Mackinac Financial (MFNC) 10-Q 11 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 11, 2020
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
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		10,533,589
Entity Central Index Key	0000036506
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Cash and due from banks	$ 97,041	$ 49,794
Federal funds sold	31	32
Cash and cash equivalents	97,072	49,826
Interest-bearing deposits in other financial institutions	8,825	10,295
Securities available for sale	114,734	107,972
Federal Home Loan Bank stock	4,924	4,924
Loans:
Commercial	760,357	765,524
Mortgage	263,445	272,014
Consumer	20,375	21,238
Total Loans	1,044,177	1,058,776
Allowance for loan losses	(5,292)	(5,308)
Net loans	1,038,885	1,053,468
Premises and equipment	24,522	23,608
Other real estate held for sale	2,228	2,194
Deferred tax asset	3,154	3,732
Deposit based intangibles	4,874	5,043
Goodwill	19,574	19,574
Other assets	37,589	39,433
TOTAL ASSETS	1,356,381	1,320,069
Deposits:
Noninterest bearing deposits	278,191	287,611
NOW, money market, interest checking	369,003	373,165
Savings	109,818	109,548
CDs less than $250,000	227,924	233,956
CDs more than $250,000	14,152	12,775
Brokered	96,293	58,622
Total deposits	1,095,381	1,075,677
Federal funds purchased	22,790	6,225
Borrowings	67,120	64,551
Other liabilities	11,030	11,697
Total liabilities	1,196,321	1,158,150
SHAREHOLDERS’ EQUITY:
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,533,589 and 10,748,712 respectively	127,003	129,564
Retained earnings	33,316	31,740
Accumulated other comprehensive income (loss)
Unrealized gains on available for sale securities	151	1,025
Minimum pension liability	(410)	(410)
Total shareholders’ equity	160,060	161,919
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,356,381	$ 1,320,069

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
CONSOLIDATED BALANCE SHEETS
Common stock, par value	$ 0	$ 0
Common stock, Authorized shares	18,000,000	18,000,000
Common stock, Shares issued	10,533,589	10,748,712
Common stock, Shares outstanding	10,533,589	10,748,712

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Interest and fees on loans:
Taxable	$ 14,613,000	$ 14,595,000
Tax-exempt	74,000	47,000
Interest on securities:
Taxable	621,000	703,000
Tax-exempt	87,000	98,000
Other interest income	270,000	385,000
Total interest income	15,665,000	15,828,000
INTEREST EXPENSE:
Deposits	1,927,000	2,354,000
Borrowings	341,000	238,000
Total interest expense	2,268,000	2,592,000
Net interest income	13,397,000	13,236,000
Provision for loan losses	100,000	100,000
Net interest income after provision for loan losses	13,297,000	13,136,000
OTHER INCOME:
Deposit service fees	403,000	406,000
Income from mortgage loans sold on the secondary market	538,000	312,000
SBA/USDA loan sale gains	710,000	125,000
Net mortgage servicing fees	259,000	120,000
Other	27,000	154,000
Total other income	1,937,000	1,117,000
OTHER EXPENSE:
Salaries and employee benefits	6,051,000	5,435,000
Occupancy	1,124,000	1,081,000
Furniture and equipment	802,000	718,000
Data processing	825,000	709,000
Advertising	212,000	309,000
Professional service fees	498,000	434,000
Loan origination expenses and deposit and card related fees	381,000	179,000
Writedowns and losses on other real estate held for sale	3,000	28,000
FDIC insurance assessment	150,000	134,000
Communications	213,000	228,000
Other	1,113,000	989,000
Total other expenses	11,372,000	10,244,000
Income before provision for income taxes	3,862,000	4,009,000
Provision for income taxes	811,000	842,000
NET INCOME	$ 3,051,000	$ 3,167,000
INCOME PER COMMON SHARE:
Basic (in dollars per share)	$ 0.28	$ 0.30
Diluted (in dollars per share)	$ 0.28	$ 0.30

CONSOLIDATED STATEMENTS COMPREH

CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME
Net income	$ 3,051	$ 3,167
Other comprehensive income
Unrealized (losses) gains arising during the period	(1,106)	973
Tax effect	232	(315)
Net change in unrealized gains on available for sale securities	(874)	658
Total comprehensive income	$ 2,177	$ 3,825

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, 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			3,167		3,167
Other comprehensive income (loss):
Net unrealized gain on securities available for sale				658	658
Total comprehensive income			3,167	658	3,825
Stock compensation		138			138
Restricted stock award vesting (in shares)	27,967
Dividend on common stock			(1,286)		(1,286)
Balance, end of period at Mar. 31, 2019		129,204	25,347	195	154,746
Balance (in shares) at Mar. 31, 2019	10,740,712
Balance, beginning of period at Dec. 31, 2019		129,564	31,740	615	161,919
Balance (in shares) at Dec. 31, 2019	10,748,712
Increase (Decrease) in Shareholders' Equity
Net income			3,051		3,051
Other comprehensive income (loss):
Net unrealized gain on securities available for sale				(874)	(874)
Total comprehensive income			3,051	(874)	2,177
Stock compensation		168			168
Restricted stock award vesting (in shares)	25,521
Repurchase of common stock		(2,729)			$ (2,729)
Repurchase of common stock (in shares)	(240,644)				240,644
Dividend on common stock			(1,475)		$ (1,475)
Balance, end of period at Mar. 31, 2020		$ 127,003	$ 33,316	$ (259)	$ 160,060
Balance (in shares) at Mar. 31, 2020	10,533,589

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities:
Net income	$ 3,051,000	$ 3,167,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	687,000	618,000
Provision for loan losses	100,000	100,000
Deferred tax expense	456,000	324,000
(Gain) on sale of loans sold in the secondary market	(447,000)	(258,000)
Origination of loans held for sale in secondary market	(18,997,000)	(13,604,000)
Proceeds from sale of loans in the secondary market	16,900,000	13,862,000
Loss on sale other real estate held for sale		28,000
Writedown of other real estate held for sale	3,000
Stock compensation	168,000	138,000
Change in other assets	2,090,000	(2,386,000)
Change in other liabilities	(667,000)	3,351,000
Net cash provided by operating activities	3,344,000	5,340,000
Cash Flows from Investing Activities:
Net increase (decrease) in loans	17,200,000	(9,291,000)
Net decrease in interest-bearing deposits in other financial institutions	1,470,000	740,000
Purchase of securities available for sale	(17,873,000)
Proceeds from maturities, sales, calls or paydowns of securities available for sale	9,988,000	4,306,000
Capital expenditures	(1,584,000)	(346,000)
Proceeds from sale of other real estate, premises and fixed assets	67,000	415,000
Net cash (used in) provided by investing activities	9,268,000	(4,176,000)
Cash Flows from Financing Activities:
Net increase (decrease) in deposits	19,704,000	(289,000)
Net activity on line of credit	3,000,000
Net increase in fed funds purchased	16,565,000	3,875,000
Repurchase of common stock	(2,729,000)
Dividend on common stock	(1,475,000)	(1,286,000)
Proceeds from term borrowing	10,000,000
Principal payments on borrowings	(10,431,000)	(10,658,000)
Net cash provided by (used in) financing activities	34,634,000	(8,358,000)
Net (decrease) increase in cash and cash equivalents	47,246,000	(7,194,000)
Cash and cash equivalents at beginning of period	49,826,000	64,157,000
Cash and cash equivalents at end of period	97,072,000	56,963,000
Cash paid during the year for:
Interest	2,242,000	2,523,000
Noncash Investing and Financing Activities:
Transfers of Foreclosures from Loans to Other Real Estate Held for Sale	$ 155,000	$ 298,000

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements of Mackinac Financial Corporation (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month periods ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The unaudited consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019. In order to properly reflect some categories of other income and other expenses, reclassifications of expense and income items have been made to prior period numbers. The “net” other income and other expenses were unchanged by these reclassifications. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reporting 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, the assessment of goodwill for impairment, and the fair value of assets and liabilities acquired in business combinations. 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 using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, 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 Financial Accounting Standards Board (“FASB”) 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. Allowance for Loan Losses The allowance for loan losses includes specific allowances related to loans, when they 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. 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”), stock grants, or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. At March 31, 2020 there were 76,310 shares available for issuance under this plan. 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.

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Mar. 31, 2020
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS	2. RECENT ACCOUNTING PRONOUNCEMENTS 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 Corporation's consolidated financial condition and results 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 proceses, 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 opening 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 run parallel testing and refine credit loss estimation models.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2020
EARNINGS PER SHARE
EARNINGS PER SHARE	3. EARNINGS PER SHARE Diluted earnings per share, which reflects the potential dilution that could occur if 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 three months ended March 31, 2020 and 2019 (dollars in thousands, except per share data): Three Months Ended March 31, 2020 2019 (Numerator): Net income $ 3,051 $ (Denominator): Weighted average shares outstanding 10,717,967 Effect of restricted stock awards 96,824 Diluted weighted average shares outstanding 10,814,791 10,723,921 Income per common share: Basic $ 0.28 $ 0.30 Diluted $ 0.28 $ 0.30

INVESTMENT SECURITIES

INVESTMENT SECURITIES	3 Months Ended
	Mar. 31, 2020
INVESTMENT SECURITIES
SECURITIES AVAILABLE FOR SALE	4. INVESTMENT SECURITIES At March 31, 2020 the Corporation had an investment security portfolio totaling $114.734 million, a increase of $6.762 million from the December 31, 2019 balance of $107.972 million. The amortized cost and estimated fair value of investment securities available for sale as of March 31, 2020 and December 31, 2019 are as follows (dollars in thousands): Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value March 31, 2020 Corporate $ 20,265 $ 78 $ (319) $ 20,024 US Agencies 9,457 154 — 9,611 US Agencies - MBS 36,743 788 (816) 36,715 Obligations of states and political subdivisions 48,078 518 (212) 48,384 Total securities available for sale $ 114,543 $ 1,538 $ (1,347) $ 114,734 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 The following table presents the amortized cost and estimated fair value of investment securities by contractual maturity as of March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, December 31, 2020 2019 Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value Available -for-sale securities Under 1 year $ 15,383 $ 15,398 $ 21,532 $ 21,575 After 1 year through five years 38,919 39,653 40,063 40,664 After 5 years through 10 years 11,898 11,281 10,019 10,189 After 10 years 11,600 11,687 997 1,018 Subtotal 77,800 78,019 72,611 73,446 US Agencies - MBS 36,743 36,715 34,063 34,526 Total available -for-sale securities $ 114,543 $ 114,734 $ 106,674 $ 107,972 The following is information pertaining to securities with gross unrealized losses at March 31, 2020 and December 31, 2019 (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 March 31, 2020 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 6 $ 14,504 $ (319) — $ — $ — 6 $ 14,504 $ (319) US Agencies — — — — — — — — — US Agencies - MBS 17 16,017 (814) 3 39 (2) 20 16,056 (816) Obligations of states and political subdivisions 46 9,474 (212) — — — 46 9,474 (212) Total 69 $ 39,995 $ (1,345) 3 $ 39 $ (2) 72 $ 40,034 $ (1,347) 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) The Corporation has evaluated gross unrealized losses that exist within the portfolio and considers them temporary in nature. The Corporation has both the ability and the intent to hold the investment securities until their respective maturities and therefore does not anticipate the realization of the temporary losses. The amortized cost and estimated fair value of investment securities pledged to secure FHLB borrowings and customer relationships were $25.327 million and $25.884 million, respectively, at March 31, 2020.

