceptible to unfavorable changes in the economy, and could be somewhat affected by seasonal factors. The borrowers within this category exhibit financial and cash flow performance that appear “average” to “slightly above average” when compared to peer standards and they show an adequate payment history. Collateral securing this type of credit is good, exhibiting above average loan to values, etc. Acceptable (4) A borrower within this category exhibits financial and cash flow performance that appear adequate and satisfactory when compared to peer standards and they show a satisfactory payment history. The collateral securing the request is within supervisory limits and overall is acceptable. Borrowers rated acceptable could also be newer businesses that are typically susceptible to unfavorable changes in the economy, and more than likely could be affected by seasonal factors. Acceptable Watch (44) The borrower may have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Acceptable watch assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. Examples of this type of credit include a start-up company fully based on projections, a documentation issue that needs to be corrected or a general market condition that the borrower is working through to get corrected. Substandard (6) Substandard loans are classified assets exhibiting a number of well-defined weaknesses that jeopardize normal repayment. The assets are no longer adequately protected due to declining net worth, lack of earning capacity, or insufficient collateral offering the distinct possibility of the loss of a portion of the loan principal. Loans classified as substandard clearly represent troubled and deteriorating credit situations requiring constant supervision. Doubtful (7) Loans in this category exhibit the same, if not more pronounced weaknesses used to describe the substandard credit. Loans are frozen with collection improbable. Such loans are not yet rated as Charge-off because certain actions may yet occur which would salvage the loan. Charge-off/Loss (8) Loans in this category are largely uncollectible and should be charged against the loan loss reserve immediately. General Reserves: For loans with a credit risk rating of 44 or better and any loans with a risk rating of 6 or 7 not considered impaired, reserves are established based on the type of loan collateral, if any, and the assigned credit risk rating. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogenous loans based on historical loss experience, and consideration of current environmental factors and economic trends, all of which may be susceptible to significant change. Using a historical average loss by loan type as a base, each loan graded as higher risk is assigned a specific percentage. The residential real estate and consumer loan portfolios are assigned a loss percentage as a homogenous group. If, however, on an individual loan the projected loss based on collateral value and payment histories are in excess of the computed allowance, the allocation is increased for the higher anticipated loss. These computations provide the basis for the allowance for loan losses as recorded by the Corporation. Commercial construction loans in the amount of $3.525 million and $7.585 million at December 31, 2019, and 2018, respectively did not receive a specific risk rating. These amounts represent loans made for land development and unimproved land purchases. Below is a breakdown of loans by risk category as of December 31, 2019 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,979 $ 17,516 $ 228,962 $ 248,177 $ 4,468 $ 5,292 $ — $ — $ 514,394 Commercial, financial and agricultural 15,126 4,510 70,748 115,229 930 4,480 — — 211,023 Commercial construction — 292 6,390 28,893 400 607 — 3,525 40,107 One-to-four family residential real estate 40 2,145 4,937 15,168 634 2,632 — 228,362 253,918 Consumer construction — — — — — — — 18,096 18,096 Consumer — 158 250 640 — 41 — 20,149 21,238 Total loans $ 25,145 $ 24,621 $ 311,287 $ 408,107 $ 6,432 $ 13,052 $ — $ 270,132 $ 1,058,776 Below is a breakdown of loans by risk category as of December 31, 2018 (dollars in thousands) (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,564 $ 22,265 $ 189,898 $ 257,627 $ 5,993 $ 10,860 $ — $ — $ 496,207 Commercial, financial and agricultural 8,077 8,678 72,466 97,441 2,269 2,129 — — 191,060 Commercial construction 734 706 6,844 12,244 829 823 — 7,585 29,765 One-to-four family residential real estate 70 2,873 6,941 15,711 2,095 4,757 — 254,461 286,908 Consumer construction — — — 200 50 11 — 14,292 14,553 Consumer 19 236 625 1,156 42 77 — 18,216 20,371 Total loans $ 18,464 $ 34,758 $ 276,774 $ 384,379 $ 11,278 $ 18,657 $ — $ 294,554 $ 1,038,864 Impaired Loans Impaired loans are those which are contractually past due 90 days or more as to interest or principal payments, on nonaccrual status, or loans, the terms of which have been renegotiated to provide a reduction or deferral on interest or principal. Loans are considered impaired when, based on current information and events, it is probable the Corporation will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loans basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible. The following is a summary of impaired loans and their effect on interest income (dollars in thousands): Impaired Loans Impaired Loans Total Unpaid Related with No Related with Related Impaired Principal Allowance for Allowance Allowance Loans Balance Loan Losses December 31, 2019 Commercial real estate $ 4,318 $ 2,374 $ 6,692 $ 7,937 $ 497 Commercial, financial and agricultural 2,354 1,475 3,829 4,892 770 Commercial construction 373 — 373 386 — One to four family residential real estate 1,920 — 1,920 2,881 — Consumer construction — — — — — Consumer 9 — 9 33 — Total $ $ $ $ $ December 31, 2018 Commercial real estate $ 2,777 $ 2,148 $ 4,925 $ 10,740 $ 486 Commercial, financial and agricultural 1,460 577 2,037 2,249 340 Commercial construction 366 — 366 1,132 — One to four family residential real estate 1,231 — 1,231 4,136 — Consumer construction 217 — 217 — — Consumer 42 — 42 55 — Total $ 6,093 $ 2,725 $ 8,818 $ 18,312 $ 826 Individually Evaluated Impaired Loans December 31, 2019 December 31, 2018 Average Interest Income Average Interest Income Balance for Recognized for Balance for Recognized for the Period the Period the Period the Period Commercial real estate $ 8,374 $ 301 $ 5,024 $ 410 Commercial, financial and agricultural 1,144 2 374 26 Commercial construction 396 — 383 13 One to four family residential real estate 3,508 219 2,879 203 Consumer construction — — 9 — Consumer 44 2 38 4 Total $ 13,466 $ 524 $ 8,707 $ 656 A summary of past due loans at December 31, is as follows (dollars in thousands): December 31, December 31, 2019 2018 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due Past Due Past Due (accruing) (accruing) Nonaccrual Total (accruing) (accruing) Nonaccrual Total Commercial real estate $ 1,055 $ — $ 671 $ 1,726 $ 298 $ — $ 1,700 $ 1,998 Commercial, financial and agricultural 829 — 527 1,356 398 — 320 718 Commercial construction 59 — 105 164 112 — 266 378 One to four family residential real estate 4,357 11 3,850 8,218 5,456 18 2,725 8,199 Consumer construction — — — — — — — — Consumer 83 — 19 102 108 5 43 156 Total past due loans $ 6,383 $ 11 $ 5,172 $ 11,566 $ 6,372 $ 23 $ 5,054 $ 11,449 Troubled Debt Restructuring Troubled debt restructurings (“TDR”) are determined on a loan-by-loan basis. Generally, restructurings are related to interest rate reductions, loan term extensions and short term payment forbearance as means to maximize collectability of troubled credits. If a portion of the TDR loan is uncollectible (including forgiveness of principal), the uncollectible amount will be charged off against the allowance at the time of the restructuring. In general, a borrower must make at least six consecutive timely payments before the Corporation would consider a return of a restructured loan to accruing status in accordance with FDIC guidelines regarding restoration of credits to accrual status. The Corporation has, in accordance with generally accepted accounting principles and per recently enacted accounting standard updates, evaluated all loan modifications to determine the fair value impact of the underlying asset. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. There were four new troubled debt restructuring that occurred during the year ended December 31, 2019 with a balance of $1.952 million, and no new troubled debt restructurings for the year ended December 31, 2018. There are no existing troubled debt restructurings that have defaulted as of December 31, 2019 and 2018. Insider Loans The Bank, in the ordinary course of business, grants loans to the Corporation’s executive officers and directors, including their families and firms in which they are principal owners. Activity in such loans is summarized below (dollars in thousands): 2019 2018 Loans outstanding, January 1 $ 9,817 $ New loans 1,872 Net activity on revolving lines of credit 1,200 Change in status of insiders (289) - Repayment (404) Loans outstanding at end of period $ $ There were no loans to related-parties classified substandard as of December 31, 2019 and 2018. In addition to the outstanding balances above, there were unfunded commitments of $.005 million to related parties at December 31, 2019.

PREMISES AND EQUIPMENT

PREMISES AND EQUIPMENT	12 Months Ended
	Dec. 31, 2019
PREMISES AND EQUIPMENT
PREMISES AND EQUIPMENT	NOTE 5 — PREMISES AND EQUIPMENT Details of premises and equipment at December 31 are as follows (dollars in thousands): 2019 2018 Land $ 4,349 $ 4,417 Buildings and improvements 26,711 23,283 Furniture, fixtures, and equipment 15,483 13,428 Construction in progress 1,555 540 Total cost basis 48,098 41,668 Less - accumulated depreciation 24,490 18,885 Net book value $ 23,608 $ 22,783 Depreciation of premises and equipment charged to operating expenses amounted to $2.684 million in 2019 and $2.432 million in 2018.

OTHER REAL ESTATE HELD FOR SALE

OTHER REAL ESTATE HELD FOR SALE	12 Months Ended
	Dec. 31, 2019
OTHER REAL ESTATE HELD FOR SALE
OTHER REAL ESTATE HELD FOR SALE	NOTE 6 — OTHER REAL ESTATE HELD FOR SALE An analysis of other real estate held for sale for the years ended December 31 is as follows (dollars in thousands): 2019 2018 Balance, January 1 $ 3,119 $ 3,558 Other real estate transferred from loans due to foreclosure 1,629 1,878 Other real estate acquired in business combinations — 263 Proceeds from other real estate sold/ principal reduction (1,329) (2,398) Transfer to premise and equipment (1,013) — Writedowns of other real estate held for sale (181) (125) Gain (loss) on sale of other real estate held for sale (31) (57) Total other real estate held for sale $ 2,194 $ 3,119 Foreclosed residential real estate property of $.495 million is included in other real estate as of December 31, 2019. The recorded investment in consumer mortgage loans secured by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdictions was $19,000 as of December 31, 2019.

DEPOSITS

DEPOSITS	12 Months Ended
	Dec. 31, 2019
DEPOSITS
DEPOSITS	NOTE 7 — DEPOSITS The distribution of deposits at December 31 is as follows (dollars in thousands): 2019 2018 Noninterest bearing deposits $ 287,611 $ 241,556 NOW, money market, interest checking 373,165 368,890 Savings 109,548 111,358 CDs <$250,000 233,956 225,236 CDs >$250,000 12,775 13,737 Brokered 58,622 136,760 Total deposits $ 1,075,677 $ 1,097,537 Maturities of non-brokered time deposits outstanding at December 31, 2019 are as follows (dollars in thousands): 2020 $ 166,013 2021 47,899 2022 15,219 2023 9,312 2024 7,640 Thereafter 648 Total $ 246,731

GOODWILL AND OTHER INTANGIBLE A

GOODWILL AND OTHER INTANGIBLE ASSETS	12 Months Ended
	Dec. 31, 2019
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS	NOTE 8 — GOODWILL AND OTHER INTANGIBLE ASSETS The Corporation through the acquisition of Peninsula in 2014, Eagle River and Niagara in 2016, and FFNM and Lincoln in 2018, has recorded goodwill and core deposit intangibles as presented below (dollars in thousands). During 2019, the Corporation recorded period adjustments to both FFNM and Lincoln goodwill as it concluded its business combination and purchase accounting. Adjustments for the FFNM transaction resulted in an increase in the deferred tax asset of $1.950 million, an increase to MSRs of $.500 million and a decrease in goodwill of $2.450 million. Adjustments for the Lincoln transaction resulted in a decrease in the deferred tax liability of $.163 million, and a corresponding decrease in goodwill. Deposit Based Goodwill Intangible Balance Initial Balance Peninsula $ 3,805 $ 1,206 Eagle River 1,839 993 Niagara 50 300 FFNM 12,628 2,894 Lincoln 1,252 1,353 Total $ 19,574 $ 6,746 Deposit Based Intangible December 31, 2019 Future Annual December 31, 2019 Amortization Amortization Balance Expense Expense Peninsula $ 594 $ 121 $ 121 Eagle River 629 99 99 Niagara 200 30 30 FFNM 2,436 299 290 Lincoln 1,184 128 135 Total $ 5,043 $ 677 $ 675 Deposit Based Intangible 2018 December 31, 2018 Amortization Balance Expense Peninsula $ 714 $ 121 Eagle River 728 99 Niagara 230 30 FFNM 2,735 159 Lincoln 1,313 41 Total $ 5,720 $ 450 The deposit based intangible is reported net of accumulated amortization at $5.043 million at December 31, 2019, compared to $5.720 million at December 31, 2018. Amortization expense in 2019 is $.677 million compared to $.450 million in 2018. Amortization expense for the next five years is expected to be at $.675 million per year.

SERVICING RIGHTS

SERVICING RIGHTS	12 Months Ended
	Dec. 31, 2019
SERVICING RIGHTS
SERVICING RIGHTS	NOTE 9 – SERVICING RIGHTS Mortgage Loans Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of December 31, 2019, the Corporation had rights to service $255.757 million of residential first mortgage loans. The valuation of MSRs is based upon the net present value of the projected revenues over the expected life of the loans being serviced, as reduced by estimated internal costs to service these loans. The key economic assumptions used in determining the fair value of the mortgage servicing rights include an annual constant prepayment speed of 13.65% and a discount rate of 8.66% for December 31, 2019, which resulted in a fair value of $2.159 million. In 2018, the fair value was $2.898 million. The following summarizes the fair value and net present value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands): December 31, December 31, 2019 2018 Balance at beginning of period $ 1,144 $ 1,033 Final purchase accounting entry for FFNM 500 18 Additions from loans sold with servicing retained 95 — Acquired MSRs — 539 Amortization (240) (446) Balance at end of period (included in Other Assets) $ 1,499 $ 1,144 Balance of loan servicing portfolio $ 255,757 $ 293,771 Mortgage servicing rights as % of portfolio Fair value of servicing rights $ 2,159 $ 2,898 Commercial Loans The Corporation also retains the servicing on commercial loans that have been sold that were originated and underwritten under the SBA and USDA government guarantee programs, in which the guaranteed portion of the loan was sold to a third party with servicing retained. The balance of these sold loans with servicing retained at December 31, 2019 and December 31, 2018 was approximately $41 million and $44 million, respectively. The Corporation valued these servicing rights at $218,000 as of December 31, 2019 and $80,000 at December 31, 2018. This valuation was established in consideration of the discounted cash flow of expected servicing income over the life of the loans.

BORROWINGS

BORROWINGS	12 Months Ended
	Dec. 31, 2019
BORROWINGS
BORROWINGS	NOTE 10 — BORROWINGS Borrowings consist of the following at December 31 (dollars in thousands): 2019 2018 Federal Home Loan Bank fixed rate advances $ 64,148 $ 57,060 USDA Rural Development note 403 476 $ 64,551 $ 57,536 The Federal Home Loan Bank borrowings bear a weighted average rate of 1.63% and mature in 2020, 2021, 2023, 2024, and 2026. They are collateralized at December 31, 2019 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $54.918 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $26.028 million and $26.407 million, respectively; and Federal Home Loan Bank stock owned by the Bank totaling $4.924 million. Prepayment of the advances is subject to the provisions and conditions of the credit policies of the Federal Home Loan Bank of Indianapolis in effect as of December 31, 2019. The Corporation currently has one correspondent banking borrowing relationship. The relationship consists of a $15.0 million revolving line of credit, which had no outstanding balance at December 31, 2019. The line of credit bears interest at a rate of LIBOR plus 2.00%, with a floor rate of 3.00% and a ceiling of 22%. The line of credit expires on April 30, 2020. LIBOR was 1.91% at December 31, 2019. The Corporation previously had a term note as part of this relationship that was paid in full during the second quarter of 2018. The relationship is secured by all of the outstanding common stock of mBank. The USDA Rural Development borrowing bears an interest rate of 1.00% and matures in August, 2024. It is collateralized by loans totaling $.403 million originated and held by the Corporation’s wholly owned subsidiary, First Rural Relending, and an assignment of a demand deposit account in the amount of $.456 million, and guaranteed by the Corporation. Maturities and principal payments of borrowings outstanding at December 31, 2019 are as follows (dollars in thousands): 2020 $ 2021 2022 2023 2024 25,081 Thereafter 3,000 Total $

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2019
INCOME TAXES
INCOME TAXES	NOTE 11 — INCOME TAXES The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands): 2019 2018 Current tax expense $ 2,505 $ 1,352 Deferred tax expense 1,355 874 Provision for income taxes $ 3,860 $ 2,226 A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands): 2019 2018 Tax expense at statutory rate $ 3,719 $ Increase (decrease) in taxes resulting from: Tax-exempt interest (110) Nondeductible transaction expenses — 138 Other 251 Provision for income taxes, as reported $ 3,860 $ 2,226 Deferred income taxes are provided for the temporary differences between the financial reporting and tax bases of the Corporation’s assets and liabilities. The major components of net deferred tax assets at December 31 are as follows (dollars in thousands): 2019 2018 Deferred tax assets: NOL carryforward $ 2,147 $ 2,634 Allowance for loan losses 1,144 1,078 Alternative Minimum Tax Credit — — OREO 177 168 Tax credit carryovers — 140 Deferred compensation 253 307 Pension liability 109 221 Stock compensation 75 92 Unrealized loss on securities — 99 Purchase accounting adjustments 1,507 2,206 Lease liability 980 — Other 894 808 Total deferred tax assets 7,286 7,753 Deferred tax liabilities: Core deposit premium (1,108) (1,256) FHLB stock dividend (73) (73) Depreciation — (101) Mortgage servicing rights — 61 Right of use asset (980) — Unrealized gain on securities (272) — Other (707) (621) Total deferred tax liabilities (3,140) (1,990) Net deferred tax asset $ 4,146 $ 5,763 The Corporation has reported net deferred tax assets of $4.146 million at December 31, 2019. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred tax asset will not be realized. The Corporation, as of December 31, 2019 had a net operating loss carryforwards for tax purposes of approximately $10.2 million. As a result of the repeal of the corporate alternative minimum tax in the Tax Cuts and Jobs Act, any outstanding alternative minimum tax credits are believed to be utilized or refundable as of December 31, 2019. Therefore, the $1.6 million of alternative minimum tax credits, was reclassified to a current tax receivable included in other assets during 2018. The net operating loss carryforwards expire twenty years from the date they originated. These carryforwards, if not utilized, will begin to expire in the year 2023. A portion of the NOL and credit carryforwards are subject to the limitations for utilization as set forth in Section 382 of the Internal Revenue Code. The annual limitation is $2.0 million for the NOL and the equivalent value of tax credits, which is approximately $.420 million. These limitations for use were established in conjunction with the recapitalization of the Corporation in December 2004. The Corporation will continue to evaluate the future benefits from these carryforwards in order to determine if any adjustment to the deferred tax asset is warranted.

OPERATING LEASES

OPERATING LEASES	12 Months Ended
	Dec. 31, 2019
OPERATING LEASES
OPERATING LEASES	NOTE 12 — OPERATING LEASES The Corporation currently maintains five operating leases for branch locations in Birmingham, Manistique, Marquette, Negaunee and Traverse City. Future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements, consist of the following (dollars in thousands): Years Ending Related Party Unrelated Party December 31 Amount Amount 2020 $ 467 $ 244 2021 477 120 2022 486 82 2023 496 — 2024 506 — Thereafter 2,081 — Total $ 4,513 $ 446 Rent expense for all operating leases amounted to $1.132 million in 2019 and $1.096 million in 2018.

RETIREMENT PLAN

RETIREMENT PLAN	12 Months Ended
	Dec. 31, 2019
DEFINED BENEFIT PENSION PLAN
RETIREMENT PLAN	NOTE 13 — RETIREMENT PLAN The Corporation has established a 401(k) profit sharing plan. Employees who have completed three months of service and attained the age of 18 are eligible to participate in the plan. Eligible employees can elect to have a portion, not to exceed 80%, of their annual compensation paid into the plan. In addition, the Corporation may make discretionary contributions into the plan. Retirement plan contributions charged to operations totaled $.370 million and $.400 million in 2019 and 2018 respectively.

DEFINED BENEFIT PENSION PLAN

DEFINED BENEFIT PENSION PLAN	12 Months Ended
	Dec. 31, 2019
DEFINED BENEFIT PENSION PLAN
DEFINED BENEFIT PENSION PLAN	NOTE 14 — DEFINED BENEFIT PENSION PLAN The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan. Effective December 31, 2005, the plan was amended to freeze participation in the plan; therefore, no additional employees are eligible to become participants in the plan. The benefits are based on years of service and the employee’s compensation at the time of retirement. The Plan was amended effective December 31, 2010, to freeze benefit accrual for all participants. Expected contributions to the Plan in 2020 are $139,000. The anticipated distributions over the next five years and through December 31, 2029 are detailed in the table below (dollars in thousands): 2020 $ 131 2021 129 2022 137 2023 143 2024 141 2025-2029 869 Total $ 1,550 The following table sets forth the plan’s funded status and amounts recognized in the Corporation’s balance sheets and the activity from date of acquisition (dollars in thousands): 2019 2018 Change in benefit obligation: Benefit obligation, beginning of year $ 2,991 $ 3,332 Interest cost 117 109 Actuarial (gain) loss 469 (316) Benefits paid (130) (134) Benefit obligation at end of year 3,447 2,991 Change in plan assets: Fair value of plan assets, beginning of year 1,987 2,191 Actual return on plan assets 381 (134) Employer contributions 22 64 Benefits paid (131) (134) Fair value of plan assets at end of year 2,259 1,987 Funded status, included with other liabilities $ (1,188) $ (1,004) Net pension costs included in the Corporation’s results of operations was immaterial. Assumptions in the actuarial valuation were: 2019 2018 Weighted average discount rate Rate of increase in future compensation levels N/A N/A Expected long-term rate of return on plan assets The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligation. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds. The primary investment objective is to maximize growth of the pension plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the Corporation’s risk tolerance. The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation, which was in place at both December 31, 2019 and December 31, 2018: Target Actual Allocation Allocation Equity securities 50% to 70% Fixed income securities 30% to 50%

DEFERRED COMPENSATION PLAN

DEFERRED COMPENSATION PLAN	12 Months Ended
	Dec. 31, 2019
DEFERRED COMPENSATION PLAN
DEFERRED COMPENSATION PLAN	NOTE 15 — DEFERRED COMPENSATION PLAN Prior to the recapitalization in 2004, as an incentive to retain key members of management and directors, the Corporation established a deferred compensation plan, with benefits based on the number of years the individuals have served the Corporation. This plan was discontinued and no longer applies to current officers and directors. A liability was recorded on a present value basis and discounted using the rates in effect at the time the deferred compensation agreement was entered into. The liability may change depending upon changes in long-term interest rates. The liability at December 31, 2019 and 2018, for vested benefits under this plan, was $51,000 and $82,000, respectively. These benefits were originally contracted to be paid over a ten to fifteen-year period. The final payment is scheduled to occur in 2023. The deferred compensation plan is unfunded; however, the Bank maintains life insurance policies on the majority of the plan participants. The cash surrender value of the policies was $1.498 million and $1.443 million at December 31, 2019 and 2018, respectively. Peninsula Financial Corporation, acquired by the Corporation in December 2014, also had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2019 and 2018, for vested benefits under this plan was $.757 million and $.900 million, respectively. The bank owned life insurance policy as of December 31, 2019 and 2018 had cash surrender values of $1.773 million and $1.760 million, respectively. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation. First Federal of Northern Michigan, acquired in May 2018 had a deferred compensation plan, which was similar in nature to the Corporation’s discontinued plan. The liability for this plan at December 31, 2019, for vested benefits under this plan was $.343 million. The bank owned life insurance policy as of December 31, 2019 had a cash surrender value of $5.320 million. This Plan was also discontinued by the Corporation and will not apply to future employees or directors of the Corporation. Deferred compensation expense for the three plans was $99,000 and $92,000 for 2019 and 2018 respectively.

REGULATORY MATTERS

REGULATORY MATTERS	12 Months Ended
	Dec. 31, 2019
REGULATORY MATTERS
REGULATORY MATTERS	NOTE 16 — REGULATORY MATTERS The Corporation is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Corporation to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. Management has determined that, as of December 31, 2019, the Corporation is well capitalized. The tables below do not include the 2.5% capital conservation buffer requirement. A bank with a capital conservation buffer greater than 2.5% of risk-weighted assets would not be restricted by payout limitations. However, if the 2.5% threshold is not met, the Bank would be subject to increasing limitations on capital distributions and discretionary bonus payments to executive officers as the capital conservation buffer approaches zero. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2019 are as follows (dollars in thousands): Minimum for Capital Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 138,263 > $ 83,696 > > N/A N/A mBank $ 136,578 > $ 83,681 > > $ 104,601 Tier 1 capital to risk weighted assets: Consolidated $ 132,955 > $ 62,772 > > N/A N/A mBank $ 131,311 > $ 62,761 > > $ 83,681 Common equity Tier 1 capital to risk weighted assets Consolidated $ 132,955 > $ 47,079 > > N/A N/A mBank $ 131,311 > $ 47,071 > > $ 67,991 Tier 1 capital to average assets: Consolidated $ 132,955 > $ 52,724 > > N/A N/A mBank $ 131,311 > $ 52,728 > > $ 65,910 The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2018 are as follows (dollars in thousands): Minimum for Capital Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 124,207 > $ 79,705 > > N/A N/A mBank $ 121,406 > $ 79,464 > > $ 99,329 Tier 1 capital to risk weighted assets: Consolidated $ 119,024 > $ 59,779 > > N/A N/A mBank $ 116,264 > $ 59,598 > > $ 79,464 Common equity Tier 1 capital to risk weighted assets Consolidated $ 119,024 > $ 44,834 > > N/A N/A mBank $ 116,264 > $ 44,698 > > $ 64,564 Tier 1 capital to average assets: Consolidated $ 119,024 > $ 51,552 > > N/A N/A mBank $ 116,264 > $ 51,556 > > $ 64,445

STOCK COMPENSATION PLANS

STOCK COMPENSATION PLANS	12 Months Ended
	Dec. 31, 2019
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS	NOTE 17 — STOCK COMPENSATION PLANS Restricted Stock Awards The Corporation’s restricted stock awards (“RSAs”) require certain service-based or performance requirements and have a vesting period of four years. Compensation expense is recognized on a straight-line basis over the vesting period. Shares are subject to certain restrictions and risk of forfeiture by the participants. The Corporation has historically granted RSAs to members of the Board of Directors and management. Awards granted are set to vest equally over their award terms and are issued at no cost to the recipient. The table below summarizes each of the grant awards. Market Value at Date of Award Units Granted grant date Vesting Term February, 2016 35,733 9.91 4 years February, 2017 28,427 13.39 4 years February, 2018 18,643 16.30 4 years April, 2018 8,000 16.00 Immediate February, 2019 27,790 15.70 4 years October, 2019 8,000 15.40 Immediate On August 31, 2016, the Corporation issued 37,125 shares of its common stock for vested RSAs. In March 2016, the Corporation issued 22,626 shares of its common stock for vested RSAs. In the first quarter of 2017, the Corporation issued 31,559 shares of its common stock for vested RSAs. In 2018, the Corporation issued 46,666 shares of its common stock for vested RSAs. In 2019, the Corporation issued 35,967 shares for vested RSAs. The Corporation recognized annual compensation expense of $.498 million in 2019 and $.533 million in 2018. Unrecognized compensation expense at the end of 2019 was $.635 million. A summary of changes in our nonvested awards for the year follows: Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2019 69,322 $ 12.79 Granted during the period 35,790 15.70 Vested during the period (35,967) 12.09 Nonvested balance at December 31, 2019 69,145 $ 14.52

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2019
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY	NOTE 18 — SHAREHOLDERS’ EQUITY The Corporation currently has a share repurchase program. The program is conducted under authorizations by the Board of Directors. The Corporation repurchased 14,000 shares in 2016, 102,455 shares in 2015, 13,700 shares in 2014 and 55,594 shares in 2013. The share repurchases were conducted under Board authorizations made and publicly announced of $600,000 on February 27, 2013, $600,000 on December 17, 2013 and an additional $750,000 on April 28, 2015. None of these authorizations has an expiration date. As of December 31, 2019, $25,000 of the total authorization was available for future purchases. On August 28, 2019, the Corporation, under the authorization of the Board of Directors announced a new common stock repurchase program. Under the Repurchase Program, the Company is authorized to repurchase up to approximately 5% of the Company’s outstanding common stock.

COMMITMENTS, CONTINGENCIES AND

COMMITMENTS, CONTINGENCIES AND CREDIT RISK	12 Months Ended
	Dec. 31, 2019
COMMITMENTS, CONTINGENCIES AND CREDIT RISK
COMMITMENTS, CONTINGENCIES AND CREDIT RISK	NOTE 19 — COMMITMENTS, CONTINGENCIES, AND CREDIT RISK Financial Instruments with Off-Balance-Sheet Risk The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The Corporation’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, is represented by the contractual amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. These commitments at December 31 are as follows (dollars in thousands): 2019 2018 Commitments to extend credit: Variable rate $ 106,278 $ 88,862 Fixed rate 50,796 54,434 Standby letters of credit - Variable rate 5,441 7,208 Credit card commitments - Fixed rate 5,841 5,107 $ 168,356 $ 155,611 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties. Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The commitments are structured to allow for 100% collateralization on all standby letters of credit. Credit card commitments are commitments on credit cards issued by the Corporation’s subsidiary and serviced by other companies. These commitments are unsecured. Legal Proceedings and Contingencies At December 31, 2019, there were no pending material legal proceedings to which the Corporation is a party or to which any of its property was subject, except for proceedings which arise in the ordinary course of business. In the opinion of management, pending legal proceedings will not have a material effect on the consolidated financial position or results of operations of the Corporation. Concentration of Credit Risk The Bank grants commercial, residential, agricultural, and consumer loans throughout Michigan and Northeastern Wisconsin. The Bank’s most prominent concentration in the loan portfolio relates to commercial real estate loans to operators of nonresidential buildings. This concentration at December 31, 2019 represents $141.965 million, or 18.54%, compared to $150.251 million, or 20.95%, of the commercial loan portfolio on December 31, 2018. The remainder of the commercial loan portfolio is diversified in such categories as hospitality and tourism, real estate agents and managers, new car dealers, gas stations and convenience stores, petroleum, forestry, agriculture, and construction. Due to the diversity of the Bank’s locations, the ability of debtors of residential and consumer loans to honor their obligations is not tied to any particular economic sector.

FAIR VALUE

FAIR VALUE	12 Months Ended
	Dec. 31, 2019
FAIR VALUE
FAIR VALUE	NOTE 20 — FAIR VALUE Fair value estimates, methods, and assumptions are set forth below for the Corporation’s financial instruments: Cash, cash equivalents, and interest-bearing deposits - The carrying values approximate the fair values for these assets. Securities - Fair values are based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Federal Home Loan Bank stock - Federal Home Loan Bank stock is carried at cost, which is its redeemable value and approximates its fair value, since the market for this stock is limited. Loans - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, residential mortgage, and other consumer. The fair value of loans is calculated by discounting scheduled cash flows using discount rates reflecting the credit and interest rate risk inherent in the loan using an exit notion as of December 31, 2019. As of December 31, 2018 an entrance price was used to measure the fair value of loans. The methodology in determining fair value of nonaccrual loans is to average them into the blended interest rate at 0% interest. This has the effect of decreasing the carrying amount below the risk-free rate amount and, therefore, discounts the estimated fair value. Impaired loans are measured at the estimated fair value of the expected future cash flows at the loan’s effective interest rate or the fair value of the collateral for loans which are collateral dependent. Therefore, the carrying values of impaired loans approximate the estimated fair values for these assets. Deposits - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits and savings, is equal to the amount payable on demand at the reporting date. The fair value of time deposits is based on the discounted value of contractual cash flows applying interest rates currently being offered on similar time deposits. Borrowings - Rates currently available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The fair value of borrowed funds due on demand is the amount payable at the reporting date. Accrued interest - The carrying amount of accrued interest approximates fair value. Off-balance-sheet instruments - The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the counterparties. Since the differences in the current fees and those reflected to the off-balance-sheet instruments at year-end are immaterial, no amounts for fair value are presented. The following table presents information for financial instruments at December 31 (dollars in thousands): December 31, 2019 December 31, 2018 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 49,826 $ 49,826 $ 64,157 $ 64,157 Interest-bearing deposits Level 2 10,295 10,295 13,452 13,452 Securities available for sale Level 2 106,569 106,569 115,260 115,260 Securities available for sale Level 3 1,403 1,403 1,488 1,488 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,053,468 1,055,985 1,033,681 1,013,214 Accrued interest receivable Level 3 3,751 3,751 3,005 3,005 Total financial assets $ 1,230,236 $ 1,232,753 $ 1,235,967 $ 1,215,500 Financial liabilities: Deposits Level 2 $ 1,075,677 $ 1,044,267 $ 1,097,537 $ 1,047,709 Borrowings Level 2 64,551 64,403 57,536 56,771 Accrued interest payable Level 3 569 569 391 391 Total financial liabilities $ 1,140,797 $ 1,109,239 $ 1,155,464 $ 1,104,871 Limitations - Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Corporation’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on-and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include premises and equipment, other assets, and other liabilities. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. The following is information about the Corporation’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019 and the valuation techniques used by the Corporation to determine those fair values. Level 1: In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access. Level 2: Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Level 3 inputs are unobservable inputs, including inputs available in situations where there is little, if any, market activity for the related asset or liability. The fair value of all investment securities at December 31, 2019 and 2018 were based on level 2 and level 3 inputs. There are no other assets or liabilities measured on a recurring basis at fair value. For additional information regarding investment securities, please refer to “Note 3 — Investment Securities.” The table below shows investment securities measured at fair value on a recurring basis (dollars in thousands): Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Balance at for Identical Assets Inputs Inputs (dollars in thousands) December 31, 2019 (Level 1) (Level 2) (Level 3) Assets Corporate $ $ — $ 20,438 $ 500 US Agencies — 14,496 — US Agencies - MBS — 34,526 — Obligations of state and political subdivisions 38,012 — 37,024 903 $ 107,972 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Balance at for Identical Assets Inputs Inputs (dollars in thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) Assets Corporate $ $ — $ 19,564 $ 500 US Agencies — 15,970 — US Agencies - MBS — 32,840 — Obligations of state and political subdivisions — 46,886 988 $ 116,748 The Corporation had no other Level 3 assets or liabilities on a recurring basis as of December 31, 2019. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Corporation’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. The Corporation also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include loans and other real estate held for sale. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections. The table below shows the activity in level three assets for the years ended, December 31, 2019 and 2018 (dollars in thousands): Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2019 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 988 — — — — — 988 Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2018 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 1,000 — — (12) — — 988 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2019 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Twelve months ended (dollars in thousands) December 31, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Impaired loans $ $ — $ — $ $ 280 Other real estate held for sale — — 212 $ 492 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2018 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) December 31, 2018 Assets Impaired loans $ 8,818 $ — $ — $ 8,818 $ 198 Other real estate held for sale 3,119 — — 3,119 182 $ 380 The Corporation had no investments subject to fair value measurement on a nonrecurring basis. Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Corporation estimates the fair value of the loans based on the present value of expected future cash flows or collateral values using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals).

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS	12 Months Ended
	Dec. 31, 2019
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS	NOTE 21 — BUSINESS COMBINATIONS First Federal of Northern Michigan Bancorp, Inc. The Corporation completed its acquisition of First Federal of Northern Michigan Bancorp, Inc. in May 2018. FFNM had seven branch offices, one of which was consolidated into an existing mBank branch shortly after consummation of the transaction. Total assets of FFNM as of May 18, 2018 were $318 million, including total loans of $192 million. Deposits garnered in the acquisition the majority of which are core deposits, totaled $254 million. The results of operations due to the merger have been included in the Corporation’s results since the acquisition date. As consideration in the acquisition, the Corporation issued 2,146,378 new shares, approximating $34.101 million. The Corporation recorded deposit based intangibles of $2.894 million and goodwill of $12.628 million. In the first quarter of 2019, the Corporation concluded the business combination and purchase accounting based on the final tax returns and deferred tax calculations of FFNM. As a result, the purchase price allocation has been updated to reflect changes with an increase in the deferred tax asset on $1.950 million, an increase to the MSRs of $.500 million, and a decrease in goodwill of $2.450 million. The table below highlights the allocation of purchase price for the FFNM acquisition after the above mentioned adjustments (dollars in thousands, except per share data): Purchase Price: FFNM shares outstanding 3,726,925 Price per share $ 9.15 Total purchase price $ 34,101 Net assets acquired: Cash and cash equivalents $ 13,267 Securities available for sale 96,297 FHLB Stock 1,748 Total loans 185,444 Premises and equipment 5,134 Other real estate owned 194 Deposit based intangible 2,894 Mortgage servicing rights 886 Deferred tax assets 4,631 Bank owned life insurance 5,170 Other assets 1,775 Total assets 317,440 Non-interest bearing deposits 60,616 Interest bearing deposits 193,099 Total deposits 253,715 FHLB borrowings 40,722 Deferred tax liability 133 Other liabilities 1,397 Total liabilities 295,967 Net assets acquired 21,473 Goodwill $ 12,628 Lincoln Community Bank The Corporation completed its acquisition of Lincoln Community Bank on October 1, 2018. Lincoln had two branch offices, one of which was subsequently closed in 2018, and total assets of $60 million. The results of operations due to the merger have been included in the Corporation’s results since the acquisition date. The merger was effected with a cash payment of $8.500 million. In the first quarter of 2019, the Corporation made adjustments to the business combination and purchase accounting based on additional tax provision information. As a result, the purchase price allocation has been updated to reflect changes with a decrease in the deferred tax liability of $.163 million and a decrease in goodwill of $.163 million. In the third quarter of 2019, the Corporation concluded the business combination and purchase accounting for the Lincoln acquisition. There were no further purchase accounting adjustments made. Purchase Price: Cash consideration $ 8,500 Net assets acquired: Cash and cash equivalents $ 10,971 Securities available for sale 6,947 Total loans 38,001 Premises and equipment 1,249 Other real estate owned 69 Deposit based intangible 1,353 Bank owned life insurance 1,653 Other assets 339 Total assets 60,582 Non-interest bearing deposits 15,559 Interest bearing deposits 37,654 Total deposits 53,213 Deferred tax liability 68 Other liabilities 53 Total liabilities 53,334 Net assets acquired 7,248 Goodwill $ 1,252 Fair Value In most instances, determining the fair value of the acquired assets and assumed liabilities required the Corporation to estimate the cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations is related to the valuation of acquired loans. For such loans, the excess cash flows expected at merger over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at merger and the cash flows expected to be collected at merger reflects the impact of estimated credit losses, interest rate changes, and other factors, such as prepayments. In accordance with the applicable accounting guidance for business combinations, there was no carry-over of the acquired banks’ previously established allowance for loan losses. Goodwill recognized in these acquisitions was based primarily due to the synergies and economies of scale expected from combining the operations of the Corporation with FFNM and Lincoln.