LOANS

LOANS	3 Months Ended
	Mar. 31, 2020
LOANS
LOANS	5. LOANS The composition of loans is as follows (dollars in thousands): March 31, December 31, 2020 2019 Commercial real estate $ 522,659 $ 514,394 Commercial, financial, and agricultural 207,727 211,023 Commercial construction 29,971 40,107 One to four family residential real estate 244,059 253,918 Consumer 20,375 21,238 Consumer construction 19,386 18,096 Total loans $ 1,044,177 $ 1,058,776 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 (“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, the Niagara acquired impaired loans totaled $2.105 million, the FFNM acquired impaired loans totaled $5.440 million, and the Lincoln acquired impaired loans totaled $1.901 million. The table below details the outstanding balances of the PFC acquired portfolio and the 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 The table below details the outstanding balances of the Eagle River acquired portfolio and the 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 The table below details the outstanding balances of the Niagara acquired portfolio and the 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 The table below details the outstanding balances of the FFNM acquired portfolio and the 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 The table below details the outstanding balances of the Lincoln acquired portfolio and the 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 The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 31, 2020 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Accretion (90) — (90) (77) — (77) Reclassification from nonaccretable difference 52 — 52 58 — 58 Balance, March 31, 2020 $ 67 $ — $ 67 $ 190 $ — $ 190 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Accretion (4) — (4) (237) (310) (547) Reclassification from nonaccretable difference 3 — 3 177 — 177 Balance, March 31, 2020 $ 18 $ — $ 18 $ 458 $ 1,643 $ 2,101 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 Accretion (3) (38) (41) (411) (348) (759) Reclassification from nonaccretable difference 3 — 3 293 — 293 Balance, March 31, 2020 $ 108 $ 226 $ 334 $ 841 $ 1,869 $ 2,710 The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 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 Acquisition — — — — — — Accretion — — — — (16) (16) Reclassification from nonaccretable difference — — — — — — Balance, March 31, 2019 $ 128 $ — $ 128 $ 213 $ — $ 213 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 Acquisition — — — — — — Accretion — (51) (51) — (410) (410) Reclassification from nonaccretable difference — — — — — — Balance, March 31, 2019 $ 26 $ 18 $ 44 $ 571 $ 3,036 $ 3,607 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 Acquisition — — — — — — Accretion (15) (49) (64) (15) (526) (541) Reclassification from nonaccretable difference 12 — 12 12 — 12 Balance, March 31, 2019 $ 137 $ 393 $ 530 $ 1,075 $ 3,447 $ 4,522 Allowance for Loan Losses An analysis of the allowance for loan losses for the three months ended March 31, 2020 and March 31, 2019 is as follows (dollars in thousands): March 31, March 31, 2020 2019 Balance, January 1 $ 5,308 $ 5,183 Recoveries on loans previously charged off 29 32 Loans charged off (145) Provision 100 100 Balance at end of period $ 5,292 $ 5,154 In the first three months of 2020, net charge-offs were $116,000, compared to net charge-offs of $129,000 in the same period in 2019. In the first three months of 2020, the Corporation recorded a provision for loan loss of $100,000 compared to a $100,000 provision for loan losses in the first three months of 2019. The Corporation’s allowance for loan loss reserve policy calls for a measurement of the adequacy of the reserve at each quarter end. This process includes an analysis of the loan portfolio to take into account increases in loans outstanding and portfolio composition, historical loss rates, and specific reserve requirements of nonperforming loans. A breakdown of the allowance for loan losses and recorded balances in loans at March 31, 2020 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 $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Charge-offs — (66) — (22) (8) (49) — (145) Recoveries 6 — — 10 — 13 — 29 Provision 623 502 27 291 7 33 (1,383) 100 Ending balance ALLR $ 1,818 $ 1,633 $ 98 $ 427 $ 10 $ 10 $ 1,296 $ 5,292 Loans: Ending balance $ 522,659 $ 207,727 $ 29,971 $ 244,059 $ 19,386 $ 20,375 $ — $ 1,044,177 Ending balance ALLR (1,818) (1,633) (98) (427) (10) (10) (1,296) (5,292) Net loans $ 520,841 $ 206,094 $ 29,873 $ 243,632 $ 19,376 $ 20,365 $ (1,296) $ 1,038,885 Ending balance ALLR: Individually evaluated $ 913 $ 476 $ — $ — $ — $ — $ — $ 1,389 Collectively evaluated 905 1,157 98 427 10 10 1,296 3,903 Total $ 1,818 $ 1,633 $ 98 $ 427 $ 10 $ 10 $ 1,296 $ 5,292 Ending balance Loans: Individually evaluated $ 2,278 $ 1,454 $ — $ — $ — $ — $ — $ 3,732 Collectively evaluated 518,642 203,857 29,604 243,251 19,386 20,374 — 1,035,114 Acquired with deteriorated credit quality 1,739 2,416 367 808 — 1 — 5,331 Total $ 522,659 $ 207,727 $ 29,971 $ 244,059 $ 19,386 $ 20,375 $ — $ 1,044,177 Impaired loans, by definition, are individually evaluated. In the first quarter of 2020, the Corporation booked a provision for loan losses of $100,000 as a result of changes in environmental factors. Furthermore, a portion of the unallocated reserve was allocated due to a modification in the methodology for calculating the environmental factors. A breakdown of the allowance for loan losses and recorded balances in loans at March 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 (20) (19) — (63) — (59) — (161) Recoveries 12 4 — 5 — 11 — 32 Provision (109) 372 (1) 60 — 49 (271) 100 Ending balance ALLR $ 1,565 $ 1,005 $ 100 $ 201 $ 6 $ 9 $ 2,268 $ 5,154 Loans: Ending balance $ 498,471 $ 201,089 $ 33,118 $ 281,104 $ 12,022 $ 19,624 $ — $ 1,045,428 Ending balance ALLR (1,565) (1,005) (100) (201) (6) (9) (2,268) (5,154) Net loans $ 496,906 $ 200,084 $ 33,018 $ 280,903 $ 12,016 $ 19,615 $ (2,268) $ 1,040,274 Ending balance ALLR: Individually evaluated $ 467 $ 648 $ — $ — $ — $ — $ — $ 1,115 Collectively evaluated 1,098 357 100 201 6 9 2,268 4,039 Total $ 1,565 $ 1,005 $ 100 $ 201 $ 6 $ 9 $ 2,268 $ 5,154 Ending balance Loans: Individually evaluated $ 2,138 $ 1,245 $ — $ — $ — $ — $ — $ 3,383 Collectively evaluated 493,570 198,425 32,753 279,943 11,809 19,585 — 1,036,085 Acquired with deteriorated credit quality 2,763 1,419 365 1,161 213 39 — 5,960 Total $ 498,471 $ 201,089 $ 33,118 $ 281,104 $ 12,022 $ 19,624 $ — $ 1,045,428 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, and other relevant characteristics. 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, and other relevant characteristics. 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 is 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. Below is a breakdown of loans by risk category as of March 31, 2020 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 14,737 $ 18,108 $ 227,628 $ 253,746 $ 3,865 $ 4,575 $ — $ — $ 522,659 Commercial, financial and agricultural 17,609 9,053 64,182 111,434 759 4,690 — — 207,727 Commercial construction — 278 8,768 16,474 596 398 — 3,457 29,971 One-to-four family residential real estate 40 2,217 5,119 15,187 617 2,556 — 218,323 244,059 Consumer construction — — — — — — — 19,386 19,386 Consumer — 130 252 473 — 85 — 19,435 20,375 Total loans $ 32,386 $ 29,786 $ 305,949 $ 397,314 $ 5,837 $ 12,304 $ — $ 260,601 $ 1,044,177 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 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 loan 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 March 31, 2020 Commercial real estate $ 1,739 $ 2,278 $ 4,017 $ 7,061 $ 913 Commercial, financial and agricultural 2,416 1,454 3,870 3,870 476 Commercial construction 367 — 367 373 — One to four family residential real estate 808 — 808 2,450 — Consumer construction — — — — — Consumer 1 — 1 1 — Total $ 5,331 $ 3,732 $ 9,063 $ 13,755 $ 1,389 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 $ 8,974 $ 3,849 $ 12,823 $ 16,129 $ 1,267 Individually Evaluated Impaired Loans March 31, 2020 December 31, 2019 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 $ 7,841 $ 65 $ 8,374 $ 301 Commercial, financial and agricultural 1,597 — 1,144 2 Commercial construction 21 1 396 — One to four family residential real estate 2,665 39 3,508 219 Consumer construction — — — — Consumer 17 1 44 2 Total $ 12,141 $ 106 $ 13,466 $ 524 A summary of past due loans at March 31, 2020 and December 31, 2019 is as follows (dollars in thousands): March 31, December 31, 2020 2019 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 $ 1,621 $ — $ 959 $ 2,580 $ 1,055 $ — $ 671 $ 1,726 Commercial, financial and agricultural 1,538 — 816 2,354 829 — 527 1,356 Commercial construction 128 — 99 227 59 — 105 164 One to four family residential real estate 3,321 — 4,479 7,800 4,357 11 3,850 8,218 Consumer construction — — — — — — — — Consumer 156 — 63 219 83 — 19 102 Total past due loans $ 6,764 $ — $ 6,416 $ 13,180 $ 6,383 $ 11 $ 5,172 $ 11,566 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 a 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. More recent regulatory guidelines and accounting standards indicate that loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs. The Corporation has, in accordance with generally accepted accounting principles and applicable 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 3 TDR’s that occurred during the three months ended March 31, 2020 and 3 TDR during the three months ended March 31, 2019. The three restructured loans as of March 31, 2020, included only modifications to the repayment schedules. The balance of these restructured loans pre-modification was $.504 million. Post-modification balances as of March 31, 2020 were $.493 million. The three TDR’s are not COVID-19 related. 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): Three Months Ended Three Months Ended March 31, March 31, 2020 2019 Loans outstanding, January 1 $ 12,196 $ 9,817 New loans — 1,872 Net activity on revolving lines of credit (354) 358 Repayment (100) (96) Loans outstanding at end of period $ 11,742 $ There were no loans to related parties classified substandard as of March 31, 2020 or March 31, 2019. In addition to the outstanding balances above, there were unfunded commitments of $.355 million to related parties at March 31, 2020.

GOODWILL AND OTHER INTANGIBLE A

GOODWILL AND OTHER INTANGIBLE ASSETS	3 Months Ended
	Mar. 31, 2020
GOODWILL AND OTHER INTANGIBLE ASSETS
GOODWILL AND OTHER INTANGIBLE ASSETS	6. 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): 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 March 31, 2020 Future Annual March 31, 2020 Amortization Amortization Balance Expense Expense Peninsula $ 564 $ 30 $ 121 Eagle River 604 25 99 Niagara 192 8 30 FFNM 2,364 72 290 Lincoln 1,150 34 135 Total $ 4,874 $ 169 $ 675 Deposit Based Intangible 2019 December 31, 2019 Amortization Balance Expense Peninsula $ 594 $ 121 Eagle River 629 99 Niagara 200 30 FFNM 2,436 299 Lincoln 1,184 128 Total $ 5,043 $ 677 The deposit based intangible asset is reported net of accumulated amortization at $4.874 million at March 31, 2020. Amortization expense in the first three months of 2020 is $.169 million. Amortization expense for the next five years is expected to be at $.675 million per year. The Corporation, in accordance with GAAP, evaluates it goodwill annually for impairment. As a result of the current economic uncertainty and volatility surrounding COVID-19, the Corporation may need to perform this evaluation prior to the annual measurement date.