PARENT COMPANY ONLY FINANCIAL S

PARENT COMPANY ONLY FINANCIAL STATEMENTS	12 Months Ended
	Dec. 31, 2019
PARENT COMPANY ONLY FINANCIAL STATEMENTS
PARENT COMPANY ONLY FINANCIAL STATEMENTS	NOTE 23 — PARENT COMPANY ONLY FINANCIAL STATEMENTS BALANCE SHEETS December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 ASSETS Cash and cash equivalents $ 490 $ 2,470 Investment in subsidiaries 157,156 146,516 Other assets 5,764 4,306 TOTAL ASSETS $ 163,410 $ 153,292 LIABILITIES AND SHAREHOLDERS’ EQUITY Other borrowing — — Other liabilities 1,491 1,223 Total liabilities 1,491 1,223 Shareholders’ equity: Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,748,712 and 10,712,745 shares respectively 129,564 129,066 Retained earnings 31,740 23,466 Accumulated other comprehensive income 615 (463) Total shareholders’ equity 161,919 152,069 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 163,410 $ 153,292 STATEMENTS OF OPERATIONS Years Ended December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 INCOME: Interest income $ — $ 1 Miscellaneous income 1 17 Total income $ 1 $ 18 EXPENSES: Interest expense on borrowings — 320 Salaries and benefits 858 835 Professional service fees 301 242 Transaction related expenses — 814 Other 376 350 Total expenses 1,535 2,561 Loss before income taxes and equity in net income of subsidiaries (1,534) (2,543) Provision for (benefit of) income taxes (322) (534) Loss before equity in net income of subsidiaries (1,212) (2,009) Equity in net income of subsidiaries 15,062 10,376 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 13,850 $ 8,367 STATEMENTS OF CASH FLOWS Years Ended December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 Cash Flows from Operating Activities: Net income $ 13,850 $ 8,367 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net (income) of subsidiaries (15,062) (10,376) Increase in capital from stock based compensation 498 533 Change in other assets (1,458) 1,043 Change in other liabilities 268 365 Net cash provided by (used in) operating activities (1,904) (68) Cash Flows from Investing Activities: Investments in subsidiaries 5,500 2,000 Net cash paid in acquisitions — (8,500) Net cash provided by (used in) investing activities 5,500 (6,500) Cash Flows from Financing Activities: Increase on term borrowing — — Principal payments on term borrowings — (18,999) Net activity on line of credit — — Repurchase of common stock — — Dividend on common stock (5,576) (4,612) Net cash from capital raise — 32,451 Net cash provided by (used in) financing activities (5,576) 8,840 Net increase (decrease) in cash and cash equivalents (1,980) 2,272 Cash and cash equivalents at beginning of period 2,470 198 Cash and cash equivalents at end of period $ 490 $ 2,470

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	The accounting policies of Mackinac Financial Corporation (the “Corporation”) and Subsidiaries conform to accounting principles generally accepted in the United States and prevailing practices within the banking industry. Significant accounting policies are summarized below.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries, mBank (the “Bank”) and other minor subsidiaries, after elimination of intercompany transactions and accounts.
Nature of Operations	Nature of Operations The Corporation’s and the Bank’s revenues and assets are derived primarily from banking activities. The Bank’s primary market area is the Upper Peninsula, the northern portion of the Lower Peninsula of Michigan, Northeastern Wisconsin and Oakland County in Lower Michigan. The Bank provides to its customers commercial, real estate, agricultural, and consumer loans, as well as a variety of traditional deposit products. Less than 1.0% of the Corporation’s business activity is with Canadian customers and denominated in Canadian dollars. While the Corporation’s chief decision makers monitor the revenue streams of the various Corporation products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis. Accordingly, all of the Corporation’s banking operations are considered by management to be aggregated in one reportable operating segment.
Use of Estimates in Preparation of Financial Statements	Use of Estimates in Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of investment securities, the valuation of foreclosed real estate, deferred tax assets, mortgage servicing rights, and the assessment of goodwill for impairment.
Cash and Cash Equivalents	Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing deposits in correspondent banks, and federal funds sold. Generally, federal funds are purchased and sold for one-day periods.
Securities	Securities The Corporation’s debt securities are classified and accounted for as securities available for sale. These securities are stated at fair value. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. Unrealized holding gains and losses on securities available for sale are reported as accumulated other comprehensive income within shareholders’ equity until realized. When it is determined that securities or other investments are impaired and the impairment is other than temporary, an impairment loss is recognized in earnings and a new basis in the affected security is established. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.
Federal Home Loan Bank Stock	Federal Home Loan Bank Stock As a member of the Federal Home Loan Bank (FHLB) system, the Bank is required to hold stock in the FHLB based on the anticipated level of borrowings to be advanced. This stock is recorded at cost, which approximates fair value. Transfer of the stock is substantially restricted.
Interest Income and Fees on Loans	Interest Income and Fees on Loans Interest income on loans is reported on the level-yield method and includes amortization of deferred loan fees and costs over the loan term. Net loan commitment fees or costs for commitment periods greater than one year are deferred and amortized into fee income or other expense on a straight-line basis over the commitment period. The accrual of interest on loans is discontinued when, in the opinion of management, it is probable that the borrower may be unable to meet payments as they become due as well as when required by regulatory provisions. Upon such discontinuance, all unpaid accrued interest is reversed. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest income on impaired and nonaccrual loans is recorded on a cash basis.
Acquired Loans	Acquired Loans Loans acquired with evidence of credit deterioration since inception and for which it is probable that all contractual payments will not be received are accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”). These loans are recorded at fair value at the time of acquisition, with no carryover of the related allowance for loan losses. Fair value of acquired loans is determined based on the present value of amounts expected to be received, which incorporates assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, collateral values, and current market rates. In recording the fair values of acquired impaired loans at acquisition date, management calculates a non-accretable difference (the credit component of the purchased loans) and an accretable difference (the yield component of the purchased loans). Over the life of the acquired loans, management continues to estimate cash flows expected to be collected. We evaluate at each balance sheet date whether it is probable that we will be unable to collect all cash flows expected at acquisition and if so, recognize a provision for loan loss in our consolidated statement of operations. For any significant increases in cash flows expected to be collected, we adjust the amount of the accretable yield recognized on a prospective basis over the pool’s remaining life. Performing acquired loans are accounted for under ASC Topic 310-20, Receivables – Nonrefundable Fees and Other Costs. Performance of certain loans may be monitored and based on management’s assessment of the cash flows and other facts available, portions of the accretable difference may be delayed or suspended if management deems appropriate. The Corporation’s policy for determining when to discontinue accruing interest on performing acquired loans and the subsequent accounting for such loans is essentially the same as the policy for originated loans.
Servicing Rights	Servicing Rights Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based on the fair value of the rights compared to amortized cost. Impairment is determined by using prices for similar assets with similar characteristics, such as interest rates and terms. Fair value is determined by using prices for similar assets with similar characteristics, when available, or based on discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.
Allowance for Loan Losses	Allowance for Loan Losses The allowance for loan losses includes specific allowances related to loans which have been judged to be impaired. A loan is impaired when, based on current information, it is probable that the Corporation will not collect all amounts due in accordance with the contractual terms of the loan agreement. These specific allowances are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. The Corporation also has an unallocated allowance for loan losses for loans not considered impaired. The allowance for loan losses is maintained at a level which management believes is adequate to provide for probable loan losses. Management periodically evaluates the adequacy of the allowance using the Corporation’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, current economic conditions, and other factors. The allowance does not include the effects of expected losses related to future events or future changes in economic conditions. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability. In management’s opinion, the allowance for loan losses is adequate to cover probable losses relating to specifically identified loans, as well as probable losses inherent in the balance of the loan portfolio as of the balance sheet date.
Troubled Debt Restructuring	Troubled Debt Restructuring Troubled debt restructuring of loans is undertaken to improve the likelihood that the loan will be repaid in full under the modified terms in accordance with a reasonable repayment schedule. All modified loans are evaluated to determine whether the loans should be reported as a Troubled Debt Restructure (TDR). A loan is a TDR when the Corporation, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower by modifying or renewing a loan that the Corporation would not otherwise consider. To make this determination, the Corporation must determine whether (a) the borrower is experiencing financial difficulties and (b) the Corporation granted the borrower a concession. This determination requires consideration of all of the facts and circumstances surrounding the modification. An overall general decline in the economy or some deterioration in a borrower’s financial condition does not automatically mean the borrower is experiencing financial difficulties.
Other Real Estate Held for Sale	Other Real Estate Held for Sale Other real estate held for sale consists of assets acquired through, or in lieu of, foreclosure and other long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. Other real estate held for sale is initially recorded at fair value, less costs to sell, establishing a new cost basis. Valuations are periodically performed by management or a third party, and the assets’ carrying values are adjusted to the lower of cost basis or fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-downs. Net revenue and expenses from operations of other real estate held for sale are included in other expense.
Premises and Equipment	Premises and Equipment Premises and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are charged to expense as incurred. Gains or losses on disposition of premises and equipment are reflected in income. Depreciation is computed on the straight-line method over the estimated useful lives of the assets.
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets The excess of the cost of acquired entities over the fair value of identifiable assets acquired less liabilities assumed is recorded as goodwill. In accordance with ASC 350, amortization of goodwill and indefinite-lived assets is not recorded. However, the recoverability of goodwill is annually tested for impairment. The Corporation’s core deposit intangible is currently being amortized over its estimated useful life of ten years.
Stock Compensation Plans	Stock Compensation Plans On May 22, 2012, the Corporation’s shareholders approved the Mackinac Financial Corporation 2012 Incentive Compensation Plan, under which current and prospective employees, non-employee directors and consultants may be awarded incentive stock options, non-statutory stock options, shares of restricted stock awards (“RSAs”), or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. Awards are made to certain other senior officers at the discretion of the Corporation's management. Compensation cost equal to the fair value of the award is recognized over the vesting period.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) is composed of unrealized gains and losses on securities available for sale, and unrecognized actuarial gains and losses in the defined benefit pension plan, arising during the period. These gains and losses for the period are shown as a component of other comprehensive income. The accumulated gains and losses are reported as a component of equity, net of any tax effect. At December 31, 2019, the balance in accumulated other comprehensive income consisted of unrealized gains on available for sales securities of $1.025 million (net of income tax of $.272 million) and actuarial losses on the defined benefit pension obligation of $.410 million (net of income tax of $.109 million). At December 31, 2018, the balance in accumulated other comprehensive income consisted of unrealized losses on available for sale securities of $.245 million (net of income tax of $.065 million) and actuarial losses on the defined benefit pension obligation of $.218 million (net of income tax of $.058 million).
Earnings per Common Share	Earnings per Common Share Diluted earnings per share, which reflects the potential dilution that could occur if outstanding stock options and warrants were exercised and stock awards were fully vested and resulted in the issuance of common stock that then shared in our earnings, is computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, after giving effect for dilutive shares issued. The following shows the computation of basic and diluted earnings per share for the years ended December 31, 2019 and 2018 (dollars in thousands, except per share data): Year Ended December 31, 2019 2018 (Numerator): Net income $ 13,850 $ 8,367 (Denominator): Weighted average shares outstanding 10,737,653 8,891,967 Effect of restricted stock awards 19,854 29,691 Diluted weighted average shares outstanding 10,757,507 8,921,658 Income per common share: Basic $ 1.29 $ .94 Diluted $ 1.29 $ .94
Income Taxes	Income Taxes Deferred income taxes have been provided under the balance sheet method. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences are expected to reverse. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is provided against deferred tax assets when it is more likely than not that some or all of the deferred asset will not be realized.
Off-Balance-Sheet Financial Instruments	Off-Balance-Sheet Financial Instruments In the ordinary course of business, the Corporation has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit, and standby letters of credit. For letters of credit, the Corporation recognizes a liability for the fair market value of the obligations it assumes under that guarantee.
Recent Developments	Recent Developments In February 2016, the FASB issued ASU 2016-02, Leases, which will supersede the current lease requirements in ASC 840. The ASU requires lessees to recognize an asset with right of use and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of operations. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new lease guidance is effective for the Corporation’s year ending December 31, 2019 and was applied using modified retrospective transition method to the beginning of the earliest period presented. The Corporation recognized right-of-use assets and lease liabilities of approximately $4.462 million, representing substantially all of its operating lease commitments. The amount recognized will be impacted by assumptions around renewals and/or extensions. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 requires an entity to measure expected credit losses for financial assets over the estimated lifetime of expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard includes the following core concepts in determining the expected credit loss. The estimate must: (a) be based on an asset’s amortized cost (including premiums or discounts, net deferred fees and costs, foreign exchange and fair value hedge accounting adjustments), (b) reflect losses expected over the remaining contractual life of an asset (considering the effect of voluntary prepayments), (c) consider available relevant information about the estimated collectability of cash flows (including information about past events, current conditions, and reasonable and supportable forecasts), and (d) reflect the risk of loss, even when that risk is remote. ASU 2016-13 also amends the recording of purchased credit-deteriorated assets. Under the new guidance, an allowance will be recognized at acquisition through a gross-up approach whereby an entity will record as the initial amortized cost the sum of (a) the purchase price and (b) an estimate of credit losses as of the date of acquisition. In addition, the guidance also requires immediate recognition in earnings of any subsequent changes, both favorable and unfavorable, in expected cash flows by adjusting this allowance. ASU 2016-13 also amends the impairment model for available-for-sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Management may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists, as is currently permitted. In addition, an entity will recognize an allowance for credit losses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of the investment, as is currently required. As a result, entities will recognize improvements to credit losses on available-for-sale debt securities immediately in earnings rather than as interest income over time under current practice. New disclosures required by ASU 2016-13 include: (a) for financial assets measured at amortized cost, an entity will be required to disclose information about how it developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes, (b) for financial receivables and net investments in leases measured at amortized cost, an entity will be required to further disaggregate the information it currently discloses about the credit quality of these assets by year or the asset’s origination or vintage for as many as five annual periods, and (c) for available-for-sale debt securities, an entity will be required to provide a roll-forward of the allowance for credit losses and an aging analysis for securities that are past due. Upon adoption of ASU 2016-13, a cumulative-effect adjustment to retained earnings will be recorded as of the beginning of the first reporting period in which the guidance is effective. The Corporation is currently evaluating the provisions of ASU 2016-13 to determine the potential impact on the Coporation’s consolidated financial condition and result of operations. The Corporation has formed a cross-functional implementation team consisting of individuals from finance, credit and information systems. A project plan and timeline has been developed and the implementation team meets regularly to assess the project status to ensure adherence to the timeline. The implementation team has also been working with a software vendor to assist in implementing required changes to credit loss estimation models and processes, and is finalizing the historical data collected to be utilized in the credit loss models. The Corporation expects to recognize a cumulative effect adjustment to the openin balance of retained earnings as of the beginning of the first reporting period in which ASU 2016-13 is effective. The Corporation has not yet determined the magnitude of any such one-time adjustment or the potential impact of ASU 2016-13 on its condensed consolidated financial statements. In October 2019 the Financial Accounting Standards Board (FASB) voted to defer the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for smaller reporting companies (as defined by the Securities Exchange Commission). As the Corporation qualifies as a smaller reporting company, management plans to delay the implementation of CECL beyond 2020 and adjust the timetable of the various CECL implementation tasks. Management believes that the Corporation will benefit from additional time to parallel testing and refine credit loss estimation models.
Reclassifications	Reclassifications Certain amounts in the 2018 consolidated financial statements have been reclassified to conform to the 2019 presentation.

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schedule showing the computation of basic and diluted earnings per share	The following shows the computation of basic and diluted earnings per share for the years ended December 31, 2019 and 2018 (dollars in thousands, except per share data): Year Ended December 31, 2019 2018 (Numerator): Net income $ 13,850 $ 8,367 (Denominator): Weighted average shares outstanding 10,737,653 8,891,967 Effect of restricted stock awards 19,854 29,691 Diluted weighted average shares outstanding 10,757,507 8,921,658 Income per common share: Basic $ 1.29 $ .94 Diluted $ 1.29 $ .94

SECURITIES AVAILABLE FOR SALE (

SECURITIES AVAILABLE FOR SALE (Tables)	12 Months Ended
	Dec. 31, 2019
SECURITIES AVAILABLE FOR SALE
Schedule of carrying value and estimated fair value of securities available for sale	The carrying value and estimated fair value of securities available for sale are as follows (dollars in thousands): Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value December 31, 2019 Corporate $ 20,779 $ 160 $ (1) $ 20,938 US Agencies 14,450 47 (1) 14,496 US Agencies - MBS 34,063 492 (29) 34,526 Obligations of states and political subdivisions 37,382 630 — 38,012 Total securities available for sale $ 106,674 $ 1,329 $ (31) $ 107,972 December 31, 2018 Corporate $ 20,198 $ 24 $ (158) $ 20,064 US Agencies 16,198 5 (233) 15,970 US Agencies - MBS 32,974 124 (258) 32,840 Obligations of states and political subdivisions 47,828 341 (295) 47,874 Total securities available for sale $ 117,198 $ 494 $ (944) $ 116,748
Schedule of securities with gross unrealized losses aggregated by investment category and length of time these individual securities have been in a loss position	Following is information pertaining to securities with gross unrealized losses at December 31, 2019 and 2018 aggregated by investment category and length of time these individual securities have been in a loss position (dollars in thousands): Less Than Twelve Months Over Twelve Months Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value December 31, 2019 Corporate $ (1) $ 2,502 $ — $ — US Agencies — — (1) 500 US Agencies - MBS (9) 6,966 (19) 1,233 Obligations of states and political subdivisions — — (1) 115 Total securities available for sale $ (10) $ 9,468 $ (21) $ 1,848 December 31, 2018 Corporate (50) $ 4,969 $ (108) $ 11,876 US Agencies — 504 (233) 14,439 US Agencies - MBS (73) 3,903 (185) 6,908 Obligations of states and political subdivisions (29) 5,812 (266) 9,533 Total securities available for sale $ (152) $ 15,188 $ (792) $ 42,756 The following is information pertaining to securities with gross unrealized losses at December 31, 2019 and 2018 (dollars in thousands): Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2019 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 1 $ 2,502 $ (1) — $ — $ — 1 $ 2,502 $ (1) US Agencies — — — 1 500 (1) 1 500 (1) US Agencies - MBS 10 6,966 (9) 13 1,233 (19) 23 8,199 (28) Obligations of states and political subdivisions — — — 1 115 (1) 1 115 (1) Total 11 $ 9,468 $ (10) 15 $ 1,848 $ (21) 26 $ 11,316 $ (31) Less Than Twelve Months Over Twelve Months Total Number Gross Number Gross Number Gross of Fair Unrealized of Fair Unrealized of Fair Unrealized December 31, 2018 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 3 $ 4,969 $ (50) 5 $ 11,876 $ (108) 8 $ 16,845 $ (158) US Agencies 1 504 — 6 14,439 (233) 7 14,943 (233) US Agencies - MBS 20 3,903 (73) 33 6,908 (185) 53 10,811 (258) Obligations of states and political subdivisions 19 5,812 (29) 45 9,533 (266) 64 15,345 (295) Total 43 $ 15,188 $ (152) 89 $ 42,756 $ (792) 132 $ 57,944 $ (944)
Summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses	Following is a summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses for the years ended December 31 (dollars in thousands): 2019 2018 Proceeds from sales and calls $ 5,805 $ 48,649 Gross gains on sales and calls 208 — Gross (losses) on sales and calls — —
Schedule of amortized cost and estimated fair value sore investment securities by contractual maturity	The carrying value and estimated fair value of securities available for sale at December 31, 2019, by contractual maturity, are shown below (dollars in thousands): Amortized Estimated Cost Fair Value Due in one year or less $ 21,532 $ 21,575 Due after one year through five years 40,063 40,664 Due after five years through ten years 10,019 10,189 Due after ten years 997 1,018 Subtotal 72,611 73,446 US Agencies - MBS 34,063 34,526 Total $ 106,674 $ 107,972

LOANS (Tables)

LOANS (Tables)	12 Months Ended
	Dec. 31, 2019
Schedule of composition of loans	The composition of loans at December 31 is as follows (dollars in thousands): 2019 2018 Commercial real estate $ 514,394 $ 496,207 Commercial, financial, and agricultural 211,023 191,060 Commercial construction 40,107 29,765 One to four family residential real estate 253,918 286,908 Consumer 21,238 20,371 Consumer construction 18,096 14,553 Total loans $ 1,058,776 $ 1,038,864
Schedule of the accretable yield by acquisition	The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2019 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Accretion (90) — (90) (17) (16) (33) Reclassification from nonaccretable difference 67 — 67 13 — 13 Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Accretion (30) (69) (99) (214) (1,493) (1,707) Reclassification from nonaccretable difference 23 — 23 161 — 161 Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051 Accretion (128) (178) (306) (479) (1,756) (2,235) Reclassification from nonaccretable difference 96 — 96 360 — 360 Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 The table below presents a rollforward of the accretable yield on acquired loans for year ended December 31, 2018 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ 149 $ — $ 149 $ 218 $ 603 $ 821 Accretion (86) — (86) (22) (587) (609) Reclassification from nonaccretable difference 65 — 65 17 — 17 Balance, December 31, 2018 $ 128 $ — $ 128 $ 213 $ 16 $ 229 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ 38 $ 281 $ 319 $ — $ — $ — Acquisition — — — 700 4,498 5,198 Accretion (48) (212) (260) (515) (1,052) (1,567) Reclassification from nonaccretable difference 36 — 36 386 — 386 Balance, December 31, 2018 $ 26 $ 69 $ 95 $ 571 $ 3,446 $ 4,017 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2017 $ — $ — $ — $ 405 $ 884 $ 1,289 Acquisition 140 493 633 840 4,991 5,831 Accretion — (51) (51) (671) (1,902) (2,573) Reclassification from nonaccretable difference — — — 504 — 504 Balance, December 31, 2018 $ 140 $ 442 $ 582 $ 1,078 $ 3,973 $ 5,051
Schedule of breakdown of the allowance for loan losses and recorded balances in loans	A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2019 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Charge-offs (27) (103) — (152) — (228) — (510) Recoveries 159 4 2 49 — 36 — 250 Provision (625) 648 (32) 52 5 197 140 385 Ending balance ALLR $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Loans: Ending balance $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Ending balance ALLR (1,189) (1,197) (71) (148) (11) (13) (2,679) (5,308) Net loans $ 513,205 $ 209,826 $ 40,036 $ 253,770 $ 18,085 $ 21,225 $ (2,679) $ 1,053,468 Ending balance ALLR: Individually evaluated $ 497 $ 770 $ — $ — $ — $ — $ — $ 1,267 Collectively evaluated 692 427 71 148 11 13 2,679 4,041 Total $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Ending balance Loans: Individually evaluated $ 2,374 $ 1,475 $ — $ — $ — $ — $ — $ 3,849 Collectively evaluated 507,702 207,194 39,734 251,998 18,096 21,229 — 1,045,953 Acquired with deteriorated credit quality 4,318 2,354 373 1,920 — 9 — 8,974 Total $ 514,394 $ 211,023 $ 40,107 $ 253,918 $ 18,096 $ 21,238 $ — $ 1,058,776 Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at December 31, 2018 is as follows (dollars in thousands): Commercial, One to four Commercial financial and Commercial family residential Consumer real estate agricultural construction real estate construction Consumer Unallocated Total Allowance for loan loss reserve: Beginning balance ALLR $ 1,650 $ 576 $ 54 $ 160 $ 6 $ 10 $ 2,623 $ 5,079 Charge-offs (198) (132) — (230) — (156) — (716) Recoveries 55 164 2 64 — 35 — 320 Provision 175 40 45 205 — 119 (84) 500 Ending balance ALLR $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Loans: Ending balance $ 496,207 $ 191,060 $ 29,765 $ 286,908 $ 14,553 $ 20,371 $ — $ 1,038,864 Ending balance ALLR (1,682) (648) (101) (199) (6) (8) (2,539) (5,183) Net loans $ 494,525 $ 190,412 $ 29,664 $ 286,709 $ 14,547 $ 20,363 $ (2,539) $ 1,033,681 Ending balance ALLR: Individually evaluated $ 486 $ 340 $ — $ — $ — $ — $ — $ 826 Collectively evaluated 1,196 308 101 199 6 8 2,539 4,357 Total $ 1,682 $ 648 $ 101 $ 199 $ 6 $ 8 $ 2,539 $ 5,183 Ending balance Loans: Individually evaluated $ 2,148 $ 577 $ — $ — $ — $ — $ — $ 2,725 Collectively evaluated 491,282 189,023 29,399 285,677 14,336 20,329 — 1,030,046 Acquired with deteriorated credit quality 2,777 1,460 366 1,231 217 42 — 6,093 Total $ 496,207 $ 191,060 $ 29,765 $ 286,908 $ 14,553 $ 20,371 $ — $ 1,038,864
Schedule of breakdown of loans by risk category	Below is a breakdown of loans by risk category as of December 31, 2019 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,979 $ 17,516 $ 228,962 $ 248,177 $ 4,468 $ 5,292 $ — $ — $ 514,394 Commercial, financial and agricultural 15,126 4,510 70,748 115,229 930 4,480 — — 211,023 Commercial construction — 292 6,390 28,893 400 607 — 3,525 40,107 One-to-four family residential real estate 40 2,145 4,937 15,168 634 2,632 — 228,362 253,918 Consumer construction — — — — — — — 18,096 18,096 Consumer — 158 250 640 — 41 — 20,149 21,238 Total loans $ 25,145 $ 24,621 $ 311,287 $ 408,107 $ 6,432 $ 13,052 $ — $ 270,132 $ 1,058,776 Below is a breakdown of loans by risk category as of December 31, 2018 (dollars in thousands) (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 9,564 $ 22,265 $ 189,898 $ 257,627 $ 5,993 $ 10,860 $ — $ — $ 496,207 Commercial, financial and agricultural 8,077 8,678 72,466 97,441 2,269 2,129 — — 191,060 Commercial construction 734 706 6,844 12,244 829 823 — 7,585 29,765 One-to-four family residential real estate 70 2,873 6,941 15,711 2,095 4,757 — 254,461 286,908 Consumer construction — — — 200 50 11 — 14,292 14,553 Consumer 19 236 625 1,156 42 77 — 18,216 20,371 Total loans $ 18,464 $ 34,758 $ 276,774 $ 384,379 $ 11,278 $ 18,657 $ — $ 294,554 $ 1,038,864
Summary of impaired loans and their effect on interest income	The following is a summary of impaired loans and their effect on interest income (dollars in thousands): Impaired Loans Impaired Loans Total Unpaid Related with No Related with Related Impaired Principal Allowance for Allowance Allowance Loans Balance Loan Losses December 31, 2019 Commercial real estate $ 4,318 $ 2,374 $ 6,692 $ 7,937 $ 497 Commercial, financial and agricultural 2,354 1,475 3,829 4,892 770 Commercial construction 373 — 373 386 — One to four family residential real estate 1,920 — 1,920 2,881 — Consumer construction — — — — — Consumer 9 — 9 33 — Total $ $ $ $ $ December 31, 2018 Commercial real estate $ 2,777 $ 2,148 $ 4,925 $ 10,740 $ 486 Commercial, financial and agricultural 1,460 577 2,037 2,249 340 Commercial construction 366 — 366 1,132 — One to four family residential real estate 1,231 — 1,231 4,136 — Consumer construction 217 — 217 — — Consumer 42 — 42 55 — Total $ 6,093 $ 2,725 $ 8,818 $ 18,312 $ 826 Individually Evaluated Impaired Loans December 31, 2019 December 31, 2018 Average Interest Income Average Interest Income Balance for Recognized for Balance for Recognized for the Period the Period the Period the Period Commercial real estate $ 8,374 $ 301 $ 5,024 $ 410 Commercial, financial and agricultural 1,144 2 374 26 Commercial construction 396 — 383 13 One to four family residential real estate 3,508 219 2,879 203 Consumer construction — — 9 — Consumer 44 2 38 4 Total $ 13,466 $ 524 $ 8,707 $ 656
Summary of past due loans	A summary of past due loans at December 31, is as follows (dollars in thousands): December 31, December 31, 2019 2018 30-89 days 90+ days 30-89 days 90+ days Past Due Past Due Past Due Past Due (accruing) (accruing) Nonaccrual Total (accruing) (accruing) Nonaccrual Total Commercial real estate $ 1,055 $ — $ 671 $ 1,726 $ 298 $ — $ 1,700 $ 1,998 Commercial, financial and agricultural 829 — 527 1,356 398 — 320 718 Commercial construction 59 — 105 164 112 — 266 378 One to four family residential real estate 4,357 11 3,850 8,218 5,456 18 2,725 8,199 Consumer construction — — — — — — — — Consumer 83 — 19 102 108 5 43 156 Total past due loans $ 6,383 $ 11 $ 5,172 $ 11,566 $ 6,372 $ 23 $ 5,054 $ 11,449
Schedule of activity in insider loans granted to the entity's executive officers and directors, including their families and firms	Activity in such loans is summarized below (dollars in thousands): 2019 2018 Loans outstanding, January 1 $ 9,817 $ New loans 1,872 Net activity on revolving lines of credit 1,200 Change in status of insiders (289) - Repayment (404) Loans outstanding at end of period $ $
PFC
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the PFC acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 13,290 $ 53,849 $ 67,139 Nonaccretable difference (2,234) — (2,234) Expected cash flows 11,056 53,849 64,905 Accretable yield (744) (2,100) (2,844) Carrying balance at acquisition date $ 10,312 $ 51,749 $ 62,061
Eagle River
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the Eagle River acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 3,401 $ 80,737 $ 84,138 Nonaccretable difference (1,172) — (1,172) Expected cash flows 2,229 80,737 82,966 Accretable yield (391) (1,700) (2,091) Carrying balance at acquisition date $ 1,838 $ 79,037 $ 80,875
Niagara Bancorporation
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the Niagara acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 2,105 $ 30,555 $ 32,660 Nonaccretable difference (265) — (265) Expected cash flows 1,840 30,555 32,395 Accretable yield (88) (600) (688) Carrying balance at acquisition date $ 1,752 $ 29,955 $ 31,707
FFNM
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the FFNM acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 5,440 $ 187,302 $ 192,742 Nonaccretable difference (2,100) — (2,100) Expected cash flows 3,340 187,302 190,642 Accretable yield (700) (4,498) (5,198) Carrying balance at acquisition date $ 2,640 $ 182,804 $ 185,444
Lincoln Community Bank
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the Lincoln acquired portfolio and the acquisition fair value adjustments at acquisition date (dollars in thousands): Acquired Acquired Acquired Impaired Non-impaired Total Loans acquired - contractual payments $ 1,901 $ 37,700 $ 39,601 Nonaccretable difference (421) — (421) Expected cash flows 1,480 37,700 39,180 Accretable yield (140) (493) (633) Carrying balance at acquisition date $ 1,340 $ 37,207 $ 38,547

PREMISES AND EQUIPMENT (Tables)

PREMISES AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2019
PREMISES AND EQUIPMENT
Schedule of details of premises and equipment	Details of premises and equipment at December 31 are as follows (dollars in thousands): 2019 2018 Land $ 4,349 $ 4,417 Buildings and improvements 26,711 23,283 Furniture, fixtures, and equipment 15,483 13,428 Construction in progress 1,555 540 Total cost basis 48,098 41,668 Less - accumulated depreciation 24,490 18,885 Net book value $ 23,608 $ 22,783

OTHER REAL ESTATE HELD FOR SA_2

OTHER REAL ESTATE HELD FOR SALE (Tables)	12 Months Ended
	Dec. 31, 2019
OTHER REAL ESTATE HELD FOR SALE
Schedule of analysis of other real estate held for sale	An analysis of other real estate held for sale for the years ended December 31 is as follows (dollars in thousands): 2019 2018 Balance, January 1 $ 3,119 $ 3,558 Other real estate transferred from loans due to foreclosure 1,629 1,878 Other real estate acquired in business combinations — 263 Proceeds from other real estate sold/ principal reduction (1,329) (2,398) Transfer to premise and equipment (1,013) — Writedowns of other real estate held for sale (181) (125) Gain (loss) on sale of other real estate held for sale (31) (57) Total other real estate held for sale $ 2,194 $ 3,119

DEPOSITS (Tables)

DEPOSITS (Tables)	12 Months Ended
	Dec. 31, 2019
DEPOSITS
Schedule of distribution of deposits	The distribution of deposits at December 31 is as follows (dollars in thousands): 2019 2018 Noninterest bearing deposits $ 287,611 $ 241,556 NOW, money market, interest checking 373,165 368,890 Savings 109,548 111,358 CDs <$250,000 233,956 225,236 CDs >$250,000 12,775 13,737 Brokered 58,622 136,760 Total deposits $ 1,075,677 $ 1,097,537
Schedule of maturities of non-brokered time deposits outstanding	Maturities of non-brokered time deposits outstanding at December 31, 2019 are as follows (dollars in thousands): 2020 $ 166,013 2021 47,899 2022 15,219 2023 9,312 2024 7,640 Thereafter 648 Total $ 246,731

GOODWILL AND OTHER INTANGIBLE_2

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)	12 Months Ended
	Dec. 31, 2019
GOODWILL AND OTHER INTANGIBLE ASSETS
Schedule of goodwill and deposit based intangible initial balance	Deposit Based Goodwill Intangible Balance Initial Balance Peninsula $ 3,805 $ 1,206 Eagle River 1,839 993 Niagara 50 300 FFNM 12,628 2,894 Lincoln 1,252 1,353 Total $ 19,574 $ 6,746
Schedule of deposit based intangible asset amortization	Deposit Based Intangible December 31, 2019 Future Annual December 31, 2019 Amortization Amortization Balance Expense Expense Peninsula $ 594 $ 121 $ 121 Eagle River 629 99 99 Niagara 200 30 30 FFNM 2,436 299 290 Lincoln 1,184 128 135 Total $ 5,043 $ 677 $ 675 Deposit Based Intangible 2018 December 31, 2018 Amortization Balance Expense Peninsula $ 714 $ 121 Eagle River 728 99 Niagara 230 30 FFNM 2,735 159 Lincoln 1,313 41 Total $ 5,720 $ 450

SERVICING RIGHTS (Tables)

SERVICING RIGHTS (Tables)	12 Months Ended
	Dec. 31, 2019
SERVICING RIGHTS
Summary of mortgage servicing rights capitalized and amortized	The following summarizes the fair value and net present value of the mortgage servicing rights capitalized and amortized. There was no valuation allowance required (dollars in thousands): December 31, December 31, 2019 2018 Balance at beginning of period $ 1,144 $ 1,033 Final purchase accounting entry for FFNM 500 18 Additions from loans sold with servicing retained 95 — Acquired MSRs — 539 Amortization (240) (446) Balance at end of period (included in Other Assets) $ 1,499 $ 1,144 Balance of loan servicing portfolio $ 255,757 $ 293,771 Mortgage servicing rights as % of portfolio Fair value of servicing rights $ 2,159 $ 2,898

BORROWINGS (Tables)

BORROWINGS (Tables)	12 Months Ended
	Dec. 31, 2019
BORROWINGS
Schedule of borrowings	Borrowings consist of the following at December 31 (dollars in thousands): 2019 2018 Federal Home Loan Bank fixed rate advances $ 64,148 $ 57,060 USDA Rural Development note 403 476 $ 64,551 $ 57,536
Schedule of maturities and principal payments of borrowings outstanding	Maturities and principal payments of borrowings outstanding at December 31, 2019 are as follows (dollars in thousands): 2020 $ 2021 2022 2023 2024 25,081 Thereafter 3,000 Total $