SERVICING RIGHTS

SERVICING RIGHTS	3 Months Ended
	Mar. 31, 2020
SERVICING RIGHTS
SERVICING RIGHTS	7. SERVICING RIGHTS Mortgage Loans Mortgage servicing rights (“MSRs”) are recorded when loans are sold in the secondary market with servicing retained. As of March 31, 2020, the Corporation had obligations to service approximately $246.370 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. On a quarterly basis, management evaluates the MSRs for impairment. The key economic assumptions used in determining the fair value of the MSRs include an annual constant prepayment speed of 13.65% and a discount rate of 8.66% as of March 31, 2020. The following table summarizes MSRs capitalized and amortized (dollars in thousands): March 31, March 31, 2020 2019 Balance at beginning of period $ 1,499 $ 1,144 Additions from loans sold with servicing retained — 500 Amortization (35) (60) Balance at end of period $ 1,464 $ 1,584 Balance of loan servicing portfolio $ 246,370 $ 288,687 Mortgage servicing rights as % of portfolio .59% .55% Fair value of servicing rights 2,159 2,898 Commercial Loans The Corporation periodically retains the servicing on certain commercial loans that have been sold. These loans 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 March 31, 2020 was approximately $41 million. The Corporation valued these servicing rights at $42,000 as of March 31, 2020 and at $80,000 as of March 31, 2019. This valuation was established in consideration of the discounted cash flow of net expected servicing income over the life of the loans.

BORROWINGS

BORROWINGS	3 Months Ended
	Mar. 31, 2020
BORROWINGS
BORROWINGS	8. BORROWINGS Borrowings consist of the following at March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, December 31, 2020 2019 Federal Home Loan Bank fixed rate advances $ 63,717 $ 64,148 Correspondent bank line of credit 3,000 — USDA Rural Development note 403 403 $ 67,120 $ 64,551 The Federal Home Loan Bank borrowings bear a weighted average rate of 1.67% and mature at various dates through 2026. They are collateralized at March 31, 2020 by the following: a collateral agreement on the Corporation’s one to four family residential real estate loans with a book value of approximately $50.310 million; mortgage related and municipal securities with an amortized cost and estimated fair value of $20.051 million and $20.655 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 policy of the Federal Home Loan Bank of Indianapolis in effect as of March 31, 2020. The Corporation currently has one correspondent banking borrowing relationship. As of March 31, 2020 the relationship consisted of a $15.0 million revolving line of credit, which had a balance of $3.0 million. The line of credit bears an interest rate of LIBOR plus 2.00%, with a floor rate of 3.00% and a ceiling of 22%. The line of credit expired on April 30, 2020, and has since been renewed with a new expiration date of April 30, 2022. LIBOR at March 31, 2020 was 1.45%. This relationship is secured by all of the outstanding mBank stock. The USDA Rural Development borrowing bears an interest rate of 1.00% and matures in August, 2024. It is collateralized by an assignment of a demand deposit account held by the Corporation’s wholly owned subsidiary, First Rural Relending, in the amount of $.456 million, and guaranteed by the Corporation.

DEFINED BENEFIT PENSION PLAN

DEFINED BENEFIT PENSION PLAN	3 Months Ended
	Mar. 31, 2020
DEFINED BENEFIT PENSION PLAN
DEFINED BENEFIT PENSION PLAN	9. The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan in 2014. 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 Corporation receives a valuation of the Plan annually. As such, at March 31, 2020, the plan’s assets had a fair value of $2.259 million and the Corporation had a net unfunded liability of $1.188 million. The accumulated benefit obligation at March 31, 2020 was $3.447 million. Assumptions in the actuarial valuation are: 2020 2019 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 March 31, 2020 and December 31, 2019. Target Actual Allocation Allocation Equity securities 50% to 70% Fixed income securities 30% to 50%

STOCK COMPENSATION PLANS

STOCK COMPENSATION PLANS	3 Months Ended
	Mar. 31, 2020
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS	10. STOCK COMPENSATION PLANS Restricted Stock Awards The Corporation’s restricted stock awards are service-based and awarded based on performance. Each award has 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, 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 February, 2020 132,000 15.46 4 years In the first three months of 2020, the Corporation issued 25,521 shares of its common stock for vested RSAs. In the first three months of 2019, the Corporation issued 27,967 shares of its common stock for vested RSAs. A summary of changes in our nonvested shares for the period follows: Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2020 69,145 $ 14.52 Granted during the period 132,000 15.46 Vested during the period (25,521) 14.99 Nonvested balance at March 31, 2020 175,624 $ 15.16

INCOME TAXES

INCOME TAXES	3 Months Ended
	Mar. 31, 2020
INCOME TAXES
INCOME TAXES	11. INCOME TAXES The Corporation has reported deferred tax assets of $3.154 million at March 31, 2020. 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 March 31, 2020 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 incuded 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. The Corporation recognized a federal income tax expense of approximately $.811 million for the three months ended March 31, 2020 and $.842 million for the three months ended March 31, 2019.

FAIR VALUE

FAIR VALUE	3 Months Ended
	Mar. 31, 2020
FAIR VALUE
FAIR VALUE	12. FAIR VALUE MEASUREMENTS 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. 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 March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, 2020 December 31, 2019 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 97,072 $ 97,072 $ 49,826 $ 49,826 Interest-bearing deposits Level 2 8,825 8,825 10,295 10,295 Securities available for sale Level 2 113,331 113,331 106,569 106,569 Securities available for sale Level 3 1,403 1,403 1,403 1,403 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,038,885 1,042,604 1,053,468 1,055,985 Accrued interest receivable Level 3 4,047 4,047 3,751 3,751 Total financial assets $ 1,268,487 $ 1,272,206 $ 1,230,236 $ 1,232,753 Financial liabilities: Deposits Level 2 $ 1,095,381 $ 1,095,819 $ 1,075,677 $ 1,044,267 Borrowings Level 2 67,120 64,952 64,551 64,403 Accrued interest payable Level 3 595 595 569 569 Total financial liabilities $ 1,163,096 $ 1,161,366 $ 1,140,797 $ 1,109,239 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 March 31, 2020, 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 March 31, 2020 and December 31, 2019 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 4 - Investment Securities.” The table below shows investment securities measured at fair value on a recurring basis (dollars in thousands): Quoted Prices Significant Significant Total (Gains) in Active Markets Other Observable Unobservable Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended (dollars in thousands) March 31, 2020 (Level 1) (Level 2) (Level 3) March 31, 2020 Assets Corporate $ $ — $ 19,524 $ 500 $ — US Agencies — 9,611 — — US Agencies - MBS — 36,715 — — Obligations of state and political subdivisions 48,384 — 40,874 903 — $ 114,734 $ — Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) 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 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 $ — The Corporation had no Level 3 assets or liabilities measured at fair value on a recurring basis as of March 31, 2020, or December 31, 2019 other than as described above. 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 certain impaired loans and other real estate owned. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections. Assets Measured at Fair Value on a Nonrecurring Basis at March 31, 2020 Quoted Prices Significant Significant Total (Gains) in Active Markets Other Observable Unobservable Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended (dollars in thousands) March 31, 2020 (Level 1) (Level 2) (Level 3) March 31, 2020 Assets Impaired loans $ 9,063 $ — $ — $ 9,063 $ 48 Other real estate owned 2,228 — — 2,228 3 $ 51 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 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 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).

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	3 Months Ended
	Mar. 31, 2020
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY	13. SHAREHOLDERS’ EQUITY The Corporation currently has two share repurchase programs. The program is conducted under authorizations by the Board of Directors. The Corporation repurchased 1,661 shares in 2020, 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 publically announced of $.600 million on February 27, 2013, $.600 million on December 17, 2013 and an additional $.750 million on April 28, 2015. None of these authorizations has an expiration date. Total shares repurchased under stock repurchase plans in the first quarter of 2020 were 240,644. 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. During the first quarter of 2020, the Corporation repurchased 238,983 shares under this plan.

COMMITMENTS, CONTINGENCIES AND

COMMITMENTS, CONTINGENCIES AND CREDIT RISK	3 Months Ended
	Mar. 31, 2020
COMMITMENTS, CONTINGENCIES AND CREDIT RISK
COMMITMENTS, CONTINGENCIES AND CREDIT RISK	14. 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 are as follows (dollars in thousands): March 31, December 31, 2020 2019 Commitments to extend credit: Variable rate $ 116,961 $ 106,278 Fixed rate 78,776 50,796 Standby letters of credit - Variable rate 8,322 5,441 Credit card commitments - Fixed rate 6,186 5,841 $ 210,245 $ 168,356 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 In the normal course of business, the Corporation is involved in various legal proceedings. For an expanded discussion on the Corporation’s legal proceedings, see Part II, Item 1, “Legal Proceedings” in this report. C oncentration 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 March 31, 2020 represents $136.477 million, or 17.95%, compared to $141.965 million, or 18.54%, of the commercial loan portfolio on December 31, 2019. 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.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements of Mackinac Financial Corporation (the “Corporation”) have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month periods ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. The unaudited consolidated financial statements and footnotes thereto should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019. In order to properly reflect some categories of other income and other expenses, reclassifications of expense and income items have been made to prior period numbers. The “net” other income and other expenses were unchanged by these reclassifications. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reporting 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, the assessment of goodwill for impairment, and the fair value of assets and liabilities acquired in business combinations.
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 using a discounted cash flow methodology based on assumptions about the amount and timing of principal and interest payments, principal prepayments and principal defaults and losses, 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 Financial Accounting Standards Board (“FASB”) 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.
Allowance for Loan Losses	Allowance for Loan Losses The allowance for loan losses includes specific allowances related to loans, when they 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.
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”), stock grants, or stock appreciation rights. The aggregate number of shares of the Corporation’s common stock issuable under the plan is 575,000. At March 31, 2020 there were 76,310 shares available for issuance under this plan. 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.

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2020
EARNINGS PER SHARE
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 three months ended March 31, 2020 and 2019 (dollars in thousands, except per share data): Three Months Ended March 31, 2020 2019 (Numerator): Net income $ 3,051 $ (Denominator): Weighted average shares outstanding 10,717,967 Effect of restricted stock awards 96,824 Diluted weighted average shares outstanding 10,814,791 10,723,921 Income per common share: Basic $ 0.28 $ 0.30 Diluted $ 0.28 $ 0.30

INVESTMENT SECURITIES (Tables)

INVESTMENT SECURITIES (Tables)	3 Months Ended
	Mar. 31, 2020
INVESTMENT SECURITIES
Schedule of carrying value and estimated fair value of securities available for sale	The amortized cost and estimated fair value of investment securities available for sale as of March 31, 2020 and December 31, 2019 are as follows (dollars in thousands): Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value March 31, 2020 Corporate $ 20,265 $ 78 $ (319) $ 20,024 US Agencies 9,457 154 — 9,611 US Agencies - MBS 36,743 788 (816) 36,715 Obligations of states and political subdivisions 48,078 518 (212) 48,384 Total securities available for sale $ 114,543 $ 1,538 $ (1,347) $ 114,734 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
Schedule of amortized cost and estimated fair value sore investment securities by contractual maturity	The following table presents the amortized cost and estimated fair value of investment securities by contractual maturity as of March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, December 31, 2020 2019 Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value Available -for-sale securities Under 1 year $ 15,383 $ 15,398 $ 21,532 $ 21,575 After 1 year through five years 38,919 39,653 40,063 40,664 After 5 years through 10 years 11,898 11,281 10,019 10,189 After 10 years 11,600 11,687 997 1,018 Subtotal 77,800 78,019 72,611 73,446 US Agencies - MBS 36,743 36,715 34,063 34,526 Total available -for-sale securities $ 114,543 $ 114,734 $ 106,674 $ 107,972
Schedule of securities with gross unrealized losses aggregated by investment category and length of time these individual securities have been in a loss position	The following is information pertaining to securities with gross unrealized losses at March 31, 2020 and December 31, 2019 (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 March 31, 2020 Securities Value Loss Securities Value Loss Securities Value Loss Corporate 6 $ 14,504 $ (319) — $ — $ — 6 $ 14,504 $ (319) US Agencies — — — — — — — — — US Agencies - MBS 17 16,017 (814) 3 39 (2) 20 16,056 (816) Obligations of states and political subdivisions 46 9,474 (212) — — — 46 9,474 (212) Total 69 $ 39,995 $ (1,345) 3 $ 39 $ (2) 72 $ 40,034 $ (1,347) 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)