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2019
INCOME TAXES
Schedule of components of the federal income tax provision (credit)	The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands): 2019 2018 Current tax expense $ 2,505 $ 1,352 Deferred tax expense 1,355 874 Provision for income taxes $ 3,860 $ 2,226
Summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes	A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands): 2019 2018 Tax expense at statutory rate $ 3,719 $ Increase (decrease) in taxes resulting from: Tax-exempt interest (110) Nondeductible transaction expenses — 138 Other 251 Provision for income taxes, as reported $ 3,860 $ 2,226
Schedule of major components of net deferred tax assets	The major components of net deferred tax assets at December 31 are as follows (dollars in thousands): 2019 2018 Deferred tax assets: NOL carryforward $ 2,147 $ 2,634 Allowance for loan losses 1,144 1,078 Alternative Minimum Tax Credit — — OREO 177 168 Tax credit carryovers — 140 Deferred compensation 253 307 Pension liability 109 221 Stock compensation 75 92 Unrealized loss on securities — 99 Purchase accounting adjustments 1,507 2,206 Lease liability 980 — Other 894 808 Total deferred tax assets 7,286 7,753 Deferred tax liabilities: Core deposit premium (1,108) (1,256) FHLB stock dividend (73) (73) Depreciation — (101) Mortgage servicing rights — 61 Right of use asset (980) — Unrealized gain on securities (272) — Other (707) (621) Total deferred tax liabilities (3,140) (1,990) Net deferred tax asset $ 4,146 $ 5,763

OPERATING LEASES (Tables)

OPERATING LEASES (Tables)	12 Months Ended
	Dec. 31, 2019
OPERATING LEASES
Schedule of future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements	Future minimum payments for base rent, by year and in the aggregate, under the initial terms of the operating lease agreements, consist of the following (dollars in thousands): Years Ending Related Party Unrelated Party December 31 Amount Amount 2020 $ 467 $ 244 2021 477 120 2022 486 82 2023 496 — 2024 506 — Thereafter 2,081 — Total $ 4,513 $ 446

DEFINED BENEFIT PENSION PLAN (T

DEFINED BENEFIT PENSION PLAN (Tables)	12 Months Ended
	Dec. 31, 2019
DEFINED BENEFIT PENSION PLAN
Schedule of anticipated distributions over the next five years	The anticipated distributions over the next five years and through December 31, 2029 are detailed in the table below (dollars in thousands): 2020 $ 131 2021 129 2022 137 2023 143 2024 141 2025-2029 869 Total $ 1,550
Schedule of funded status, amounts recognized in the balance sheets and activity from the date of acquisition	The following table sets forth the plan’s funded status and amounts recognized in the Corporation’s balance sheets and the activity from date of acquisition (dollars in thousands): 2019 2018 Change in benefit obligation: Benefit obligation, beginning of year $ 2,991 $ 3,332 Interest cost 117 109 Actuarial (gain) loss 469 (316) Benefits paid (130) (134) Benefit obligation at end of year 3,447 2,991 Change in plan assets: Fair value of plan assets, beginning of year 1,987 2,191 Actual return on plan assets 381 (134) Employer contributions 22 64 Benefits paid (131) (134) Fair value of plan assets at end of year 2,259 1,987 Funded status, included with other liabilities $ (1,188) $ (1,004)
Schedule of assumptions in the actuarial valuation	2019 2018 Weighted average discount rate Rate of increase in future compensation levels N/A N/A Expected long-term rate of return on plan assets
Schedule of asset allocation	The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation, which was in place at both December 31, 2019 and December 31, 2018: Target Actual Allocation Allocation Equity securities 50% to 70% Fixed income securities 30% to 50%

REGULATORY MATTERS (Tables)

REGULATORY MATTERS (Tables)	12 Months Ended
	Dec. 31, 2019
REGULATORY MATTERS
Schedule of the Corporation's and the Bank's actual and capital amounts and ratios compared to generally applicable regulatory requirements	The tables below do not include the 2.5% capital conservation buffer requirement. A bank with a capital conservation buffer greater than 2.5% of risk-weighted assets would not be restricted by payout limitations. However, if the 2.5% threshold is not met, the Bank would be subject to increasing limitations on capital distributions and discretionary bonus payments to executive officers as the capital conservation buffer approaches zero. The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2019 are as follows (dollars in thousands): Minimum for Capital Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 138,263 > $ 83,696 > > N/A N/A mBank $ 136,578 > $ 83,681 > > $ 104,601 Tier 1 capital to risk weighted assets: Consolidated $ 132,955 > $ 62,772 > > N/A N/A mBank $ 131,311 > $ 62,761 > > $ 83,681 Common equity Tier 1 capital to risk weighted assets Consolidated $ 132,955 > $ 47,079 > > N/A N/A mBank $ 131,311 > $ 47,071 > > $ 67,991 Tier 1 capital to average assets: Consolidated $ 132,955 > $ 52,724 > > N/A N/A mBank $ 131,311 > $ 52,728 > > $ 65,910 The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2018 are as follows (dollars in thousands): Minimum for Capital Actual Adequacy Purposes Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Total capital to risk weighted assets: Consolidated $ 124,207 > $ 79,705 > > N/A N/A mBank $ 121,406 > $ 79,464 > > $ 99,329 Tier 1 capital to risk weighted assets: Consolidated $ 119,024 > $ 59,779 > > N/A N/A mBank $ 116,264 > $ 59,598 > > $ 79,464 Common equity Tier 1 capital to risk weighted assets Consolidated $ 119,024 > $ 44,834 > > N/A N/A mBank $ 116,264 > $ 44,698 > > $ 64,564 Tier 1 capital to average assets: Consolidated $ 119,024 > $ 51,552 > > N/A N/A mBank $ 116,264 > $ 51,556 > > $ 64,445

STOCK COMPENSATION PLANS (Table

STOCK COMPENSATION PLANS (Tables)	12 Months Ended
	Dec. 31, 2019
STOCK COMPENSATION PLANS
Summary of restricted stock units awards granted	Market Value at Date of Award Units Granted grant date Vesting Term February, 2016 35,733 9.91 4 years February, 2017 28,427 13.39 4 years February, 2018 18,643 16.30 4 years April, 2018 8,000 16.00 Immediate February, 2019 27,790 15.70 4 years October, 2019 8,000 15.40 Immediate
Summary of changes in nonvested shares	Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2019 69,322 $ 12.79 Granted during the period 35,790 15.70 Vested during the period (35,967) 12.09 Nonvested balance at December 31, 2019 69,145 $ 14.52

COMMITMENTS, CONTINGENCIES, AND

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Tables)	12 Months Ended
	Dec. 31, 2019
COMMITMENTS, CONTINGENCIES AND CREDIT RISK
Schedule of commitments	These commitments at December 31 are as follows (dollars in thousands): 2019 2018 Commitments to extend credit: Variable rate $ 106,278 $ 88,862 Fixed rate 50,796 54,434 Standby letters of credit - Variable rate 5,441 7,208 Credit card commitments - Fixed rate 5,841 5,107 $ 168,356 $ 155,611

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	12 Months Ended
	Dec. 31, 2019
FAIR VALUE
Schedule presenting information for financial instruments	The following table presents information for financial instruments at December 31 (dollars in thousands): December 31, 2019 December 31, 2018 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 49,826 $ 49,826 $ 64,157 $ 64,157 Interest-bearing deposits Level 2 10,295 10,295 13,452 13,452 Securities available for sale Level 2 106,569 106,569 115,260 115,260 Securities available for sale Level 3 1,403 1,403 1,488 1,488 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,053,468 1,055,985 1,033,681 1,013,214 Accrued interest receivable Level 3 3,751 3,751 3,005 3,005 Total financial assets $ 1,230,236 $ 1,232,753 $ 1,235,967 $ 1,215,500 Financial liabilities: Deposits Level 2 $ 1,075,677 $ 1,044,267 $ 1,097,537 $ 1,047,709 Borrowings Level 2 64,551 64,403 57,536 56,771 Accrued interest payable Level 3 569 569 391 391 Total financial liabilities $ 1,140,797 $ 1,109,239 $ 1,155,464 $ 1,104,871
Schedule of investment securities measured at fair value on a recurring basis	The table below shows investment securities measured at fair value on a recurring basis (dollars in thousands): Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Balance at for Identical Assets Inputs Inputs (dollars in thousands) December 31, 2019 (Level 1) (Level 2) (Level 3) Assets Corporate $ $ — $ 20,438 $ 500 US Agencies — 14,496 — US Agencies - MBS — 34,526 — Obligations of state and political subdivisions 38,012 — 37,024 903 $ 107,972 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Balance at for Identical Assets Inputs Inputs (dollars in thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) Assets Corporate $ $ — $ 19,564 $ 500 US Agencies — 15,970 — US Agencies - MBS — 32,840 — Obligations of state and political subdivisions — 46,886 988 $ 116,748
Schedule of activity in level three assets	Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2019 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 988 — — — — — 988 Balance at Transfers Balance Beginning Net Gains (losses) in (out) of at end of Period Realized Unrealized Level 3 Purchases Sales of Period Year Ended December 31, 2018 Corporate $ 500 $ — $ — $ — $ — $ — $ 500 Obligations of state and political subdivisions 1,000 — — (12) — — 988
Schedule of assets measured at fair value on a non-recurring basis	Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2019 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Twelve months ended (dollars in thousands) December 31, 2019 (Level 1) (Level 2) (Level 3) December 31, 2019 Assets Impaired loans $ $ — $ — $ $ 280 Other real estate held for sale — — 212 $ 492 Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2018 Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total Losses for Balance at for Identical Assets Inputs Inputs Year Ended (dollars in thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) December 31, 2018 Assets Impaired loans $ 8,818 $ — $ — $ 8,818 $ 198 Other real estate held for sale 3,119 — — 3,119 182 $ 380

BUSINESS COMBINATIONS (Tables)

BUSINESS COMBINATIONS (Tables)	12 Months Ended
	Dec. 31, 2019
FFNM
Schedule of allocation of the purchase price	The table below highlights the allocation of purchase price for the FFNM acquisition after the above mentioned adjustments (dollars in thousands, except per share data): Purchase Price: FFNM shares outstanding 3,726,925 Price per share $ 9.15 Total purchase price $ 34,101 Net assets acquired: Cash and cash equivalents $ 13,267 Securities available for sale 96,297 FHLB Stock 1,748 Total loans 185,444 Premises and equipment 5,134 Other real estate owned 194 Deposit based intangible 2,894 Mortgage servicing rights 886 Deferred tax assets 4,631 Bank owned life insurance 5,170 Other assets 1,775 Total assets 317,440 Non-interest bearing deposits 60,616 Interest bearing deposits 193,099 Total deposits 253,715 FHLB borrowings 40,722 Deferred tax liability 133 Other liabilities 1,397 Total liabilities 295,967 Net assets acquired 21,473 Goodwill $ 12,628
Lincoln Community Bank
Schedule of allocation of the purchase price	Purchase Price: Cash consideration $ 8,500 Net assets acquired: Cash and cash equivalents $ 10,971 Securities available for sale 6,947 Total loans 38,001 Premises and equipment 1,249 Other real estate owned 69 Deposit based intangible 1,353 Bank owned life insurance 1,653 Other assets 339 Total assets 60,582 Non-interest bearing deposits 15,559 Interest bearing deposits 37,654 Total deposits 53,213 Deferred tax liability 68 Other liabilities 53 Total liabilities 53,334 Net assets acquired 7,248 Goodwill $ 1,252

PARENT COMPANY ONLY FINANCIAL_2

PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables)	12 Months Ended
	Dec. 31, 2019
PARENT COMPANY ONLY FINANCIAL STATEMENTS
Balance sheet	BALANCE SHEETS December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 ASSETS Cash and cash equivalents $ 490 $ 2,470 Investment in subsidiaries 157,156 146,516 Other assets 5,764 4,306 TOTAL ASSETS $ 163,410 $ 153,292 LIABILITIES AND SHAREHOLDERS’ EQUITY Other borrowing — — Other liabilities 1,491 1,223 Total liabilities 1,491 1,223 Shareholders’ equity: Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,748,712 and 10,712,745 shares respectively 129,564 129,066 Retained earnings 31,740 23,466 Accumulated other comprehensive income 615 (463) Total shareholders’ equity 161,919 152,069 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 163,410 $ 153,292
Statements of operations	STATEMENTS OF OPERATIONS Years Ended December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 INCOME: Interest income $ — $ 1 Miscellaneous income 1 17 Total income $ 1 $ 18 EXPENSES: Interest expense on borrowings — 320 Salaries and benefits 858 835 Professional service fees 301 242 Transaction related expenses — 814 Other 376 350 Total expenses 1,535 2,561 Loss before income taxes and equity in net income of subsidiaries (1,534) (2,543) Provision for (benefit of) income taxes (322) (534) Loss before equity in net income of subsidiaries (1,212) (2,009) Equity in net income of subsidiaries 15,062 10,376 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 13,850 $ 8,367
Statements of cash flows	STATEMENTS OF CASH FLOWS Years Ended December 31, 2019 and 2018 (Dollars in Thousands) 2019 2018 Cash Flows from Operating Activities: Net income $ 13,850 $ 8,367 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net (income) of subsidiaries (15,062) (10,376) Increase in capital from stock based compensation 498 533 Change in other assets (1,458) 1,043 Change in other liabilities 268 365 Net cash provided by (used in) operating activities (1,904) (68) Cash Flows from Investing Activities: Investments in subsidiaries 5,500 2,000 Net cash paid in acquisitions — (8,500) Net cash provided by (used in) investing activities 5,500 (6,500) Cash Flows from Financing Activities: Increase on term borrowing — — Principal payments on term borrowings — (18,999) Net activity on line of credit — — Repurchase of common stock — — Dividend on common stock (5,576) (4,612) Net cash from capital raise — 32,451 Net cash provided by (used in) financing activities (5,576) 8,840 Net increase (decrease) in cash and cash equivalents (1,980) 2,272 Cash and cash equivalents at beginning of period 2,470 198 Cash and cash equivalents at end of period $ 490 $ 2,470

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2019USD ($)item$ / sharesshares	Dec. 31, 2018USD ($)$ / sharesshares	Jan. 01, 2019USD ($)	May 22, 2012shares
Nature of Operations
Maximum percentage of the entity's business activity with Canadian customers denominated in Canadian dollars	1.00%
Number of reportable operating segments | item	1
Cash and Cash Equivalents
Number of days for which federal funds are purchased and sold	1 day
Interest Income and Fees on Loans
Minimum commitment period required before loan commitment fees or costs are deferred	1 year
Goodwill and Other Intangible Assets
Core deposit estimated useful life	10 years
Comprehensive Income (Loss)
Unrealized gains (losses) on available for sale securities	$ 1,025	$ (245)
Minimum pension liability	410	218
Amount of tax on unrealized gains on available for sales securities	272	65
Amount of tax on actuarial losses on the defined benefit pension obligation	109	58
Computation of basic and diluted earnings per share
Net income (in dollars)	$ 13,850	$ 8,367
(Denominator):
Weighted average shares outstanding | shares	10,737,653	8,891,967
Effect of restricted stock awards | shares	19,854	29,691
Diluted weighted average shares outstanding | shares	10,757,507	8,921,658
Income per common share:
Basic (in dollars per share) | $ / shares	$ 1.29	$ 0.94
Diluted (in dollars per share) | $ / shares	$ 1.29	$ 0.94
Adjustment | Accounting Standards Update 2016-02
Recent Developments
Right-of-use assets			$ 4,462
Lease liabilities			$ 4,462
2012 Incentive Compensation Plan
Stock Compensation Plans
Total authorized share balance | shares				575,000

RESTRICTIONS ON CASH AND CASH_2

RESTRICTIONS ON CASH AND CASH EQUIVALENTS (Details)	12 Months Ended
	Dec. 31, 2019USD ($)
RESTRICTIONS ON CASH AND CASH EQUIVALENTS
Restricted cash and cash equivalents	$ 31,451,000
Federal Deposit Insurance Limit	$ 250,000

SECURITIES AVAILABLE FOR SALE_2

SECURITIES AVAILABLE FOR SALE (Details) $ in Thousands	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)item
SECURITIES AVAILABLE FOR SALE
Estimated Fair Value	$ 107,972
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Gross Unrealized Loss, Less Than Twelve Months	(10)	$ (152)
Fair Value, Less Than Twelve Months	9,468	15,188
Gross Unrealized Loss, Over Twelve Months	(21)	(792)
Fair Value, Over Twelve Months	$ 1,848	$ 42,756
Number of securities in an unrealized loss position	26	132
Available-for-sale Securities
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 106,674	$ 117,198
Gross Unrealized Gains	1,329	494
Gross Unrealized Losses	(31)	(944)
Estimated Fair Value	107,972	116,748
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Gross Unrealized Loss, Less Than Twelve Months	(10)	(152)
Fair Value, Less Than Twelve Months	9,468	15,188
Gross Unrealized Loss, Over Twelve Months	(21)	(792)
Fair Value, Over Twelve Months	$ 1,848	$ 42,756
Number of securities in an unrealized loss position | item	26	132
Corporate
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 20,779	$ 20,198
Gross Unrealized Gains	160	24
Gross Unrealized Losses	(1)	(158)
Estimated Fair Value	20,938	20,064
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Gross Unrealized Loss, Less Than Twelve Months	(1)	(50)
Fair Value, Less Than Twelve Months	$ 2,502	4,969
Gross Unrealized Loss, Over Twelve Months		(108)
Fair Value, Over Twelve Months		$ 11,876
Number of securities in an unrealized loss position	1	8
US Agencies
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 14,450	$ 16,198
Gross Unrealized Gains	47	5
Gross Unrealized Losses	(1)	(233)
Estimated Fair Value	14,496	15,970
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Fair Value, Less Than Twelve Months		504
Gross Unrealized Loss, Over Twelve Months	(1)	(233)
Fair Value, Over Twelve Months	$ 500	$ 14,439
Number of securities in an unrealized loss position	1	7
US Agencies - MBS
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 34,063	$ 32,974
Gross Unrealized Gains	492	124
Gross Unrealized Losses	(29)	(258)
Estimated Fair Value	34,526	32,840
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Gross Unrealized Loss, Less Than Twelve Months	(9)	(73)
Fair Value, Less Than Twelve Months	6,966	3,903
Gross Unrealized Loss, Over Twelve Months	(19)	(185)
Fair Value, Over Twelve Months	$ 1,233	$ 6,908
Number of securities in an unrealized loss position	23	53
Obligations of states and political subdivisions
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 37,382	$ 47,828
Gross Unrealized Gains	630	341
Gross Unrealized Losses		(295)
Estimated Fair Value	38,012	47,874
Securities with gross unrealized losses aggregated by investment category and length of time the individual securities have been in a loss position
Gross Unrealized Loss, Less Than Twelve Months		(29)
Fair Value, Less Than Twelve Months		5,812
Gross Unrealized Loss, Over Twelve Months	(1)	(266)
Fair Value, Over Twelve Months	$ 115	$ 9,533
Number of securities in an unrealized loss position	1	64

SECURITIES AVAILABLE FOR SALE -

SECURITIES AVAILABLE FOR SALE - BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Summary of the proceeds from sales and calls of securities available for sale, as well as gross gains and losses
Proceeds from sales and calls	$ 5,805	$ 48,649
Gross gains on sales and calls	208
Amortized Cost
Due in one year or less	21,532
Due after one year through five years	40,063
Due after five years through ten years	10,019
Due after ten years	997
Subtotal	72,611
US Agencies - MBS	34,063
Estimated Fair Value
Due in one year or less	21,575
Due after one year through five years	40,664
Due after five years through ten years	10,189
Due after ten years	1,018
Subtotal	73,446
US Agencies - MBS	34,526
Estimated Fair Value	107,972
FHLB
Estimated Fair Value
Securities held as collateral at fair value	26,407
Customer Relationship
Estimated Fair Value
Securities held as collateral at fair value	$ 4,487

SECURITIES AVAILABLE FOR SALE_3

SECURITIES AVAILABLE FOR SALE - GROSS UNREALIZED LOSSES AND LENGTH OF TIME IN LOSS POSITION (Details) $ in Thousands	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)item
Number of Securities
Number of Securities, Less Than Twelve Months	11	43
Number of Securities, Over Twelve Months	15	89
Total Number of Securities	26	132
Fair Value
Fair Value, Less Than Twelve Months	$ 9,468	$ 15,188
Fair Value, Over Twelve Months	1,848	42,756
Total Fair Value	11,316	57,944
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(10)	(152)
Gross Unrealized Loss, Over Twelve Months	(21)	(792)
Total Gross Unrealized Loss	$ (31)	$ (944)
Available-for-sale Securities
Number of Securities
Total Number of Securities | item	26	132
Fair Value
Fair Value, Less Than Twelve Months	$ 9,468	$ 15,188
Fair Value, Over Twelve Months	1,848	42,756
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(10)	(152)
Gross Unrealized Loss, Over Twelve Months	$ (21)	$ (792)
Corporate
Number of Securities
Number of Securities, Less Than Twelve Months	1	3
Number of Securities, Over Twelve Months		5
Total Number of Securities	1	8
Fair Value
Fair Value, Less Than Twelve Months	$ 2,502	$ 4,969
Fair Value, Over Twelve Months		11,876
Total Fair Value	2,502	16,845
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(1)	(50)
Gross Unrealized Loss, Over Twelve Months		(108)
Total Gross Unrealized Loss	$ (1)	$ (158)
US Agencies
Number of Securities
Number of Securities, Less Than Twelve Months		1
Number of Securities, Over Twelve Months	1	6
Total Number of Securities	1	7
Fair Value
Fair Value, Less Than Twelve Months		$ 504
Fair Value, Over Twelve Months	$ 500	14,439
Total Fair Value	500	14,943
Gross Unrealized Loss
Gross Unrealized Loss, Over Twelve Months	(1)	(233)
Total Gross Unrealized Loss	$ (1)	$ (233)
US Agencies - MBS
Number of Securities
Number of Securities, Less Than Twelve Months	10	20
Number of Securities, Over Twelve Months	13	33
Total Number of Securities	23	53
Fair Value
Fair Value, Less Than Twelve Months	$ 6,966	$ 3,903
Fair Value, Over Twelve Months	1,233	6,908
Total Fair Value	8,199	10,811
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(9)	(73)
Gross Unrealized Loss, Over Twelve Months	(19)	(185)
Total Gross Unrealized Loss	$ (28)	$ (258)
Obligations of states and political subdivisions
Number of Securities
Number of Securities, Less Than Twelve Months		19
Number of Securities, Over Twelve Months	1	45
Total Number of Securities	1	64
Fair Value
Fair Value, Less Than Twelve Months		$ 5,812
Fair Value, Over Twelve Months	$ 115	9,533
Total Fair Value	115	15,345
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months		(29)
Gross Unrealized Loss, Over Twelve Months	(1)	(266)
Total Gross Unrealized Loss	$ (1)	$ (295)

LOANS (Details)

LOANS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loans
Total loans	$ 1,058,776	$ 1,038,864
Acquired portfolio
Acquired with deteriorated credit quality	8,974	6,093
Balance at the beginning of period	5,051	1,289
Acquisition activity		5,831
Accretion	(2,235)	(2,573)
Reclassification from nonaccretable difference	360	504
Balance at the end of period	3,176	5,051
PFC
Acquired portfolio
Loans acquired - contractual payments	67,139
Nonaccretable difference	(2,234)
Expected cash flows	64,905
Accretable yield	(2,844)
Carrying balance at acquisition date	62,061
Acquired with deteriorated credit quality	1,718	2,369
Balance at the beginning of period	128	149
Accretion	(90)	(86)
Reclassification from nonaccretable difference	67	65
Balance at the end of period	105	128
Eagle River
Acquired portfolio
Loans acquired - contractual payments	84,138
Nonaccretable difference	(1,172)
Expected cash flows	82,966
Accretable yield	(2,091)
Carrying balance at acquisition date	80,875
Acquired with deteriorated credit quality	1,716	1,963
Balance at the beginning of period	229	821
Accretion	(33)	(609)
Reclassification from nonaccretable difference	13	17
Balance at the end of period	209	229
Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	32,660
Nonaccretable difference	(265)
Expected cash flows	32,395
Accretable yield	(688)
Carrying balance at acquisition date	31,707
Acquired with deteriorated credit quality	75	237
Balance at the beginning of period	95	319
Accretion	(99)	(260)
Reclassification from nonaccretable difference	23	36
Balance at the end of period	19	95
FFNM
Acquired portfolio
Loans acquired - contractual payments	192,742
Nonaccretable difference	(2,100)
Expected cash flows	190,642
Accretable yield	(5,198)
Carrying balance at acquisition date	185,444
Acquired with deteriorated credit quality	5,119	7,720
Balance at the beginning of period	4,017
Acquisition activity		5,198
Accretion	(1,707)	(1,567)
Reclassification from nonaccretable difference	161	386
Balance at the end of period	2,471	4,017
Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	39,601
Nonaccretable difference	(421)
Expected cash flows	39,180
Accretable yield	(633)
Carrying balance at acquisition date	38,547
Acquired with deteriorated credit quality	897	1,272
Balance at the beginning of period	582
Acquisition activity		633
Accretion	(306)	(51)
Reclassification from nonaccretable difference	96
Balance at the end of period	372	582
Commercial real estate
Loans
Total loans	514,394	496,207
Acquired portfolio
Acquired with deteriorated credit quality	4,318	2,777
Commercial, financial, and agricultural
Loans
Total loans	211,023	191,060
Acquired portfolio
Acquired with deteriorated credit quality	2,354	1,460
Commercial construction
Loans
Total loans	40,107	29,765
Acquired portfolio
Acquired with deteriorated credit quality	373	366
One to four family residential real estate
Loans
Total loans	253,918	286,908
Acquired portfolio
Acquired with deteriorated credit quality	1,920	1,231
Consumer
Loans
Total loans	21,238	20,371
Acquired portfolio
Acquired with deteriorated credit quality	9	42
Consumer construction
Loans
Total loans	18,096	14,553
Acquired portfolio
Acquired with deteriorated credit quality		217
Acquired Impaired
Acquired portfolio
Balance at the beginning of period	1,078	405
Acquisition activity		840
Accretion	(479)	(671)
Reclassification from nonaccretable difference	360	504
Balance at the end of period	959	1,078
Acquired Impaired | PFC
Acquired portfolio
Loans acquired - contractual payments	13,290
Nonaccretable difference	(2,234)
Expected cash flows	11,056
Accretable yield	(744)
Carrying balance at acquisition date	10,312
Balance at the beginning of period	128	149
Accretion	(90)	(86)
Reclassification from nonaccretable difference	67	65
Balance at the end of period	105	128
Acquired Impaired | Eagle River
Acquired portfolio
Loans acquired - contractual payments	3,401
Nonaccretable difference	(1,172)
Expected cash flows	2,229
Accretable yield	(391)
Carrying balance at acquisition date	1,838
Balance at the beginning of period	213	218
Accretion	(17)	(22)
Reclassification from nonaccretable difference	13	17
Balance at the end of period	209	213
Acquired Impaired | Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	2,105
Nonaccretable difference	(265)
Expected cash flows	1,840
Accretable yield	(88)
Carrying balance at acquisition date	1,752
Balance at the beginning of period	26	38
Accretion	(30)	(48)
Reclassification from nonaccretable difference	23	36
Balance at the end of period	19	26
Acquired Impaired | FFNM
Acquired portfolio
Loans acquired - contractual payments	5,440
Nonaccretable difference	(2,100)
Expected cash flows	3,340
Accretable yield	(700)
Carrying balance at acquisition date	2,640
Balance at the beginning of period	571
Acquisition activity		700
Accretion	(214)	(515)
Reclassification from nonaccretable difference	161	386
Balance at the end of period	518	571
Acquired Impaired | Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	1,901
Nonaccretable difference	(421)
Expected cash flows	1,480
Accretable yield	(140)
Carrying balance at acquisition date	1,340
Balance at the beginning of period	140
Acquisition activity		140
Accretion	(128)
Reclassification from nonaccretable difference	96
Balance at the end of period	108	140
Acquired Non-impaired
Acquired portfolio
Balance at the beginning of period	3,973	884
Acquisition activity		4,991
Accretion	(1,756)	(1,902)
Balance at the end of period	2,217	3,973
Acquired Non-impaired | PFC
Acquired portfolio
Loans acquired - contractual payments	53,849
Expected cash flows	53,849
Accretable yield	(2,100)
Carrying balance at acquisition date	51,749
Acquired Non-impaired | Eagle River
Acquired portfolio
Loans acquired - contractual payments	80,737
Expected cash flows	80,737
Accretable yield	(1,700)
Carrying balance at acquisition date	79,037
Balance at the beginning of period	16	603
Accretion	(16)	(587)
Balance at the end of period		16
Acquired Non-impaired | Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	30,555
Expected cash flows	30,555
Accretable yield	(600)
Carrying balance at acquisition date	29,955
Balance at the beginning of period	69	281
Accretion	(69)	(212)
Balance at the end of period		69
Acquired Non-impaired | FFNM
Acquired portfolio
Loans acquired - contractual payments	187,302
Expected cash flows	187,302
Accretable yield	(4,498)
Carrying balance at acquisition date	182,804
Balance at the beginning of period	3,446
Acquisition activity		4,498
Accretion	(1,493)	(1,052)
Balance at the end of period	1,953	3,446
Acquired Non-impaired | Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	37,700
Expected cash flows	37,700
Accretable yield	(493)
Carrying balance at acquisition date	37,207
Balance at the beginning of period	442
Acquisition activity		493
Accretion	(178)	(51)
Balance at the end of period	264	442
Receivables Acquired with Deteriorated Credit Quality
Acquired portfolio
Accretion	(404)
Receivables Acquired with Deteriorated Credit Quality | FFNM
Acquired portfolio
Loans acquired - contractual payments	$ 5,440
Receivables Acquired with Deteriorated Credit Quality | Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments		1,901
Receivables Acquired with Deteriorated Credit Quality | Acquired Impaired
Acquired portfolio
Accretion		$ (546)

LOANS - ALLOWANCE (Details)

LOANS - ALLOWANCE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Allowance for loan loss reserve:
Balance at beginning of period	$ 5,183	$ 5,079
Charge-offs	(510)	(716)
Recoveries	250	320
Provision	385	500
Balance at end of period	5,308	5,183
Loans:
Ending balance			$ 1,058,776	$ 1,038,864
Ending balance ALLR	(5,308)	(5,183)	(5,308)	(5,183)
Net loans			1,053,468	1,033,681
Ending balance ALLR:
Individually evaluated			1,267	826
Collectively evaluated			4,041	4,357
Total	5,308	5,183	5,308	5,183
Ending balance Loans:
Individually evaluated			3,849	2,725
Collectively evaluated			1,045,953	1,030,046
Acquired with deteriorated credit quality			8,974	6,093
Total Loans			1,058,776	1,038,864
Commercial real estate
Allowance for loan loss reserve:
Balance at beginning of period	1,682	1,650
Charge-offs	(27)	(198)
Recoveries	159	55
Provision	(625)	175
Balance at end of period	1,189	1,682
Loans:
Ending balance			514,394	496,207
Ending balance ALLR	(1,189)	(1,682)	(1,189)	(1,682)
Net loans			513,205	494,525
Ending balance ALLR:
Individually evaluated			497	486
Collectively evaluated			692	1,196
Total	1,189	1,682	1,189	1,682
Ending balance Loans:
Individually evaluated			2,374	2,148
Collectively evaluated			507,702	491,282
Acquired with deteriorated credit quality			4,318	2,777
Total Loans			514,394	496,207
Commercial, financial, and agricultural
Allowance for loan loss reserve:
Balance at beginning of period	648	576
Charge-offs	(103)	(132)
Recoveries	4	164
Provision	648	40
Balance at end of period	1,197	648
Loans:
Ending balance			211,023	191,060
Ending balance ALLR	(1,197)	(648)	(1,197)	(648)
Net loans			209,826	190,412
Ending balance ALLR:
Individually evaluated			770	340
Collectively evaluated			427	308
Total	1,197	648	1,197	648
Ending balance Loans:
Individually evaluated			1,475	577
Collectively evaluated			207,194	189,023
Acquired with deteriorated credit quality			2,354	1,460
Total Loans			211,023	191,060
Commercial construction
Allowance for loan loss reserve:
Balance at beginning of period	101	54
Recoveries	2	2
Provision	(32)	45
Balance at end of period	71	101
Loans:
Ending balance			40,107	29,765
Ending balance ALLR	(71)	(101)	(71)	(101)
Net loans			40,036	29,664
Ending balance ALLR:
Collectively evaluated			71	101
Total	71	101	71	101
Ending balance Loans:
Collectively evaluated			39,734	29,399
Acquired with deteriorated credit quality			373	366
Total Loans			40,107	29,765
One to four family residential real estate
Allowance for loan loss reserve:
Balance at beginning of period	199	160
Charge-offs	(152)	(230)
Recoveries	49	64
Provision	52	205
Balance at end of period	148	199
Loans:
Ending balance			253,918	286,908
Ending balance ALLR	(148)	(199)	(148)	(199)
Net loans			253,770	286,709
Ending balance ALLR:
Collectively evaluated			148	199
Total	148	199	148	199
Ending balance Loans:
Collectively evaluated			251,998	285,677
Acquired with deteriorated credit quality			1,920	1,231
Total Loans			253,918	286,908
Consumer construction
Allowance for loan loss reserve:
Balance at beginning of period	6	6
Provision	5
Balance at end of period	11	6
Loans:
Ending balance			18,096	14,553
Ending balance ALLR	(11)	(6)	(11)	(6)
Net loans			18,085	14,547
Ending balance ALLR:
Collectively evaluated			11	6
Total	11	6	11	6
Ending balance Loans:
Collectively evaluated			18,096	14,336
Acquired with deteriorated credit quality				217
Total Loans			18,096	14,553
Consumer
Allowance for loan loss reserve:
Balance at beginning of period	8	10
Charge-offs	(228)	(156)
Recoveries	36	35
Provision	197	119
Balance at end of period	13	8
Loans:
Ending balance			21,238	20,371
Ending balance ALLR	(13)	(8)	(13)	(8)
Net loans			21,225	20,363
Ending balance ALLR:
Collectively evaluated			13	8
Total	13	8	13	8
Ending balance Loans:
Collectively evaluated			21,229	20,329
Acquired with deteriorated credit quality			9	42
Total Loans			21,238	20,371
Unallocated
Allowance for loan loss reserve:
Balance at beginning of period	2,539	2,623
Provision	140	(84)
Balance at end of period	2,679	2,539
Loans:
Ending balance ALLR	(2,679)	(2,539)	(2,679)	(2,539)
Net loans			(2,679)	(2,539)
Ending balance ALLR:
Collectively evaluated			2,679	2,539
Total	$ 2,679	$ 2,539	$ 2,679	$ 2,539

LOANS - LOANS BY RISK CATEGORY

LOANS - LOANS BY RISK CATEGORY (Details) $ in Thousands	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)
Breakdown of loans by risk category
Total loans	$ 1,058,776	$ 1,038,864
Minimum
Breakdown of loans by risk category
Credit risk rating for which reserves are established if no specific reserves made | item	6
Maximum
Breakdown of loans by risk category
Credit risk rating for which general reserves are established | item	44
Credit risk rating for which reserves are established if no specific reserves made | item	7
Commercial real estate
Breakdown of loans by risk category
Total loans	$ 514,394	496,207
Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	211,023	191,060
Commercial construction
Breakdown of loans by risk category
Total loans	40,107	29,765
One to four family residential real estate
Breakdown of loans by risk category
Total loans	253,918	286,908
Consumer construction
Breakdown of loans by risk category
Total loans	18,096	14,553
Consumer
Breakdown of loans by risk category
Total loans	21,238	20,371
Strong (1)
Breakdown of loans by risk category
Total loans	25,145	18,464
Strong (1) | Commercial real estate
Breakdown of loans by risk category
Total loans	9,979	9,564
Strong (1) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	15,126	8,077
Strong (1) | Commercial construction
Breakdown of loans by risk category
Total loans		734
Strong (1) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	40	70
Strong (1) | Consumer
Breakdown of loans by risk category
Total loans		19
Good (2)
Breakdown of loans by risk category
Total loans	24,621	34,758
Good (2) | Commercial real estate
Breakdown of loans by risk category
Total loans	17,516	22,265
Good (2) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	4,510	8,678
Good (2) | Commercial construction
Breakdown of loans by risk category
Total loans	292	706
Good (2) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	2,145	2,873
Good (2) | Consumer
Breakdown of loans by risk category
Total loans	158	236
Average (3)
Breakdown of loans by risk category
Total loans	311,287	276,774
Average (3) | Commercial real estate
Breakdown of loans by risk category
Total loans	228,962	189,898
Average (3) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	70,748	72,466
Average (3) | Commercial construction
Breakdown of loans by risk category
Total loans	6,390	6,844
Average (3) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	4,937	6,941
Average (3) | Consumer
Breakdown of loans by risk category
Total loans	250	625
Acceptable
Breakdown of loans by risk category
Total loans	408,107	384,379
Acceptable | Commercial real estate
Breakdown of loans by risk category
Total loans	248,177	257,627
Acceptable | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	115,229	97,441
Acceptable | Commercial construction
Breakdown of loans by risk category
Total loans	28,893	12,244
Acceptable | One to four family residential real estate
Breakdown of loans by risk category
Total loans	15,168	15,711
Acceptable | Consumer construction
Breakdown of loans by risk category
Total loans		200
Acceptable | Consumer
Breakdown of loans by risk category
Total loans	640	1,156
Acceptable Watch
Breakdown of loans by risk category
Total loans	6,432	11,278
Acceptable Watch | Commercial real estate
Breakdown of loans by risk category
Total loans	4,468	5,993
Acceptable Watch | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	930	2,269
Acceptable Watch | Commercial construction
Breakdown of loans by risk category
Total loans	400	829
Acceptable Watch | One to four family residential real estate
Breakdown of loans by risk category
Total loans	634	2,095
Acceptable Watch | Consumer construction
Breakdown of loans by risk category
Total loans		50
Acceptable Watch | Consumer
Breakdown of loans by risk category
Total loans		42
Substandard (6)
Breakdown of loans by risk category
Total loans	13,052	18,657
Substandard (6) | Commercial real estate
Breakdown of loans by risk category
Total loans	5,292	10,860
Substandard (6) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	4,480	2,129
Substandard (6) | Commercial construction
Breakdown of loans by risk category
Total loans	607	823
Substandard (6) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	2,632	4,757
Substandard (6) | Consumer construction
Breakdown of loans by risk category
Total loans		11
Substandard (6) | Consumer
Breakdown of loans by risk category
Total loans	41	77
Rating Unassigned
Breakdown of loans by risk category
Total loans	270,132	294,554
Rating Unassigned | Commercial construction
Breakdown of loans by risk category
Total loans	3,525	7,585
Rating Unassigned | One to four family residential real estate
Breakdown of loans by risk category
Total loans	228,362	254,461
Rating Unassigned | Consumer construction
Breakdown of loans by risk category
Total loans	18,096	14,292
Rating Unassigned | Consumer
Breakdown of loans by risk category
Total loans	$ 20,149	$ 18,216