LOANS (Tables)

LOANS (Tables)	3 Months Ended
	Mar. 31, 2020
Schedule of composition of loans	The composition of loans is as follows (dollars in thousands): March 31, December 31, 2020 2019 Commercial real estate $ 522,659 $ 514,394 Commercial, financial, and agricultural 207,727 211,023 Commercial construction 29,971 40,107 One to four family residential real estate 244,059 253,918 Consumer 20,375 21,238 Consumer construction 19,386 18,096 Total loans $ 1,044,177 $ 1,058,776
Schedule of the accretable yield by acquisition	The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 31, 2020 (dollars in thousands): PFC Eagle River Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 105 $ — $ 105 $ 209 $ — $ 209 Accretion (90) — (90) (77) — (77) Reclassification from nonaccretable difference 52 — 52 58 — 58 Balance, March 31, 2020 $ 67 $ — $ 67 $ 190 $ — $ 190 Niagara First Federal Northern Michigan Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 19 $ — $ 19 $ 518 $ 1,953 $ 2,471 Accretion (4) — (4) (237) (310) (547) Reclassification from nonaccretable difference 3 — 3 177 — 177 Balance, March 31, 2020 $ 18 $ — $ 18 $ 458 $ 1,643 $ 2,101 Lincoln Community Bank Total Acquired Acquired Acquired Acquired Acquired Acquired Impaired Non-impaired Total Impaired Non-impaired Total Balance, December 31, 2019 $ 108 $ 264 $ 372 $ 959 $ 2,217 $ 3,176 Accretion (3) (38) (41) (411) (348) (759) Reclassification from nonaccretable difference 3 — 3 293 — 293 Balance, March 31, 2020 $ 108 $ 226 $ 334 $ 841 $ 1,869 $ 2,710 The table below presents a rollforward of the accretable yield on acquired loans for the three months ended March 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 Acquisition — — — — — — Accretion — — — — (16) (16) Reclassification from nonaccretable difference — — — — — — Balance, March 31, 2019 $ 128 $ — $ 128 $ 213 $ — $ 213 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 Acquisition — — — — — — Accretion — (51) (51) — (410) (410) Reclassification from nonaccretable difference — — — — — — Balance, March 31, 2019 $ 26 $ 18 $ 44 $ 571 $ 3,036 $ 3,607 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 Acquisition — — — — — — Accretion (15) (49) (64) (15) (526) (541) Reclassification from nonaccretable difference 12 — 12 12 — 12 Balance, March 31, 2019 $ 137 $ 393 $ 530 $ 1,075 $ 3,447 $ 4,522
Schedule of the allowance for loan losses	An analysis of the allowance for loan losses for the three months ended March 31, 2020 and March 31, 2019 is as follows (dollars in thousands): March 31, March 31, 2020 2019 Balance, January 1 $ 5,308 $ 5,183 Recoveries on loans previously charged off 29 32 Loans charged off (145) Provision 100 100 Balance at end of period $ 5,292 $ 5,154
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 March 31, 2020 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 $ 1,189 $ 1,197 $ 71 $ 148 $ 11 $ 13 $ 2,679 $ 5,308 Charge-offs — (66) — (22) (8) (49) — (145) Recoveries 6 — — 10 — 13 — 29 Provision 623 502 27 291 7 33 (1,383) 100 Ending balance ALLR $ 1,818 $ 1,633 $ 98 $ 427 $ 10 $ 10 $ 1,296 $ 5,292 Loans: Ending balance $ 522,659 $ 207,727 $ 29,971 $ 244,059 $ 19,386 $ 20,375 $ — $ 1,044,177 Ending balance ALLR (1,818) (1,633) (98) (427) (10) (10) (1,296) (5,292) Net loans $ 520,841 $ 206,094 $ 29,873 $ 243,632 $ 19,376 $ 20,365 $ (1,296) $ 1,038,885 Ending balance ALLR: Individually evaluated $ 913 $ 476 $ — $ — $ — $ — $ — $ 1,389 Collectively evaluated 905 1,157 98 427 10 10 1,296 3,903 Total $ 1,818 $ 1,633 $ 98 $ 427 $ 10 $ 10 $ 1,296 $ 5,292 Ending balance Loans: Individually evaluated $ 2,278 $ 1,454 $ — $ — $ — $ — $ — $ 3,732 Collectively evaluated 518,642 203,857 29,604 243,251 19,386 20,374 — 1,035,114 Acquired with deteriorated credit quality 1,739 2,416 367 808 — 1 — 5,331 Total $ 522,659 $ 207,727 $ 29,971 $ 244,059 $ 19,386 $ 20,375 $ — $ 1,044,177 Impaired loans, by definition, are individually evaluated. A breakdown of the allowance for loan losses and recorded balances in loans at March 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 (20) (19) — (63) — (59) — (161) Recoveries 12 4 — 5 — 11 — 32 Provision (109) 372 (1) 60 — 49 (271) 100 Ending balance ALLR $ 1,565 $ 1,005 $ 100 $ 201 $ 6 $ 9 $ 2,268 $ 5,154 Loans: Ending balance $ 498,471 $ 201,089 $ 33,118 $ 281,104 $ 12,022 $ 19,624 $ — $ 1,045,428 Ending balance ALLR (1,565) (1,005) (100) (201) (6) (9) (2,268) (5,154) Net loans $ 496,906 $ 200,084 $ 33,018 $ 280,903 $ 12,016 $ 19,615 $ (2,268) $ 1,040,274 Ending balance ALLR: Individually evaluated $ 467 $ 648 $ — $ — $ — $ — $ — $ 1,115 Collectively evaluated 1,098 357 100 201 6 9 2,268 4,039 Total $ 1,565 $ 1,005 $ 100 $ 201 $ 6 $ 9 $ 2,268 $ 5,154 Ending balance Loans: Individually evaluated $ 2,138 $ 1,245 $ — $ — $ — $ — $ — $ 3,383 Collectively evaluated 493,570 198,425 32,753 279,943 11,809 19,585 — 1,036,085 Acquired with deteriorated credit quality 2,763 1,419 365 1,161 213 39 — 5,960 Total $ 498,471 $ 201,089 $ 33,118 $ 281,104 $ 12,022 $ 19,624 $ — $ 1,045,428
Schedule of breakdown of loans by risk category	Below is a breakdown of loans by risk category as of March 31, 2020 (dollars in thousands): (1) (2) (3) (4) (44) (6) (7) Rating Strong Good Average Acceptable Acceptable Watch Substandard Doubtful Unassigned Total Commercial real estate $ 14,737 $ 18,108 $ 227,628 $ 253,746 $ 3,865 $ 4,575 $ — $ — $ 522,659 Commercial, financial and agricultural 17,609 9,053 64,182 111,434 759 4,690 — — 207,727 Commercial construction — 278 8,768 16,474 596 398 — 3,457 29,971 One-to-four family residential real estate 40 2,217 5,119 15,187 617 2,556 — 218,323 244,059 Consumer construction — — — — — — — 19,386 19,386 Consumer — 130 252 473 — 85 — 19,435 20,375 Total loans $ 32,386 $ 29,786 $ 305,949 $ 397,314 $ 5,837 $ 12,304 $ — $ 260,601 $ 1,044,177 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
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 March 31, 2020 Commercial real estate $ 1,739 $ 2,278 $ 4,017 $ 7,061 $ 913 Commercial, financial and agricultural 2,416 1,454 3,870 3,870 476 Commercial construction 367 — 367 373 — One to four family residential real estate 808 — 808 2,450 — Consumer construction — — — — — Consumer 1 — 1 1 — Total $ 5,331 $ 3,732 $ 9,063 $ 13,755 $ 1,389 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 $ 8,974 $ 3,849 $ 12,823 $ 16,129 $ 1,267 Individually Evaluated Impaired Loans March 31, 2020 December 31, 2019 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 $ 7,841 $ 65 $ 8,374 $ 301 Commercial, financial and agricultural 1,597 — 1,144 2 Commercial construction 21 1 396 — One to four family residential real estate 2,665 39 3,508 219 Consumer construction — — — — Consumer 17 1 44 2 Total $ 12,141 $ 106 $ 13,466 $ 524
Summary of past due loans	A summary of past due loans at March 31, 2020 and December 31, 2019 is as follows (dollars in thousands): March 31, December 31, 2020 2019 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 $ 1,621 $ — $ 959 $ 2,580 $ 1,055 $ — $ 671 $ 1,726 Commercial, financial and agricultural 1,538 — 816 2,354 829 — 527 1,356 Commercial construction 128 — 99 227 59 — 105 164 One to four family residential real estate 3,321 — 4,479 7,800 4,357 11 3,850 8,218 Consumer construction — — — — — — — — Consumer 156 — 63 219 83 — 19 102 Total past due loans $ 6,764 $ — $ 6,416 $ 13,180 $ 6,383 $ 11 $ 5,172 $ 11,566
Schedule of activity in insider loans granted to the entity's executive officers and directors, including their families and firms	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): Three Months Ended Three Months Ended March 31, March 31, 2020 2019 Loans outstanding, January 1 $ 12,196 $ 9,817 New loans — 1,872 Net activity on revolving lines of credit (354) 358 Repayment (100) (96) Loans outstanding at end of period $ 11,742 $
PFC
Schedule of acquired portfolio at acquisition date	The table below details the outstanding balances of the PFC acquired portfolio and the 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 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 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 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 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

GOODWILL AND OTHER INTANGIBLE_2

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)	3 Months Ended
	Mar. 31, 2020
GOODWILL AND OTHER INTANGIBLE ASSETS
Schedule of goodwill and deposit based intangible initial balance	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): 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 March 31, 2020 Future Annual March 31, 2020 Amortization Amortization Balance Expense Expense Peninsula $ 564 $ 30 $ 121 Eagle River 604 25 99 Niagara 192 8 30 FFNM 2,364 72 290 Lincoln 1,150 34 135 Total $ 4,874 $ 169 $ 675 Deposit Based Intangible 2019 December 31, 2019 Amortization Balance Expense Peninsula $ 594 $ 121 Eagle River 629 99 Niagara 200 30 FFNM 2,436 299 Lincoln 1,184 128 Total $ 5,043 $ 677

SERVICING RIGHTS (Tables)

SERVICING RIGHTS (Tables)	3 Months Ended
	Mar. 31, 2020
SERVICING RIGHTS
Summary of mortgage servicing rights capitalized and amortized	The following table summarizes MSRs capitalized and amortized (dollars in thousands): March 31, March 31, 2020 2019 Balance at beginning of period $ 1,499 $ 1,144 Additions from loans sold with servicing retained — 500 Amortization (35) (60) Balance at end of period $ 1,464 $ 1,584 Balance of loan servicing portfolio $ 246,370 $ 288,687 Mortgage servicing rights as % of portfolio .59% .55% Fair value of servicing rights 2,159 2,898

BORROWINGS (Tables)