LOANS - IMPAIRED LOANS AND EFFE

LOANS - IMPAIRED LOANS AND EFFECT ON INTEREST INCOME (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Impaired Loans
Number of days past due to be considered as nonperforming loans	90 days
Recorded investment
With no valuation reserve	$ 8,974	$ 6,093
With a valuation reserve	3,849	2,725
Total	12,823	8,818
Unpaid Principal Balance	16,129	18,312
Related Allowance for Loan Losses	1,267	826
Average investment
Average Balance for the Period	13,466	8,707
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	524	656
Commercial real estate
Recorded investment
With no valuation reserve	4,318	2,777
With a valuation reserve	2,374	2,148
Total	6,692	4,925
Unpaid Principal Balance	7,937	10,740
Related Allowance for Loan Losses	497	486
Average investment
Average Balance for the Period	8,374	5,024
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	301	410
Commercial, financial, and agricultural
Recorded investment
With no valuation reserve	2,354	1,460
With a valuation reserve	1,475	577
Total	3,829	2,037
Unpaid Principal Balance	4,892	2,249
Related Allowance for Loan Losses	770	340
Average investment
Average Balance for the Period	1,144	374
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	2	26
Commercial construction
Recorded investment
With no valuation reserve	373	366
Total	373	366
Unpaid Principal Balance	386	1,132
Average investment
Average Balance for the Period	396	383
Interest Income Recognized During Impairment
Interest Income Recognized for the Period		13
One to four family residential real estate
Recorded investment
With no valuation reserve	1,920	1,231
Total	1,920	1,231
Unpaid Principal Balance	2,881	4,136
Average investment
Average Balance for the Period	3,508	2,879
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	219	203
Consumer construction
Recorded investment
With no valuation reserve		217
Total		217
Average investment
Average Balance for the Period		9
Consumer
Recorded investment
With no valuation reserve	9	42
Total	9	42
Unpaid Principal Balance	33	55
Average investment
Average Balance for the Period	44	38
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	$ 2	$ 4

LOANS - PAST DUE (Details)

LOANS - PAST DUE (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Past due loans
Nonaccrual	$ 5,172	$ 5,054
Total	11,566	11,449
30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	6,383	6,372
90+ days Past Due
Past due loans
90+ days Past Due	11	23
Commercial real estate
Past due loans
Nonaccrual	671	1,700
Total	1,726	1,998
Commercial real estate | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	1,055	298
Commercial, financial, and agricultural
Past due loans
Nonaccrual	527	320
Total	1,356	718
Commercial, financial, and agricultural | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	829	398
Commercial construction
Past due loans
Nonaccrual	105	266
Total	164	378
Commercial construction | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	59	112
One to four family residential real estate
Past due loans
Nonaccrual	3,850	2,725
Total	8,218	8,199
One to four family residential real estate | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	4,357	5,456
One to four family residential real estate | 90+ days Past Due
Past due loans
90+ days Past Due	11	18
Consumer
Past due loans
Nonaccrual	19	43
Total	102	156
Consumer | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	$ 83	108
Consumer | 90+ days Past Due
Past due loans
90+ days Past Due		$ 5

LOANS - TROUBLED DEBT RESTRUCTU

LOANS - TROUBLED DEBT RESTRUCTURING (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019USD ($)loanitem	Dec. 31, 2018loanitem
LOANS
Number of consecutive timely payments before being considered return to accruing status	6
Number of TDR’s	4	0
Number of troubled debt restructurings that have defaulted | loan	0	0
Restructured loans | $	$ 1,952

LOANS - INSIDER LOANS (Details)

LOANS - INSIDER LOANS (Details) - Bank - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms
Loans outstanding, beginning of period	$ 9,817	$ 10,037
New loans	1,872	660
Net activity on revolving lines of credit	1,200	(245)
Change in status of insiders	(289)
Repayment	(404)	(635)
Loans outstanding, end of period	12,196	9,817
Loans outstanding	12,196	9,817	$ 12,196
Unfunded commitments			5
Substandard (6)
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms
Loans outstanding, beginning of period	0
Loans outstanding, end of period	0	0
Loans outstanding	$ 0	$ 0	$ 0

PREMISES AND EQUIPMENT (Details

PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Premises and Equipment
Total cost basis	$ 48,098	$ 41,668
Less - accumulated depreciation	24,490	18,885
Net book value	23,608	22,783
Depreciation charged to operating expenses	2,684	2,432
Land
Premises and Equipment
Total cost basis	4,349	4,417
Buildings and improvements
Premises and Equipment
Total cost basis	26,711	23,283
Furniture Fixtures And Equipment
Premises and Equipment
Total cost basis	15,483	13,428
Construction in progress
Premises and Equipment
Total cost basis	$ 1,555	$ 540

OTHER REAL ESTATE HELD FOR SA_3

OTHER REAL ESTATE HELD FOR SALE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Changes in other real estate held for sale
Balance, January 1	$ 3,119,000	$ 3,558,000
Other real estate transferred from loans due to foreclosure	1,629,000	1,878,000
Other real estate acquired in business combinations		263,000
Proceeds from other real estate sold	1,329,000	2,398,000
Transfer to premise and equipment	(1,013,000)
Writedowns of other real estate held for sale	(181,000)	(125,000)
Gain (loss) on sale of other real estate held for sale	(31,000)	(57,000)
Total other real estate held for sale	2,194,000	$ 3,119,000
Foreclosed residential real estate property	495,000
Mortgage loans secured by residential real estate property in process of foreclosure	$ 19,000

DEPOSITS (Details)

DEPOSITS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Distribution of deposits
Noninterest bearing deposits	$ 287,611	$ 241,556
NOW, money market, interest checking	373,165	368,890
Savings	109,548	111,358
CDs less than $250,000	233,956	225,236
CDs more than $250,000	12,775	13,737
Brokered	58,622	136,760
Total deposits	1,075,677	$ 1,097,537
Maturities of non-brokered time deposits outstanding
2020	166,013
2021	47,899
2022	15,219
2023	9,312
2024	7,640
Thereafter	648
Total	$ 246,731

GOODWILL AND OTHER INTANGIBLE_3

GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	May 18, 2018	Dec. 31, 2019	Dec. 31, 2018	Oct. 01, 2018	May 31, 2018	Aug. 31, 2016	Apr. 29, 2016	Dec. 05, 2014
Goodwill		$ 19,574	$ 22,024	$ 19,574
Deposit based intangible assets		5,043	5,720	6,746
Amortization expense		677	450
Future Amortization Expense		675
Amortization expense year one		675
Amortization expense year two		675
Amortization expense year three		675
Amortization expense year four		675
Amortization expense year five		675
PFC
Goodwill								$ 3,805
Deposit based intangible assets		594	714					$ 1,206
Amortization expense		121	121
Future Amortization Expense		121
Eagle River
Goodwill							$ 1,839
Deposit based intangible assets		629	728				$ 993
Amortization expense		99	99
Future Amortization Expense		99
Niagara Bancorporation
Goodwill						$ 50
Deposit based intangible assets		200	230			$ 300
Amortization expense		30	30
Future Amortization Expense		30
FFNM
Increase deferred tax asset		1,950
Increase to MSRs	$ 500
Decrease Goodwill		2,450
Goodwill	12,628				$ 12,628
Deposit based intangible assets	$ 2,894	2,436	2,735
Amortization expense		299	159
Future Amortization Expense		290
Lincoln Community Bank
Decrease deferred tax liability		163
Decrease Goodwill		163
Goodwill				1,252
Deposit based intangible assets		1,184	1,313	$ 1,353
Amortization expense		128	$ 41
Future Amortization Expense		$ 135

SERVICING RIGHTS (Details)

SERVICING RIGHTS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Changes in mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances
Valuation allowance	$ 0
Commercial loans
Commercial Loans
Commercial Loans	41,000,000	$ 44,000,000
Servicing rights	$ 218,000	80,000
Mortgage loans
Mortgage Loans
Annual constant prepayment speed (as a percent)	13.65%
Discount rate (as a percent)	8.66%
Changes in mortgage servicing rights capitalized and amortized, along with the aggregate activity in related valuation allowances
Balance at beginning of period	$ 1,144,000	1,033,000
Final purchase accounting entry for FFNM	500,000	18,000
Additions from loans sold with servicing retained	95,000
Acquired MSRs		539,000
Amortization	(240,000)	(446,000)
Balance at end of period	1,499,000	1,144,000
Balance of loan servicing portfolio	$ 255,757,000	$ 293,771,000
Mortgage servicing rights as % of portfolio	0.59%	0.39%
Fair value of servicing rights	$ 2,159,000	$ 2,898,000

BORROWINGS (Details)

BORROWINGS (Details)	12 Months Ended
	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)
BORROWINGS
Borrowings	$ 64,551,000	$ 57,536,000
Available for sale equity securities	106,674,000
Federal Home Loan Bank borrowings
BORROWINGS
Borrowings	$ 64,148,000	57,060,000
Interest rate on note (as a percent)	1.63%
Federal Home Loan Bank borrowings | Mortgage related and municipal securities | Collateral Pledged
BORROWINGS
Available for sale equity securities	$ 26,028,000
Amortized cost estimated fair value	26,407,000
Federal Home Loan Bank borrowings | FHLB stock
BORROWINGS
Stock owned and pledged as collateral	4,924,000
Federal Home Loan Bank borrowings | One to four family residential real estate
BORROWINGS
Loans pledged as collateral	$ 54,918,000
Correspondent bank line of credit
BORROWINGS
Number of banking borrowing relationships | item	1
Correspondent bank line of credit | LIBOR
BORROWINGS
Variable rate basis	LIBOR
Variable rate (as a percent)	2.00%
Correspondent bank line of credit | LIBOR | Minimum
BORROWINGS
Floor rate (as a percent)	3.00%
Correspondent bank line of credit | LIBOR | Maximum
BORROWINGS
Floor rate (as a percent)	22.00%
USDA Rural Development note
BORROWINGS
Borrowings	$ 403,000	$ 476,000
Interest rate on note (as a percent)	1.00%
USDA Rural Development note | First Rural Relending
BORROWINGS
Loans pledged as collateral	$ 403,000
Demand deposit account pledged as collateral	456,000
Revolving Credit Facility
BORROWINGS
Line of Credit	0
Maximum borrowing capacity	$ 15,000,000
Revolving Credit Facility | LIBOR
BORROWINGS
LIBOR rate at point of time	1.91%

BORROWINGS - MATURITIES (Detail

BORROWINGS - MATURITIES (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Maturities and principal payments of borrowings outstanding
2020	$ 10,968
2021	25,114
2022	80
2023	308
2024	25,081
Thereafter	3,000
Borrowings	$ 64,551	$ 57,536

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Components of the federal income tax provision (credit)
Current tax expense	$ 2,505	$ 1,352
Deferred tax expense	1,355	874
Provision for income taxes	3,860	2,226
Source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes
Tax expense at statutory rate	3,719	2,225
Tax-exempt interest	(110)	(97)
Nondeductible transaction expenses		138
Other	251	(40)
Provision for income taxes	3,860	2,226
Deferred tax assets:
NOL carryforward	2,147	2,634
Allowance for loan losses	1,144	1,078
OREO	177	168
Tax credit carryovers		140
Deferred compensation	253	307
Pension Liability	109	221
Stock compensation	75	92
Unrealized loss on securities		99
Purchase accounting adjustments	1,507	2,206
Lease liability	980
Other	894	808
Total deferred tax assets	7,286	7,753
Deferred tax liabilities:
Core deposit premium	(1,108)	(1,256)
FHLB stock dividend	(73)	(73)
Depreciation		(101)
Mortgage servicing rights		61
Right of use assets	(980)
Unrealized gain on securities	(272)
Other	(707)	(621)
Total deferred tax liabilities	(3,140)	(1,990)
Net deferred tax asset	4,146	5,763
INCOME TAXES
Deferred tax asset	4,146
Net operating loss (NOL) carryforwards	$ 10,200
Alternative minimum tax credits was reclassified to current tax receivable		$ 1,600
Expiration period from date of origination for net operating loss carryforwards	20 years
Annual limitation for usage of NOL	$ 2,000
Annual limitation for usage of tax credits	$ 420

OPERATING LEASES (Details)

OPERATING LEASES (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)
OPERATING LEASES
Number of operating leases | item	5
Future minimum payments, by year and in the aggregate, under the initial terms of the operating lease agreements
2020	$ 244
2021	120
2022	82
Total	446
Rent Expenses
Rent expense for all operating leases	1,132
Rent expense for all operating leases		$ 1,096
Related Party
Future minimum payments, by year and in the aggregate, under the initial terms of the operating lease agreements
2020	467
2021	477
2022	486
2023	496
2024	506
Thereafter	2,081
Total	$ 4,513

RETIREMENT PLAN (Details)

RETIREMENT PLAN (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
DEFINED BENEFIT PENSION PLAN
Minimum period of service to be completed in order to participate in the retirement plan	3 months
Minimum age to be attained in order to participate in the retirement plan	18 years
Employee's contribution limit as a percentage of annual compensation under the 401 (k) profit sharing plan	80.00%
Retirement plan contributions charged to operations	$ 370	$ 400

DEFINED BENEFIT PENSION PLAN (D

DEFINED BENEFIT PENSION PLAN (Details)	12 Months Ended
	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)	Dec. 31, 2017USD ($)
Defined Benefit Pension Plan
Number of years over which anticipated pension distributions disclosed | item	5
Anticipated distributions from the plan
2020	$ 131,000
2021	129,000
2022	137,000
2023	143,000
2024	141,000
2025-2029	869,000
Total	1,550,000
Peninsula Financial Corporation noncontributory defined benefit pension plan
Defined Benefit Pension Plan
Expected contributions to the plan next fiscal year	139,000
Change in benefit obligation:
Benefit obligation, beginning of year	2,991,000	$ 3,332,000
Interest cost	117,000	109,000
Actuarial (gain) loss	469,000	(316,000)
Benefits paid	(130,000)	(134,000)
Benefit obligation at end of year	3,447,000	2,991,000
Change in plan assets
Fair value of plan assets	2,259,000	1,987,000	$ 2,191,000
Actual return on plan assets	381,000	(134,000)
Employer contributions	22,000	64,000
Benefits paid	(131,000)	(134,000)
Funded status, included with other liabilities	$ (1,188,000)	$ (1,004,000)
Assumptions in the actuarial valuation
Weighted average discount rate	2.92%	4.02%
Expected long-term rate of return on plan assets	8.00%	8.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan
Plan assets
Actual Allocation	60.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | Minimum
Plan assets
Target Allocation	50.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan | Maximum
Plan assets
Target Allocation	70.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan
Plan assets
Actual Allocation	40.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | Minimum
Plan assets
Target Allocation	30.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan | Maximum
Plan assets
Target Allocation	50.00%

DEFERRED COMPENSATION PLAN (Det

DEFERRED COMPENSATION PLAN (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
DEFERRED COMPENSATION PLAN
Liability for vested benefits under the plan	$ 51,000	$ 82,000
Cash surrender value of life insurance policies of the plan participants	1,498,000	1,443,000
Deferred compensation expense	$ 99,000	92,000
Minimum
DEFERRED COMPENSATION PLAN
Original contractual term	10 years
Maximum
DEFERRED COMPENSATION PLAN
Original contractual term	15 years
PFC
DEFERRED COMPENSATION PLAN
Liability for vested benefits under the plan	$ 757,000	900,000
Cash surrender value of life insurance policies of the plan participants	$ 1,773,000	1,760,000
FFNM
DEFERRED COMPENSATION PLAN
Liability for vested benefits under the plan		343,000
Cash surrender value of life insurance policies of the plan participants		$ 5,320,000

REGULATORY MATTERS (Details)

REGULATORY MATTERS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Consolidated
Corporation's and the Bank's actual and required capital amounts and ratios
Total capital to risk weighted assets, Actual Amount	$ 138,263	$ 124,207
Total capital to risk weighted assets, Actual Ratio (as a percent)	13.20%	12.50%
Tier 1 capital to risk weighted assets, Actual Amount	$ 132,955	$ 119,024
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent)	12.70%	12.00%
Common equity Tier 1 capital to risk weighted assets, Actual Amount	$ 132,955	$ 119,024
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent)	12.70%	12.00%
Tier 1 capital to average assets, Actual Amount	$ 132,955	$ 119,024
Tier 1 capital to average assets, Actual Ratio (as a percent)	10.10%	9.20%
Consolidated | Minimum
Corporation's and the Bank's actual and required capital amounts and ratios
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount	$ 83,696	$ 79,705
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	8.00%	8.00%
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount	$ 62,772	$ 59,779
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	6.00%	6.00%
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital,Adequacy Purpose Amount	$ 47,079	$ 44,834
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Adequacy Purpose Ratio (as a percent)	4.50%	4.50%
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Amount	$ 52,724	$ 51,552
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	4.00%	4.00%
Bank
Corporation's and the Bank's actual and required capital amounts and ratios
Total capital to risk weighted assets, Actual Amount	$ 136,578	$ 121,406
Total capital to risk weighted assets, Actual Ratio (as a percent)	13.10%	12.20%
Tier 1 capital to risk weighted assets, Actual Amount	$ 131,311	$ 116,264
Tier 1 capital to risk weighted assets, Actual Ratio (as a percent)	12.60%	11.70%
Common equity Tier 1 capital to risk weighted assets, Actual Amount	$ 131,311	$ 116,264
Common equity Tier 1 capital to risk weighted assets, Actual Ratio (as a percent)	12.60%	11.70%
Tier 1 capital to average assets, Actual Amount	$ 131,311	$ 116,264
Tier 1 capital to average assets, Actual Ratio (as a percent)	10.00%	9.00%
Bank | Minimum
Corporation's and the Bank's actual and required capital amounts and ratios
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount	$ 83,681	$ 79,464
Total capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	8.00%	8.00%
Total capital to risk weighted assets, Action Provisions Amount	$ 104,601	$ 99,329
Total capital to risk weighted assets, Action Provisions Ratio (as a percent)	10.00%	10.00%
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Amount	$ 62,761	$ 59,598
Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	6.00%	6.00%
Tier 1 capital to risk weighted assets, Action Provisions Amount	$ 83,681	$ 79,464
Tier 1 capital to risk weighted assets, Action Provisions Ratio (as a percent)	8.00%	8.00%
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital,Adequacy Purpose Amount	$ 47,071	$ 44,698
Common equity Tier 1 capital to risk weighted assets, Minimum for Capital Adequacy Adequacy Purpose Ratio (as a percent)	4.50%	4.50%
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Amount	$ 67,991	$ 64,564
Common equity Tier 1 capital to risk weighted assets, Well-Capitalized Ratio (as a percent)	6.50%	6.50%
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Amount	$ 52,728	$ 51,556
Tier 1 capital to average assets, Minimum for Capital Adequacy Purposes Ratio (as a percent)	4.00%	4.00%
Tier 1 capital to average assets, Action Provisions Amount	$ 65,910	$ 64,445
Tier 1 capital to average assets, Action Provisions Ratio (as a percent)	5.00%	5.00%

STOCK COMPENSATION PLANS (Detai

STOCK COMPENSATION PLANS (Details) - USD ($) $ / shares in Units, $ in Thousands	Aug. 31, 2016	Oct. 31, 2019	Feb. 28, 2019	Apr. 30, 2018	Feb. 28, 2018	Feb. 28, 2017	Mar. 31, 2016	Feb. 29, 2016	Mar. 31, 2017	Dec. 31, 2019	Dec. 31, 2018
Stock Compensation Plans
Annual Compensation cost										$ 498	$ 533
Unrecognized compensation expenses										$ 635
Summary of nonvested shares
Nonvested beginning balance (in shares)										69,322
Granted during the period (in shares)										35,790
Vested during the period (in shares)										(35,967)
Nonvested ending balance (in shares)										69,145	69,322
Weighted Average Grant Date Fair Value
Nonvested beginning balance (in dollars per share)										$ 12.79
Granted during the period (in dollars per share)										15.70
Vested during the period (in dollars per share)										12.09
Nonvested ending balance (in dollars per share)										$ 14.52	$ 12.79
RSUs
Stock Compensation Plans
Vesting period			4 years		4 years	4 years		4 years		4 years
Market value at grant date (in dollars per share)		$ 15.40	$ 15.70	$ 16	$ 16.30	$ 13.39		$ 9.91
Stock issued for vested restricted stocks	37,125						22,626		31,559	35,967	46,666
Summary of nonvested shares
Granted during the period (in shares)		8,000	27,790	8,000	18,643	28,427		35,733

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details) - USD ($)	Aug. 28, 2019	Dec. 31, 2018	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Apr. 28, 2015	Dec. 17, 2013	Feb. 27, 2013
Participation in the TARP Capital Purchase Program
Number of shares authorized to be repurchased		$ 25,000						$ 600,000	$ 600,000
Number of additional shares authorized to be repurchased							$ 750,000
Proceeds from common stock offering		$ 32,451,000
Percentage of outstanding common stock authorized to repurchase	5.00%
Shares of Common Stock
Participation in the TARP Capital Purchase Program
Number of shares repurchased			14,000	102,455	13,700	55,594
Shares issued (in shares)		2,225,807
PARENT COMPANY
Participation in the TARP Capital Purchase Program
Proceeds from common stock offering		$ 32,451,000

COMMITMENTS, CONTINGENCIES, A_2

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019USD ($)item	Dec. 31, 2018USD ($)
Financial Instruments with Off-Balance-Sheet Risk
Commitments	$ 168,356	$ 155,611
Number of pending material legal proceedings | item	0
Commitments to extend credit
Financial Instruments with Off-Balance-Sheet Risk
Variable rate	$ 106,278	88,862
Fixed rate	50,796	54,434
Standby letters of credit
Financial Instruments with Off-Balance-Sheet Risk
Variable rate	$ 5,441	7,208
Percentage collateralization on financial instruments allowed under commitments	100.00%
Credit card commitments
Financial Instruments with Off-Balance-Sheet Risk
Fixed rate	$ 5,841	$ 5,107

COMMITMENTS, CONTINGENCIES, A_3

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK - CREDIT RISK (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Concentration of Credit Risk
Loan portfolio	$ 1,053,468	$ 1,033,681
Commercial real estate
Concentration of Credit Risk
Loan portfolio	513,205	494,525
Bank | Commercial real estate | Commercial loan portfolio | Credit risk concentration
Concentration of Credit Risk
Loan portfolio	$ 141,965	$ 150,251
Percentage of concentration risk under a specified benchmark	18.54%	20.95%

FAIR VALUE (Details)

FAIR VALUE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair Value Measurements
Blended interest rate for determining fair value of nonaccrual loans (as a percent)	0.00%
Fair value of commitments	$ 0
Financial assets:
Interest-bearing deposits	10,295	$ 13,452
Securities available for sale	107,972	116,748
Marketable Securities	107,972
Carrying Amount
Financial assets:
Total financial assets	1,230,236	1,235,967
Financial liabilities:
Total financial liabilities	1,140,797	1,155,464
Estimated Fair Value
Financial assets:
Total financial assets	1,232,753	1,215,500
Financial liabilities:
Total financial liabilities	1,109,239	1,104,871
Level 1 | Carrying Amount
Financial assets:
Cash and cash equivalents	49,826	64,157
Level 1 | Estimated Fair Value
Financial assets:
Cash and cash equivalents	49,826	64,157
Level 2 | Carrying Amount
Financial assets:
Interest-bearing deposits	10,295	13,452
Securities available for sale	106,569	115,260
Federal Home Loan Bank stock	4,924	4,924
Financial liabilities:
Deposits	1,075,677	1,097,537
Borrowings	64,551	57,536
Level 2 | Estimated Fair Value
Financial assets:
Interest-bearing deposits	10,295	13,452
Securities available for sale	106,569	115,260
Federal Home Loan Bank stock	4,924	4,924
Financial liabilities:
Deposits	1,044,267	1,047,709
Borrowings	64,403	56,771
Level 3 | Carrying Amount
Financial assets:
Securities available for sale	1,403	1,488
Net loans	1,053,468	1,033,681
Accrued interest receivable	3,751	3,005
Financial liabilities:
Accrued interest payable	569	391
Level 3 | Estimated Fair Value
Financial assets:
Securities available for sale	1,403	1,488
Net loans	1,055,985	1,013,214
Accrued interest receivable	3,751	3,005
Financial liabilities:
Accrued interest payable	569	391
Available-for-sale Securities
Financial assets:
Marketable Securities	107,972	116,748
Corporate
Financial assets:
Marketable Securities	20,938	20,064
Corporate | Level 3
Financial assets:
Securities available for sale	500	500	$ 500
US Agencies
Financial assets:
Marketable Securities	14,496	15,970
US Agencies - MBS
Financial assets:
Marketable Securities	34,526	32,840
US Agencies - MBS | Level 3
Financial assets:
Securities available for sale		988	$ 1,000
Obligations of states and political subdivisions
Financial assets:
Marketable Securities	38,012	47,874
Obligations of states and political subdivisions | Level 3
Financial assets:
Securities available for sale	$ 988	$ 988

FAIR VALUE - OTHER ASSETS AND O

FAIR VALUE - OTHER ASSETS AND OTHER LIABILITIES (Details) - Recurring - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair value measurements
Other assets		$ 0	$ 0
Other liabilities		$ 0	$ 0
Level 3
Fair value measurements
Other assets	$ 0
Other liabilities	$ 0

FAIR VALUE - RECURRING (Details

FAIR VALUE - RECURRING (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Marketable Securities	$ 107,972
Recurring
Marketable Securities	107,972		$ 116,748
Available-for-sale Securities
Marketable Securities	107,972	$ 116,748
Corporate
Marketable Securities	20,938	20,064
Corporate | Recurring
Marketable Securities	20,938		20,064
Corporate | Level 2 | Recurring
Marketable Securities	20,438	19,564
Corporate | Level 3 | Recurring
Marketable Securities	500	500
US Agencies
Marketable Securities	14,496	15,970
US Agencies | Recurring
Marketable Securities	14,496		15,970
US Agencies | Level 2 | Recurring
Marketable Securities	14,496	15,970
US Agencies - MBS
Marketable Securities	34,526	32,840
US Agencies - MBS | Recurring
Marketable Securities	34,526		32,840
US Agencies - MBS | Level 2 | Recurring
Marketable Securities	34,526	32,840
Obligations of states and political subdivisions
Marketable Securities	38,012	47,874
Obligations of states and political subdivisions | Recurring
Marketable Securities	38,012		$ 47,874
Obligations of states and political subdivisions | Level 2 | Recurring
Marketable Securities	37,024	46,886
Obligations of states and political subdivisions | Level 3 | Recurring
Marketable Securities	$ 903	$ 988

FAIR VALUE - LEVEL 3 ACTIVITIES

FAIR VALUE - LEVEL 3 ACTIVITIES (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2018USD ($)
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections
Balance at the end	$ 116,748
Level 3 | Corporate
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections
Balance at the beginning	500
Balance at the end	500
Level 3 | US Agencies - MBS
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections
Balance at the beginning	1,000
Transfers in (out) of level 3	(12)
Balance at the end	988
Level 3 | Obligations of states and political subdivisions
Fair values of assets using Level 3 inputs, specifically discounted cash flow projections
Balance at the end	$ 988

FAIR VALUE - NONRECURRING BASIS

FAIR VALUE - NONRECURRING BASIS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair value
Impaired loans	$ 12,823	$ 8,818
Other real estate owned	2,194	3,119	$ 3,558
Nonrecurring
Fair value
Total (Gains) Losses	492	380
Investments	0
Nonrecurring | Impaired loans
Fair value
Impaired loans		12,823	8,818
Total (Gains) Losses	280	198
Nonrecurring | Other real estate owned
Fair value
Other real estate owned		2,194	$ 3,119
Total (Gains) Losses	212	182
Nonrecurring | Level 3 | Impaired loans
Fair value
Impaired loans	12,823	8,818
Nonrecurring | Level 3 | Other real estate owned
Fair value
Other real estate owned	$ 2,194	$ 3,119

BUSINESS COMBINATIONS (Details)

BUSINESS COMBINATIONS (Details) $ / shares in Units, $ in Thousands	Oct. 01, 2018USD ($)item	May 18, 2018USD ($)	May 05, 2018USD ($)shares	May 31, 2018USD ($)item$ / sharesshares	Dec. 31, 2019USD ($)shares	Dec. 31, 2018USD ($)shares
Business Acquisition [Line Items]
Assets					$ 1,320,069	$ 1,318,040
Net cash paid						$ (4,768)
FFNM acquisition (in shares) | shares						2,146,378
FFNM acquisition						$ 34,101
Purchase Price:
FFNM shares outstanding | shares					10,748,712	10,712,745
Net assets acquired:
Goodwill	$ 19,574				$ 19,574	$ 22,024
FFNM
Business Acquisition [Line Items]
Number of banking offices | item				7
Assets		$ 318,000
Increase deferred tax asset					1,950
Increase to MSRs		500
Decrease Goodwill					2,450
Purchase Price:
FFNM shares outstanding | shares				3,726,925
Price per share / Cash Price | $ / shares				$ 9.15
Total purchase price				$ 34,101
Net assets acquired:
Cash and cash equivalents				13,267
Securities available for sale				96,297
FHLB Stock				1,748
Total loans		192,000		185,444
Premises and equipment				5,134
Other real estate owned				194
Deposit based intangible				2,894
Mortgage service rights				886
Deferred tax assets				4,631
Bank owned life insurance				5,170
Other assets				1,775
Total assets				317,440
Non-interest bearing deposits				60,616
Interest bearing deposits				193,099
Total deposits		254,000		253,715
FHLB Borrowings				40,722
Deferred tax liability				133
Other liabilities				1,397
Total liabilities				295,967
Net assets acquired				21,473
Goodwill		$ 12,628		$ 12,628
Lincoln Community Bank
Business Acquisition [Line Items]
Number of banking offices | item	2
Assets	$ 60,000
Cash consideration	8,500
Decrease deferred tax liability					163
Decrease Goodwill					$ 163
Net cash paid	8,500
Net assets acquired:
Cash and cash equivalents	10,971
Securities available for sale	6,947
Total loans	38,001
Premises and equipment	1,249
Other real estate owned	69
Deposit based intangible	1,353
Bank owned life insurance	1,653
Other assets	339
Total assets	60,582
Non-interest bearing deposits	15,559
Interest bearing deposits	37,654
Total deposits	53,213
Deferred tax liability	68
Other liabilities	53
Total liabilities	53,334
Net assets acquired	7,248
Goodwill	$ 1,252
Shares of Common Stock
Business Acquisition [Line Items]
FFNM acquisition (in shares) | shares			2,146,378			2,146,378
Common Stock and Additional Paid in Capital
Business Acquisition [Line Items]
FFNM acquisition			$ 34,101			$ 34,101

PARENT COMPANY ONLY FINANCIAL_3

PARENT COMPANY ONLY FINANCIAL STATEMENTS (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
ASSETS
Other assets	$ 39,433	$ 25,669
TOTAL ASSETS	1,320,069	1,318,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities	11,697	7,993
Total liabilities	1,158,150	1,165,971
Shareholders' equity:
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,748,712 and 10,712,745 shares respectively	129,564	129,066
Retained earnings	31,740	23,466
Total shareholders’ equity	161,919	152,069	$ 81,400
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	1,320,069	1,318,040
PARENT COMPANY
ASSETS
Cash and cash equivalents	490	2,470
Investment in subsidiaries	157,156	146,516
Other assets	5,764	4,306
TOTAL ASSETS	163,410	153,292
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities	1,491	1,223
Total liabilities	1,491	1,223
Shareholders' equity:
Common stock and additional paid in capital - no par value Authorized 18,000,000 shares Issued and outstanding - 10,748,712 and 10,712,745 shares respectively	129,564	129,066
Retained earnings	31,740	23,466
Accumulated other comprehensive income	615	(463)
Total shareholders’ equity	161,919	152,069
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 163,410	$ 153,292

PARENT COMPANY ONLY FINANCIAL_4

PARENT COMPANY ONLY FINANCIAL STATEMENTS - BALANCE SHEET (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
BALANCE SHEET
Common stock, par value	$ 0	$ 0
Common stock, Authorized shares	18,000,000	18,000,000
Common stock, Shares issued	10,748,712	10,712,745
Common stock, Shares outstanding	10,748,712	10,712,745
PARENT COMPANY
BALANCE SHEET
Common stock, Authorized shares	18,000,000	18,000,000
Common stock, Shares issued	10,748,712	10,712,745
Common stock, Shares outstanding	10,748,712	10,712,745

PARENT COMPANY ONLY FINANCIAL_5

PARENT COMPANY ONLY FINANCIAL STATEMENTS - STATEMENT OF OPERATIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
INCOME:
Interest income	$ 64,384	$ 55,377
EXPENSES:
Interest expense on borrowings	1,041	1,755
Salaries and benefits	22,743	20,064
Professional service fees	2,100	1,575
Transaction related expenses		2,951
Other	3,534	3,340
Total other expenses	41,765	40,300
Loss before income taxes and equity in net income of subsidiaries	17,710	10,593
Provision for (benefit of) income taxes	3,860	2,226
NET INCOME	13,850	8,367
PARENT COMPANY
INCOME:
Interest income		1
Miscellaneous income	1	17
Total income	1	18
EXPENSES:
Interest expense on borrowings		320
Salaries and benefits	858	835
Professional service fees	301	242
Transaction related expenses		814
Other	376	350
Total other expenses	1,535	2,561
Loss before income taxes and equity in net income of subsidiaries	(1,534)	(2,543)
Provision for (benefit of) income taxes	(322)	(534)
Loss before equity in net income of subsidiaries	(1,212)	(2,009)
Equity in net income of subsidiaries	15,062	10,376
NET INCOME	$ 13,850	$ 8,367

PARENT COMPANY ONLY FINANCIAL_6

PARENT COMPANY ONLY FINANCIAL STATEMENTS - CASH FLOWS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash Flows from Operating Activities:
Net income	$ 13,850	$ 8,367
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in capital from stock compensation	498	533
Change in other assets	(10,934)	7,531
Change in other liabilities	3,704	37
Net cash provided by operating activities	7,597	20,631
Cash Flows from Investing Activities:
Net cash provided by (used in) investing activities	(4,827)	65,483
Cash Flows from Financing Activities:
Principal payments on term borrowings	(17,985)	(62,738)
Dividend on common stock	5,576	4,612
Net cash from capital raise		32,451
Net cash (used in) provided by financing activities	(17,101)	(59,383)
Net (decrease) increase in cash and cash equivalents	(14,331)	26,731
Cash and cash equivalents at beginning of period	64,157	37,426
Cash and cash equivalents at end of period	49,826	64,157
PARENT COMPANY
Cash Flows from Operating Activities:
Net income	13,850	8,367
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in net (income) of subsidiaries	(15,062)	(10,376)
Increase in capital from stock compensation	498	533
Change in other assets	(1,458)	1,043
Change in other liabilities	268	365
Net cash provided by operating activities	(1,904)	(68)
Cash Flows from Investing Activities:
Investments in subsidiaries	5,500	2,000
Net cash paid in acquisitions		(8,500)
Net cash provided by (used in) investing activities	5,500	(6,500)
Cash Flows from Financing Activities:
Principal payments on term borrowings		(18,999)
Dividend on common stock	(5,576)	(4,612)
Net cash from capital raise		32,451
Net cash (used in) provided by financing activities	(5,576)	8,840
Net (decrease) increase in cash and cash equivalents	(1,980)	2,272
Cash and cash equivalents at beginning of period	2,470	198
Cash and cash equivalents at end of period	$ 490	$ 2,470