BORROWINGS (Tables)	3 Months Ended
	Mar. 31, 2020
BORROWINGS
Schedule of borrowings	Borrowings consist of the following at March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, December 31, 2020 2019 Federal Home Loan Bank fixed rate advances $ 63,717 $ 64,148 Correspondent bank line of credit 3,000 — USDA Rural Development note 403 403 $ 67,120 $ 64,551

DEFINED BENEFIT PENSION PLAN (T

DEFINED BENEFIT PENSION PLAN (Tables)	3 Months Ended
	Mar. 31, 2020
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 assumptions in the actuarial valuation	2020 2019 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 March 31, 2020 and December 31, 2019. Target Actual Allocation Allocation Equity securities 50% to 70% Fixed income securities 30% to 50%

STOCK COMPENSATION PLANS (Table

STOCK COMPENSATION PLANS (Tables)	3 Months Ended
	Mar. 31, 2020
STOCK COMPENSATION PLANS
Summary of restricted stock units awards granted	Market Value at Date of Award Units Granted grant date Vesting Term 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 February, 2020 132,000 15.46 4 years
Summary of changes in nonvested shares	Weighted Average Number Grant Date Outstanding Fair Value Nonvested balance at January 1, 2020 69,145 $ 14.52 Granted during the period 132,000 15.46 Vested during the period (25,521) 14.99 Nonvested balance at March 31, 2020 175,624 $ 15.16

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2020
FAIR VALUE
Schedule presenting information for financial instruments	The following table presents information for financial instruments at March 31, 2020 and December 31, 2019 (dollars in thousands): March 31, 2020 December 31, 2019 Level in Fair Carrying Estimated Carrying Estimated Value Hierarchy Amount Fair Value Amount Fair Value Financial assets: Cash and cash equivalents Level 1 $ 97,072 $ 97,072 $ 49,826 $ 49,826 Interest-bearing deposits Level 2 8,825 8,825 10,295 10,295 Securities available for sale Level 2 113,331 113,331 106,569 106,569 Securities available for sale Level 3 1,403 1,403 1,403 1,403 Federal Home Loan Bank stock Level 2 4,924 4,924 4,924 4,924 Net loans Level 3 1,038,885 1,042,604 1,053,468 1,055,985 Accrued interest receivable Level 3 4,047 4,047 3,751 3,751 Total financial assets $ 1,268,487 $ 1,272,206 $ 1,230,236 $ 1,232,753 Financial liabilities: Deposits Level 2 $ 1,095,381 $ 1,095,819 $ 1,075,677 $ 1,044,267 Borrowings Level 2 67,120 64,952 64,551 64,403 Accrued interest payable Level 3 595 595 569 569 Total financial liabilities $ 1,163,096 $ 1,161,366 $ 1,140,797 $ 1,109,239
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 Total (Gains) in Active Markets Other Observable Unobservable Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended (dollars in thousands) March 31, 2020 (Level 1) (Level 2) (Level 3) March 31, 2020 Assets Corporate $ $ — $ 19,524 $ 500 $ — US Agencies — 9,611 — — US Agencies - MBS — 36,715 — — Obligations of state and political subdivisions 48,384 — 40,874 903 — $ 114,734 $ — Quoted Prices Significant Significant in Active Markets Other Observable Unobservable Total (Gains) 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 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 $ —
Schedule of assets measured at fair value on a non-recurring basis	Assets Measured at Fair Value on a Nonrecurring Basis at March 31, 2020 Quoted Prices Significant Significant Total (Gains) in Active Markets Other Observable Unobservable Losses for Balance at for Identical Assets Inputs Inputs Three Months Ended (dollars in thousands) March 31, 2020 (Level 1) (Level 2) (Level 3) March 31, 2020 Assets Impaired loans $ 9,063 $ — $ — $ 9,063 $ 48 Other real estate owned 2,228 — — 2,228 3 $ 51 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

COMMITMENTS, CONTINGENCIES, AND

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Tables)	3 Months Ended
	Mar. 31, 2020
COMMITMENTS, CONTINGENCIES AND CREDIT RISK
Schedule of commitments	These commitments are as follows (dollars in thousands): March 31, December 31, 2020 2019 Commitments to extend credit: Variable rate $ 116,961 $ 106,278 Fixed rate 78,776 50,796 Standby letters of credit - Variable rate 8,322 5,441 Credit card commitments - Fixed rate 6,186 5,841 $ 210,245 $ 168,356

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details). - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	May 22, 2012
Stock Compensation Plans
Provision for loan losses	$ 100,000	$ 100,000
Shares available for grant	76,310
2012 Incentive Compensation Plan
Stock Compensation Plans
Total authorized share balance			575,000

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
(Numerator):
Net income	$ 3,051	$ 3,167
(Denominator):
Weighted average shares outstanding	10,717,967	10,720,127
Effect of restricted stock awards	96,824	3,794
Diluted weighted average shares outstanding	10,814,791	10,723,921
Income per common share:
Basic (in dollars per share)	$ 0.28	$ 0.30
Diluted (in dollars per share)	$ 0.28	$ 0.30

INVESTMENT SECURITIES (Details)

INVESTMENT SECURITIES (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)security	Dec. 31, 2019USD ($)security
SECURITIES AVAILABLE FOR SALE
Decrease in fair value of marketable securities.	$ 6,762
Total amortized cost	114,543	$ 106,674
Estimated Fair Value	114,734	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	(1,345)	(10)
Fair Value, Less Than Twelve Months	39,995	9,468
Gross Unrealized Loss, Over Twelve Months	(2)	(21)
Fair Value, Over Twelve Months	$ 39	$ 1,848
Number of securities in an unrealized loss position | security	72	26
Available-for-sale Securities
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 114,543	$ 106,674
Gross Unrealized Gains	1,538	1,329
Gross Unrealized Losses	(1,347)	(31)
Estimated Fair Value	114,734	107,972
Corporate
SECURITIES AVAILABLE FOR SALE
Total amortized cost	20,265	20,779
Gross Unrealized Gains	78	160
Gross Unrealized Losses	(319)	(1)
Estimated Fair Value	20,024	20,938
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	(319)	(1)
Fair Value, Less Than Twelve Months	$ 14,504	$ 2,502
Number of securities in an unrealized loss position | security	6	1
US Agencies
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 9,457	$ 14,450
Gross Unrealized Gains	154	47
Gross Unrealized Losses		(1)
Estimated Fair Value	9,611	14,496
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, Over Twelve Months		(1)
Fair Value, Over Twelve Months		$ 500
Number of securities in an unrealized loss position | security		1
US Agencies - MBS
SECURITIES AVAILABLE FOR SALE
Total amortized cost	36,743	$ 34,063
Gross Unrealized Gains	788	492
Gross Unrealized Losses	(816)	(29)
Estimated Fair Value	36,715	34,526
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	(814)	(9)
Fair Value, Less Than Twelve Months	16,017	6,966
Gross Unrealized Loss, Over Twelve Months	(2)	(19)
Fair Value, Over Twelve Months	$ 39	$ 1,233
Number of securities in an unrealized loss position | security	20	23
Obligations of states and political subdivisions
SECURITIES AVAILABLE FOR SALE
Total amortized cost	$ 48,078	$ 37,382
Gross Unrealized Gains	518	630
Gross Unrealized Losses	(212)
Estimated Fair Value	48,384	38,012
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	(212)
Fair Value, Less Than Twelve Months	$ 9,474
Gross Unrealized Loss, Over Twelve Months		(1)
Fair Value, Over Twelve Months		$ 115
Number of securities in an unrealized loss position | security	46	1

INVESTMENT SECURITIES - BY CONT

INVESTMENT SECURITIES - BY CONTRACTUAL MATURITY (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Amortized Cost
Due in one year or less	$ 15,383	$ 21,532
Due after one year through five years	38,919	40,063
Due after five years through ten years	11,898	10,019
Due after ten years	11,600	997
Subtotal	77,800	72,611
US Agencies - MBS	36,743	34,063
Total amortized cost	114,543	106,674
Estimated Fair Value
Due in one year or less	15,398	21,575
Due after one year through five years	39,653	40,664
Due after five years through ten years	11,281	10,189
Due after ten years	11,687	1,018
Subtotal	78,019	73,446
US Agencies - MBS	36,715	34,526
Estimated Fair Value	114,734	$ 107,972
Collateral Pledged
Estimated Fair Value
Investment securities at cost	25,327
Securities held as collateral at fair value	$ 25,884

INVESTMENT SECURITIES - GROSS U

INVESTMENT SECURITIES - GROSS UNREALIZED LOSSES AND LENGTH OF TIME IN LOSS POSITION (Details) $ in Thousands	Mar. 31, 2020USD ($)security	Dec. 31, 2019USD ($)security
Number of Securities
Number of Securities, Less Than Twelve Months | security	69	11
Number of Securities, Over Twelve Months | security	3	15
Total Number of Securities | security	72	26
Fair Value
Fair Value, Less Than Twelve Months	$ 39,995	$ 9,468
Fair Value, Over Twelve Months	39	1,848
Total Fair Value	40,034	11,316
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(1,345)	(10)
Gross Unrealized Loss, Over Twelve Months	(2)	(21)
Total Gross Unrealized Loss	$ (1,347)	$ (31)
Corporate
Number of Securities
Number of Securities, Less Than Twelve Months | security	6	1
Total Number of Securities | security	6	1
Fair Value
Fair Value, Less Than Twelve Months	$ 14,504	$ 2,502
Total Fair Value	14,504	2,502
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(319)	(1)
Total Gross Unrealized Loss	$ (319)	$ (1)
US Agencies
Number of Securities
Number of Securities, Over Twelve Months | security		1
Total Number of Securities | security		1
Fair Value
Fair Value, Over Twelve Months		$ 500
Total Fair Value		500
Gross Unrealized Loss
Gross Unrealized Loss, Over Twelve Months		(1)
Total Gross Unrealized Loss		$ (1)
US Agencies - MBS
Number of Securities
Number of Securities, Less Than Twelve Months | security	17	10
Number of Securities, Over Twelve Months | security	3	13
Total Number of Securities | security	20	23
Fair Value
Fair Value, Less Than Twelve Months	$ 16,017	$ 6,966
Fair Value, Over Twelve Months	39	1,233
Total Fair Value	16,056	8,199
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(814)	(9)
Gross Unrealized Loss, Over Twelve Months	(2)	(19)
Total Gross Unrealized Loss	$ (816)	$ (28)
Obligations of states and political subdivisions
Number of Securities
Number of Securities, Less Than Twelve Months | security	46
Number of Securities, Over Twelve Months | security		1
Total Number of Securities | security	46	1
Fair Value
Fair Value, Less Than Twelve Months	$ 9,474
Fair Value, Over Twelve Months		$ 115
Total Fair Value	9,474	115
Gross Unrealized Loss
Gross Unrealized Loss, Less Than Twelve Months	(212)
Gross Unrealized Loss, Over Twelve Months		(1)
Total Gross Unrealized Loss	$ (212)	$ (1)

LOANS (Details)

LOANS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Loans
Total loans	$ 1,044,177,000	$ 1,045,428,000	$ 1,058,776,000
Acquired portfolio
Acquired with deteriorated credit quality	5,331,000	5,960,000
Balance at the beginning of period	3,176,000	5,051,000
Accretion	(759,000)	(541,000)
Reclassification from nonaccretable difference	293,000	12,000
Balance at the end of period	2,710,000	4,522,000
Changes in the allowance for loan losses
Net charge off activity	116,000	129,000
Provision for loan losses	100,000	100,000
PFC
Acquired portfolio
Loans acquired - contractual payments	67,139,000
Nonaccretable difference	(2,234,000)
Expected cash flows	64,905,000
Accretable yield	(2,844,000)
Carrying balance at acquisition date	62,061,000
Balance at the beginning of period	105,000	128,000
Accretion	(90,000)
Reclassification from nonaccretable difference	52,000
Balance at the end of period	67,000	128,000
Eagle River
Acquired portfolio
Loans acquired - contractual payments	84,138,000
Nonaccretable difference	(1,172,000)
Expected cash flows	82,966,000
Accretable yield	(2,091,000)
Carrying balance at acquisition date	80,875,000
Balance at the beginning of period	209,000	229,000
Accretion	(77,000)	(16,000)
Reclassification from nonaccretable difference	58,000
Balance at the end of period	190,000	213,000
Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	32,660,000
Nonaccretable difference	(265,000)
Expected cash flows	32,395,000
Accretable yield	(688,000)
Carrying balance at acquisition date	31,707,000
Balance at the beginning of period	19,000	95,000
Accretion	(4,000)	(51,000)
Reclassification from nonaccretable difference	3,000
Balance at the end of period	18,000	44,000
FFNM
Acquired portfolio
Loans acquired - contractual payments	192,742,000
Nonaccretable difference	(2,100,000)
Expected cash flows	190,642,000
Accretable yield	(5,198,000)
Carrying balance at acquisition date	185,444,000
Balance at the beginning of period	2,471,000	4,017,000
Accretion	(547,000)	(410,000)
Reclassification from nonaccretable difference	177,000
Balance at the end of period	2,101,000	3,607,000
Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	39,601,000
Nonaccretable difference	(421,000)
Expected cash flows	39,180,000
Accretable yield	(633,000)
Carrying balance at acquisition date	38,547,000
Balance at the beginning of period	372,000	582,000
Accretion	(41,000)	(64,000)
Reclassification from nonaccretable difference	3,000	12,000
Balance at the end of period	334,000	530,000
Commercial real estate
Loans
Total loans	522,659,000	498,471,000	514,394,000
Acquired portfolio
Acquired with deteriorated credit quality	1,739,000	2,763,000
Changes in the allowance for loan losses
Provision for loan losses	623,000	(109,000)
Commercial, financial, and agricultural
Loans
Total loans	207,727,000	201,089,000	211,023,000
Acquired portfolio
Acquired with deteriorated credit quality	2,416,000	1,419,000
Changes in the allowance for loan losses
Provision for loan losses	502,000	372,000
Commercial construction
Loans
Total loans	29,971,000	33,118,000	40,107,000
Acquired portfolio
Acquired with deteriorated credit quality	367,000	365,000
Changes in the allowance for loan losses
Provision for loan losses	27,000	(1,000)
One to four family residential real estate
Loans
Total loans	244,059,000	281,104,000	253,918,000
Acquired portfolio
Acquired with deteriorated credit quality	808,000	1,161,000
Changes in the allowance for loan losses
Provision for loan losses	291,000	60,000
Consumer
Loans
Total loans	20,375,000	19,624,000	21,238,000
Acquired portfolio
Acquired with deteriorated credit quality	1,000	39,000
Changes in the allowance for loan losses
Provision for loan losses	33,000	49,000
Consumer construction
Loans
Total loans	19,386,000	12,022,000	$ 18,096,000
Acquired portfolio
Acquired with deteriorated credit quality		213,000
Changes in the allowance for loan losses
Provision for loan losses	7,000
Acquired Impaired
Acquired portfolio
Balance at the beginning of period	959,000	1,078,000
Accretion	(411,000)	(15,000)
Reclassification from nonaccretable difference	293,000	12,000
Balance at the end of period	841,000	1,075,000
Acquired Impaired | PFC
Acquired portfolio
Loans acquired - contractual payments	13,290,000
Nonaccretable difference	(2,234,000)
Expected cash flows	11,056,000
Accretable yield	(744,000)
Carrying balance at acquisition date	10,312,000
Balance at the beginning of period	105,000	128,000
Accretion	(90,000)
Reclassification from nonaccretable difference	52,000
Balance at the end of period	67,000	128,000
Acquired Impaired | Eagle River
Acquired portfolio
Loans acquired - contractual payments	3,401,000
Nonaccretable difference	(1,172,000)
Expected cash flows	2,229,000
Accretable yield	(391,000)
Carrying balance at acquisition date	1,838,000
Balance at the beginning of period	209,000	213,000
Accretion	(77,000)
Reclassification from nonaccretable difference	58,000
Balance at the end of period	190,000	213,000
Acquired Impaired | Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	2,105,000
Nonaccretable difference	(265,000)
Expected cash flows	1,840,000
Accretable yield	(88,000)
Carrying balance at acquisition date	1,752,000
Balance at the beginning of period	19,000	26,000
Accretion	(4,000)
Reclassification from nonaccretable difference	3,000
Balance at the end of period	18,000	26,000
Acquired Impaired | FFNM
Acquired portfolio
Loans acquired - contractual payments	5,440,000
Nonaccretable difference	(2,100,000)
Expected cash flows	3,340,000
Accretable yield	(700,000)
Carrying balance at acquisition date	2,640,000
Balance at the beginning of period	518,000	571,000
Accretion	(237,000)
Reclassification from nonaccretable difference	177,000
Balance at the end of period	458,000	571,000
Acquired Impaired | Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	1,901,000
Nonaccretable difference	(421,000)
Expected cash flows	1,480,000
Accretable yield	(140,000)
Carrying balance at acquisition date	1,340,000
Balance at the beginning of period	108,000	140,000
Accretion	(3,000)	(15,000)
Reclassification from nonaccretable difference	3,000	12,000
Balance at the end of period	108,000	137,000
Acquired Non-impaired
Acquired portfolio
Balance at the beginning of period	2,217,000	3,973,000
Accretion	(348,000)	(526,000)
Balance at the end of period	1,869,000	3,447,000
Acquired Non-impaired | PFC
Acquired portfolio
Loans acquired - contractual payments	53,849,000
Expected cash flows	53,849,000
Accretable yield	(2,100,000)
Carrying balance at acquisition date	51,749,000
Acquired Non-impaired | Eagle River
Acquired portfolio
Loans acquired - contractual payments	80,737,000
Expected cash flows	80,737,000
Accretable yield	(1,700,000)
Carrying balance at acquisition date	79,037,000
Balance at the beginning of period		16,000
Accretion		(16,000)
Acquired Non-impaired | Niagara Bancorporation
Acquired portfolio
Loans acquired - contractual payments	30,555,000
Expected cash flows	30,555,000
Accretable yield	(600,000)
Carrying balance at acquisition date	29,955,000
Balance at the beginning of period		69,000
Accretion		(51,000)
Balance at the end of period		18,000
Acquired Non-impaired | FFNM
Acquired portfolio
Loans acquired - contractual payments	187,302,000
Expected cash flows	187,302,000
Accretable yield	(4,498,000)
Carrying balance at acquisition date	182,804,000
Balance at the beginning of period	1,953,000	3,446,000
Accretion	(310,000)	(410,000)
Balance at the end of period	1,643,000	3,036,000
Acquired Non-impaired | Lincoln Community Bank
Acquired portfolio
Loans acquired - contractual payments	37,700,000
Expected cash flows	37,700,000
Accretable yield	(493,000)
Carrying balance at acquisition date	37,207,000
Balance at the beginning of period	264,000	442,000
Accretion	(38,000)	(49,000)
Balance at the end of period	$ 226,000	$ 393,000

LOANS - ALLOWANCE (Details)

LOANS - ALLOWANCE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Allowance for loan loss reserve:
Balance at beginning of period	$ 5,308,000	$ 5,183,000
Charge-offs	(145,000)	(161,000)
Recoveries	29,000	32,000
Provision	100,000	100,000
Balance at end of period	5,292,000	5,154,000
Loans:
Ending balance			$ 1,044,177,000	$ 1,058,776,000	$ 1,045,428,000
Ending balance ALLR	(5,292,000)	(5,154,000)	(5,292,000)	(5,308,000)	(5,154,000)
Net loans			1,038,885,000	1,053,468,000	1,040,274,000
Ending balance ALLR:
Individually evaluated			1,389,000		1,115,000
Collectively evaluated			3,903,000		4,039,000
Total	5,292,000	5,154,000	5,292,000	5,308,000	5,154,000
Ending balance Loans:
Individually evaluated			3,732,000		3,383,000
Collectively evaluated			1,035,114,000		1,036,085,000
Acquired with deteriorated credit quality			5,331,000		5,960,000
Total Loans			1,044,177,000	1,058,776,000	1,045,428,000
Commercial real estate
Allowance for loan loss reserve:
Balance at beginning of period	1,189,000	1,682,000
Charge-offs		(20,000)
Recoveries	6,000	12,000
Provision	623,000	(109,000)
Balance at end of period	1,818,000	1,565,000
Loans:
Ending balance			522,659,000	514,394,000	498,471,000
Ending balance ALLR	(1,818,000)	(1,565,000)	(1,818,000)	(1,189,000)	(1,565,000)
Net loans			520,841,000		496,906,000
Ending balance ALLR:
Individually evaluated			913,000		467,000
Collectively evaluated			905,000		1,098,000
Total	1,818,000	1,565,000	1,818,000	1,189,000	1,565,000
Ending balance Loans:
Individually evaluated			2,278,000		2,138,000
Collectively evaluated			518,642,000		493,570,000
Acquired with deteriorated credit quality			1,739,000		2,763,000
Total Loans			522,659,000	514,394,000	498,471,000
Commercial, financial, and agricultural
Allowance for loan loss reserve:
Balance at beginning of period	1,197,000	648,000
Charge-offs	(66,000)	(19,000)
Recoveries		4,000
Provision	502,000	372,000
Balance at end of period	1,633,000	1,005,000
Loans:
Ending balance			207,727,000	211,023,000	201,089,000
Ending balance ALLR	(1,633,000)	(1,005,000)	(1,633,000)	(1,197,000)	(1,005,000)
Net loans			206,094,000		200,084,000
Ending balance ALLR:
Individually evaluated			476,000		648,000
Collectively evaluated			1,157,000		357,000
Total	1,633,000	1,005,000	1,633,000	1,197,000	1,005,000
Ending balance Loans:
Individually evaluated			1,454,000		1,245,000
Collectively evaluated			203,857,000		198,425,000
Acquired with deteriorated credit quality			2,416,000		1,419,000
Total Loans			207,727,000	211,023,000	201,089,000
Commercial construction
Allowance for loan loss reserve:
Balance at beginning of period	71,000	101,000
Provision	27,000	(1,000)
Balance at end of period	98,000	100,000
Loans:
Ending balance			29,971,000	40,107,000	33,118,000
Ending balance ALLR	(98,000)	(100,000)	(98,000)	(71,000)	(100,000)
Net loans			29,873,000		33,018,000
Ending balance ALLR:
Collectively evaluated			98,000		100,000
Total	98,000	100,000	98,000	71,000	100,000
Ending balance Loans:
Collectively evaluated			29,604,000		32,753,000
Acquired with deteriorated credit quality			367,000		365,000
Total Loans			29,971,000	40,107,000	33,118,000
One to four family residential real estate
Allowance for loan loss reserve:
Balance at beginning of period	148,000	199,000
Charge-offs	(22,000)	(63,000)
Recoveries	10,000	5,000
Provision	291,000	60,000
Balance at end of period	427,000	201,000
Loans:
Ending balance			244,059,000	253,918,000	281,104,000
Ending balance ALLR	(427,000)	(201,000)	(427,000)	(148,000)	(201,000)
Net loans			243,632,000		280,903,000
Ending balance ALLR:
Collectively evaluated			427,000		201,000
Total	427,000	201,000	427,000	148,000	201,000
Ending balance Loans:
Collectively evaluated			243,251,000		279,943,000
Acquired with deteriorated credit quality			808,000		1,161,000
Total Loans			244,059,000	253,918,000	281,104,000
Consumer construction
Allowance for loan loss reserve:
Balance at beginning of period	11,000	6,000
Charge-offs	(8,000)
Provision	7,000
Balance at end of period	10,000	6,000
Loans:
Ending balance			19,386,000	18,096,000	12,022,000
Ending balance ALLR	(10,000)	(6,000)	(10,000)	(11,000)	(6,000)
Net loans			19,376,000		12,016,000
Ending balance ALLR:
Collectively evaluated			10,000		6,000
Total	10,000	6,000	10,000	11,000	6,000
Ending balance Loans:
Collectively evaluated			19,386,000		11,809,000
Acquired with deteriorated credit quality					213,000
Total Loans			19,386,000	18,096,000	12,022,000
Consumer
Allowance for loan loss reserve:
Balance at beginning of period	13,000	8,000
Charge-offs	(49,000)	(59,000)
Recoveries	13,000	11,000
Provision	33,000	49,000
Balance at end of period	10,000	9,000
Loans:
Ending balance			20,375,000	21,238,000	19,624,000
Ending balance ALLR	(10,000)	(9,000)	(10,000)	(13,000)	(9,000)
Net loans			20,365,000		19,615,000
Ending balance ALLR:
Collectively evaluated			10,000		9,000
Total	10,000	9,000	10,000	13,000	9,000
Ending balance Loans:
Collectively evaluated			20,374,000		19,585,000
Acquired with deteriorated credit quality			1,000		39,000
Total Loans			20,375,000	21,238,000	19,624,000
Unallocated
Allowance for loan loss reserve:
Balance at beginning of period	2,679,000	2,539,000
Provision	(1,383,000)	(271,000)
Balance at end of period	1,296,000	2,268,000
Loans:
Ending balance ALLR	(1,296,000)	(2,268,000)	(1,296,000)	(2,679,000)	(2,268,000)
Net loans			(1,296,000)		(2,268,000)
Ending balance ALLR:
Collectively evaluated			1,296,000		2,268,000
Total	$ 1,296,000	$ 2,268,000	$ 1,296,000	$ 2,679,000	$ 2,268,000

LOANS - LOANS BY RISK CATEGORY

LOANS - LOANS BY RISK CATEGORY (Details) $ in Thousands	Mar. 31, 2020USD ($)item	Dec. 31, 2019USD ($)	Mar. 31, 2019USD ($)
Breakdown of loans by risk category
Total loans	$ 1,044,177	$ 1,058,776	$ 1,045,428
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	$ 522,659	514,394	498,471
Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	207,727	211,023	201,089
Commercial construction
Breakdown of loans by risk category
Total loans	29,971	40,107	33,118
One to four family residential real estate
Breakdown of loans by risk category
Total loans	244,059	253,918	281,104
Consumer construction
Breakdown of loans by risk category
Total loans	19,386	18,096	12,022
Consumer
Breakdown of loans by risk category
Total loans	20,375	21,238	$ 19,624
Strong (1)
Breakdown of loans by risk category
Total loans	32,386	25,145
Strong (1) | Commercial real estate
Breakdown of loans by risk category
Total loans	14,737	9,979
Strong (1) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	17,609	15,126
Strong (1) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	40	40
Good (2)
Breakdown of loans by risk category
Total loans	29,786	24,621
Good (2) | Commercial real estate
Breakdown of loans by risk category
Total loans	18,108	17,516
Good (2) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	9,053	4,510
Good (2) | Commercial construction
Breakdown of loans by risk category
Total loans	278	292
Good (2) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	2,217	2,145
Good (2) | Consumer
Breakdown of loans by risk category
Total loans	130	158
Average (3)
Breakdown of loans by risk category
Total loans	305,949	311,287
Average (3) | Commercial real estate
Breakdown of loans by risk category
Total loans	227,628	228,962
Average (3) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	64,182	70,748
Average (3) | Commercial construction
Breakdown of loans by risk category
Total loans	8,768	6,390
Average (3) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	5,119	4,937
Average (3) | Consumer
Breakdown of loans by risk category
Total loans	252	250
Acceptable
Breakdown of loans by risk category
Total loans	397,314	408,107
Acceptable | Commercial real estate
Breakdown of loans by risk category
Total loans	253,746	248,177
Acceptable | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	111,434	115,229
Acceptable | Commercial construction
Breakdown of loans by risk category
Total loans	16,474	28,893
Acceptable | One to four family residential real estate
Breakdown of loans by risk category
Total loans	15,187	15,168
Acceptable | Consumer
Breakdown of loans by risk category
Total loans	473	640
Acceptable Watch
Breakdown of loans by risk category
Total loans	5,837	6,432
Acceptable Watch | Commercial real estate
Breakdown of loans by risk category
Total loans	3,865	4,468
Acceptable Watch | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	759	930
Acceptable Watch | Commercial construction
Breakdown of loans by risk category
Total loans	596	400
Acceptable Watch | One to four family residential real estate
Breakdown of loans by risk category
Total loans	617	634
Substandard (6)
Breakdown of loans by risk category
Total loans	12,304	13,052
Substandard (6) | Commercial real estate
Breakdown of loans by risk category
Total loans	4,575	5,292
Substandard (6) | Commercial, financial, and agricultural
Breakdown of loans by risk category
Total loans	4,690	4,480
Substandard (6) | Commercial construction
Breakdown of loans by risk category
Total loans	398	607
Substandard (6) | One to four family residential real estate
Breakdown of loans by risk category
Total loans	2,556	2,632
Substandard (6) | Consumer
Breakdown of loans by risk category
Total loans	85	41
Rating Unassigned
Breakdown of loans by risk category
Total loans	260,601	270,132
Rating Unassigned | Commercial construction
Breakdown of loans by risk category
Total loans	3,457	3,525
Rating Unassigned | One to four family residential real estate
Breakdown of loans by risk category
Total loans	218,323	228,362
Rating Unassigned | Consumer construction
Breakdown of loans by risk category
Total loans	19,386	18,096
Rating Unassigned | Consumer
Breakdown of loans by risk category
Total loans	$ 19,435	$ 20,149

LOANS - IMPAIRED LOANS AND EFFE

LOANS - IMPAIRED LOANS AND EFFECT ON INTEREST INCOME (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Impaired Loans
Number of days past due to be considered as nonperforming loans	90 days
Recorded investment
With no valuation reserve	$ 5,331	$ 8,974
With a valuation reserve	3,732	3,849
Total	9,063	12,823
Unpaid Principal Balance	13,755	16,129
Related Allowance for Loan Losses	1,389	1,267
Average investment
Average Balance for the Period	12,141	13,466
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	106	524
Commercial real estate
Recorded investment
With no valuation reserve	1,739	4,318
With a valuation reserve	2,278	2,374
Total	4,017	6,692
Unpaid Principal Balance	7,061	7,937
Related Allowance for Loan Losses	913	497
Average investment
Average Balance for the Period	7,841	8,374
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	65	301
Commercial, financial, and agricultural
Recorded investment
With no valuation reserve	2,416	2,354
With a valuation reserve	1,454	1,475
Total	3,870	3,829
Unpaid Principal Balance	3,870	4,892
Related Allowance for Loan Losses	476	770
Average investment
Average Balance for the Period	1,597	1,144
Interest Income Recognized During Impairment
Interest Income Recognized for the Period		2
Commercial construction
Recorded investment
With no valuation reserve	367	373
Total	367	373
Unpaid Principal Balance	373	386
Average investment
Average Balance for the Period	21	396
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	1
One to four family residential real estate
Recorded investment
With no valuation reserve	808	1,920
Total	808	1,920
Unpaid Principal Balance	2,450	2,881
Average investment
Average Balance for the Period	2,665	3,508
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	39	219
Consumer
Recorded investment
With no valuation reserve	1	9
Total	1	9
Unpaid Principal Balance	1	33
Average investment
Average Balance for the Period	17	44
Interest Income Recognized During Impairment
Interest Income Recognized for the Period	$ 1	$ 2

LOANS - PAST DUE (Details)

LOANS - PAST DUE (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Past due loans
Nonaccrual	$ 6,416	$ 5,172
Total	13,180	11,566
30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	6,764	6,383
90+ days Past Due
Past due loans
90+ days Past Due (accruing)		11
Commercial real estate
Past due loans
Nonaccrual	959	671
Total	2,580	1,726
Commercial real estate | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	1,621	1,055
Commercial, financial, and agricultural
Past due loans
Nonaccrual	816	527
Total	2,354	1,356
Commercial, financial, and agricultural | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	1,538	829
Commercial construction
Past due loans
Nonaccrual	99	105
Total	227	164
Commercial construction | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	128	59
One to four family residential real estate
Past due loans
Nonaccrual	4,479	3,850
Total	7,800	8,218
One to four family residential real estate | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	3,321	4,357
One to four family residential real estate | 90+ days Past Due
Past due loans
90+ days Past Due (accruing)		11
Consumer
Past due loans
Nonaccrual	63	19
Total	219	102
Consumer | 30-89 days Past Due
Past due loans
30-89 days Past Due (accruing)	$ 156	$ 83

LOANS - TROUBLED DEBT RESTRUCTU

LOANS - TROUBLED DEBT RESTRUCTURING (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2020USD ($)item	Mar. 31, 2019loan	Sep. 30, 2019loan
LOANS
Number of consecutive timely payments before being considered return to accruing status | item	6
Number of TDR’s | loan		3	3
Restructured loan pre-modification	$ 504
Restructured loans post-modification	$ 493

LOANS - INSIDER LOANS (Details)

LOANS - INSIDER LOANS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms
Loans outstanding, beginning of period	$ 12,196,000	$ 9,817,000
New loans		1,872,000
Net activity on revolving lines of credit	(354,000)	358,000
Repayment	(100,000)	(96,000)
Loans outstanding, end of period	11,742,000	11,951,000
Loans outstanding	11,742,000	11,951,000	$ 11,742,000
Unfunded commitments			355,000
Substandard (6)
Activity in insider loans granted to the entity's executive officers and directors, including their families and firms
Loans outstanding, end of period	0	0
Loans outstanding	$ 0	$ 0	$ 0

GOODWILL AND OTHER INTANGIBLE_3

GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Oct. 01, 2018	May 18, 2018	Aug. 31, 2016	Apr. 29, 2016	Dec. 05, 2014
Goodwill	$ 19,574	$ 19,574	$ 19,574
Deposit based intangible assets	4,874	5,043	6,746
Amortization expense	169	677
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	564	594					$ 1,206
Amortization expense	30	121
Future Amortization Expense	121
Eagle River
Goodwill						$ 1,839
Deposit based intangible assets	604	629				$ 993
Amortization expense	25	99
Future Amortization Expense	99
Niagara Bancorporation
Goodwill					$ 50
Deposit based intangible assets	192	200			$ 300
Amortization expense	8	30
Future Amortization Expense	30
FFNM
Goodwill				$ 12,628
Deposit based intangible assets	2,364	2,436		$ 2,894
Amortization expense	72	299
Future Amortization Expense	290
Lincoln Community Bank
Goodwill			1,252
Deposit based intangible assets	1,150	1,184	$ 1,353
Amortization expense	34	$ 128
Future Amortization Expense	$ 135

SERVICING RIGHTS (Details)

SERVICING RIGHTS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Commercial loans
Commercial Loans
Commercial Loans	$ 41,000,000
Servicing rights	$ 42,000	$ 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	$ 1,499,000	1,144,000
Additions from loans sold with servicing retained		500,000
Amortization	(35,000)	(60,000)
Balance at end of period	1,464,000	1,584,000
Balance of loan servicing portfolio	$ 246,370,000	$ 288,687,000
Mortgage servicing rights as % of portfolio	0.59%	0.55%
Fair value of servicing rights	$ 2,159,000	$ 2,898,000

BORROWINGS (Details)

BORROWINGS (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)item	Dec. 31, 2019USD ($)
BORROWINGS
Borrowings	$ 67,120	$ 64,551
Collateral Pledged
BORROWINGS
Amortized cost estimated fair value	25,884
Federal Home Loan Bank borrowings
BORROWINGS
Borrowings	$ 63,717	64,148
Federal Home Loan Bank Borrowing Weighted Average Interest Rate	1.67%
Federal Home Loan Bank borrowings | Mortgage related and municipal securities | Collateral Pledged
BORROWINGS
Available for sale equity securities	$ 20,051
Amortized cost estimated fair value	20,655
Federal Home Loan Bank borrowings | FHLB stock
BORROWINGS
Stock owned and pledged as collateral	4,924
Federal Home Loan Bank borrowings | One to four family residential real estate
BORROWINGS
Loans pledged as collateral	50,310
Correspondent bank line of credit
BORROWINGS
Borrowings	$ 3,000
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	$ 403
Interest rate on note (as a percent)	1.00%
USDA Rural Development note | First Rural Relending
BORROWINGS
Demand deposit account pledged as collateral	$ 456
Revolving Credit Facility
BORROWINGS
Line of Credit	3,000
Maximum borrowing capacity	$ 15,000
Revolving Credit Facility | LIBOR
BORROWINGS
LIBOR rate at point of time	1.45%

DEFINED BENEFIT PENSION PLAN (D

DEFINED BENEFIT PENSION PLAN (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)item	Mar. 31, 2019USD ($)	Dec. 31, 2019
Defined Benefit Pension Plan
Number of years over which anticipated pension distributions disclosed | item	5
Anticipated distributions from the plan
2020	$ 131
2021	129
2022	137
2023	143
2024	141
2025-2029	869
Total	1,550
Peninsula Financial Corporation noncontributory defined benefit pension plan
Defined Benefit Pension Plan
Expected contributions to the plan next fiscal year	139
Change in plan assets
Fair value of plan assets	2,259
Accrued pension expense, included with other assets or liabilities	$ 1,188
Accumulated benefit obligation		$ 3,447
Assumptions in the actuarial valuation
Weighted average discount rate	2.92%	2.92%
Rate of increase in future compensation levels
Expected long-term rate of return on plan assets	8.00%	8.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Minimum
Plan assets
Target Allocation	50.00%		50.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Maximum
Plan assets
Target Allocation	70.00%		70.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Equity securities | Plan
Plan assets
Actual Allocation	60.00%		60.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Minimum
Plan assets
Target Allocation	30.00%		30.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Maximum
Plan assets
Target Allocation	50.00%		50.00%
Peninsula Financial Corporation noncontributory defined benefit pension plan | Fixed income securities | Plan
Plan assets
Actual Allocation	40.00%		40.00%

STOCK COMPENSATION PLANS (Detai

STOCK COMPENSATION PLANS (Details) - $ / shares	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017	Feb. 29, 2020	Oct. 31, 2019	Feb. 28, 2019	Apr. 30, 2018	Feb. 28, 2018	Feb. 28, 2017	Mar. 31, 2020	Mar. 31, 2019
Summary of nonvested shares
Nonvested beginning balance (in shares)										69,145
Granted during the period (in shares)										132,000
Vested during the period (in shares)										(25,521)
Nonvested ending balance (in shares)										175,624
Weighted Average Grant Date Fair Value
Nonvested beginning balance (in dollars per share)										$ 14.52
Granted during the period (in dollars per share)										15.46
Vested during the period (in dollars per share)										14.99
Nonvested ending balance (in dollars per share)										$ 15.16
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)	$ 15.70	$ 16.30	$ 13.39	$ 15.46	$ 15.40	$ 15.70	$ 16	$ 16.30	$ 13.39
Stock issued for vested restricted stocks										25,521	27,967
Summary of nonvested shares
Granted during the period (in shares)				132,000	8,000	27,790	8,000	18,643	28,427

INCOME TAXES (Details.)

INCOME TAXES (Details.) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
INCOME TAXES
Deferred tax assets, net of valuation allowance	$ 3,154
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
Deferred tax expense	$ 811	$ 842

FAIR VALUE (Details)

FAIR VALUE (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
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	8,825	$ 10,295
Securities available for sale	114,734	107,972
Marketable Securities	114,734	107,972
Carrying Amount
Financial assets:
Total financial assets	1,268,487	1,230,236
Financial liabilities:
Total financial liabilities	1,163,096	1,140,797
Estimated Fair Value
Financial assets:
Total financial assets	1,272,206	1,232,753
Financial liabilities:
Total financial liabilities	1,161,366	1,109,239
Level 1 | Carrying Amount
Financial assets:
Cash and cash equivalents	97,072	49,826
Level 1 | Estimated Fair Value
Financial assets:
Cash and cash equivalents	97,072	49,826
Level 2 | Carrying Amount
Financial assets:
Interest-bearing deposits	8,825	10,295
Federal Home Loan Bank stock	4,924	4,924
Financial liabilities:
Deposits	1,095,381	1,075,677
Borrowings	67,120	64,551
Level 2 | Estimated Fair Value
Financial assets:
Interest-bearing deposits	8,825	10,295
Federal Home Loan Bank stock	4,924	4,924
Financial liabilities:
Deposits	1,095,819	1,044,267
Borrowings	64,952	64,403
Level 3 | Carrying Amount
Financial assets:
Net loans	1,038,885	1,053,468
Accrued interest receivable	4,047	3,751
Financial liabilities:
Accrued interest payable	595	569
Level 3 | Estimated Fair Value
Financial assets:
Net loans	1,042,604	1,055,985
Accrued interest receivable	4,047	3,751
Financial liabilities:
Accrued interest payable	595	569
Available-for-sale Securities
Financial assets:
Marketable Securities	114,734	107,972
Available-for-sale Securities | Level 2 | Carrying Amount
Financial assets:
Marketable Securities	113,331	106,569
Available-for-sale Securities | Level 2 | Estimated Fair Value
Financial assets:
Marketable Securities	113,331	106,569
Available-for-sale Securities | Level 3 | Carrying Amount
Financial assets:
Marketable Securities	1,403	1,403
Available-for-sale Securities | Level 3 | Estimated Fair Value
Financial assets:
Marketable Securities	1,403	1,403
Corporate
Financial assets:
Marketable Securities	20,024	20,938
US Agencies
Financial assets:
Marketable Securities	9,611	14,496
US Agencies - MBS
Financial assets:
Marketable Securities	36,715	34,526
Obligations of states and political subdivisions
Financial assets:
Marketable Securities	$ 48,384	$ 38,012

FAIR VALUE - OTHER ASSETS AND O

FAIR VALUE - OTHER ASSETS AND OTHER LIABILITIES (Details) - Recurring - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair value measurements
Other assets	$ 0	$ 0
Other liabilities	0	0
Level 3
Fair value measurements
Assets	0	0
Liabilities	$ 0	$ 0

FAIR VALUE - RECURRING (Details

FAIR VALUE - RECURRING (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Marketable Securities	$ 114,734	$ 107,972
Recurring
Marketable Securities	114,734	107,972
Available-for-sale Securities
Marketable Securities	114,734	107,972
Corporate
Marketable Securities	20,024	20,938
Corporate | Recurring
Marketable Securities	20,024	20,938
Corporate | Level 2 | Recurring
Marketable Securities	19,524	20,438
Corporate | Level 3 | Recurring
Marketable Securities	500	500
US Agencies
Marketable Securities	9,611	14,496
US Agencies | Recurring
Marketable Securities	9,611	14,496
US Agencies | Level 2 | Recurring
Marketable Securities	9,611	14,496
US Agencies - MBS
Marketable Securities	36,715	34,526
US Agencies - MBS | Recurring
Marketable Securities	36,715	34,526
US Agencies - MBS | Level 2 | Recurring
Marketable Securities	36,715	34,526
Obligations of states and political subdivisions
Marketable Securities	48,384	38,012
Obligations of states and political subdivisions | Recurring
Marketable Securities	48,384	38,012
Obligations of states and political subdivisions | Level 2 | Recurring
Marketable Securities	40,874	37,024
Obligations of states and political subdivisions | Level 3 | Recurring
Marketable Securities	$ 903	$ 903

FAIR VALUE - NONRECURRING BASIS

FAIR VALUE - NONRECURRING BASIS (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Fair value
Impaired loans	$ 9,063	$ 12,823
Other real estate owned	2,228	2,194
Impaired loans
Fair value
Impaired loans	9,063	12,823
Other real estate owned
Fair value
Other real estate owned	2,228	2,194
Nonrecurring
Fair value
Total (Gains) Losses	51	492
Nonrecurring | Impaired loans
Fair value
Total (Gains) Losses	48	280
Nonrecurring | Other real estate owned
Fair value
Total (Gains) Losses	3	212
Nonrecurring | Level 3 | Impaired loans
Fair value
Impaired loans	9,063	12,823
Nonrecurring | Level 3 | Other real estate owned
Fair value
Other real estate owned	$ 2,228	$ 2,194

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Aug. 28, 2019	Mar. 31, 2020Programshares	Dec. 31, 2016shares	Dec. 31, 2015shares	Dec. 31, 2014shares	Dec. 31, 2013shares	Apr. 28, 2015USD ($)	Dec. 17, 2013USD ($)	Feb. 27, 2013USD ($)
Participation in the TARP Capital Purchase Program
Number of shares repurchased		240,644
Number of share repurchase programs | Program		2
Share Repurchase Program One
Participation in the TARP Capital Purchase Program
Amount authorized to be repurchased | $								$ 600	$ 600
Additional amount authorized to be repurchased | $							$ 750
Share Repurchase Program Two | Maximum
Participation in the TARP Capital Purchase Program
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		(240,644)
Shares of Common Stock | Share Repurchase Program One
Participation in the TARP Capital Purchase Program
Number of shares repurchased		1,661	14,000	102,455	13,700	55,594
Shares of Common Stock | Share Repurchase Program Two
Participation in the TARP Capital Purchase Program
Number of shares repurchased		238,983

COMMITMENTS, CONTINGENCIES, A_2

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Financial Instruments with Off-Balance-Sheet Risk
Commitments	$ 210,245	$ 168,356
Commitments to extend credit
Financial Instruments with Off-Balance-Sheet Risk
Variable rate	116,961	106,278
Fixed rate	78,776	50,796
Standby letters of credit
Financial Instruments with Off-Balance-Sheet Risk
Variable rate	$ 8,322	5,441
Percentage collateralization on financial instruments allowed under commitments	100.00%
Credit card commitments
Financial Instruments with Off-Balance-Sheet Risk
Fixed rate	$ 6,186	$ 5,841

COMMITMENTS, CONTINGENCIES, A_3

COMMITMENTS, CONTINGENCIES, AND CREDIT RISK - CREDIT RISK (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Concentration of Credit Risk
Loan portfolio	$ 1,038,885	$ 1,053,468	$ 1,040,274
Commercial real estate
Concentration of Credit Risk
Loan portfolio	520,841		$ 496,906
Bank | Commercial real estate | Commercial loan portfolio | Credit risk concentration
Concentration of Credit Risk
Loan portfolio	$ 136,477	$ 141,965
Percentage of concentration risk under a specified benchmark	17.95%	18.54%