Mackinac Financial Corporation Reports 2020 Fourth Quarter and Annual Results

MANISTIQUE, Mich., Jan. 28, 2021 (GLOBE NEWSWIRE) — Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”),…

MANISTIQUE, Mich., Jan. 28, 2021 (GLOBE NEWSWIRE) — Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2020 net income of $13.47 million, or $1.27 per share, compared to 2019 net income of $13.85 million, or $1.29 per share. The Corporation had fourth quarter 2020 net income of $3.64 million, or $.35 per share, compared to 2019 fourth quarter net income of $3.30 million, or $.31 per share.  

Total assets of the Corporation at December 31, 2020 were $1.50 billion, compared to $1.32 billion at December 31, 2019. Shareholders’ equity at December 31, 2020 totaled $167.86 million, compared to $161.92 million at December 31, 2019. Book value per share outstanding equated to $15.99 at the end of the fourth quarter 2020, compared to $15.06 per share outstanding a year ago. Tangible book value at quarter-end was $143.92 million, or $13.71 per share outstanding, compared to $137.30 million, or $12.77 per share outstanding at the end of the fourth quarter 2019.

Additional notes:

  • mBank, the Corporation’s primary asset, recorded net income of $15.02 million in 2020, which resulted in an ROAA of 1.03%, compared to $15.07 million in 2019. mBank recorded net income of $4.04 million for the fourth quarter of 2020 and $3.73 million for the same period of 2019.
  • COVID-19 loan modifications resided at a nominal $2.4 million, or .25% of total loans with no commercial loans remaining in total payment deferral at December 31, 2020. This is compared to peak levels of $201 million in the spring.
  • Core bank deposit growth has been very strong this year with an increase of approximately $196.55 million, or 19% year-over-year. The vast majority of that growth has centered in transactional related accounts through our branch network outreach and treasury management line of business.
  • Non-interest income continued to be very solid for the fourth quarter of 2020. This included strong secondary market mortgage fee income and gain on sale of $1.92 million and premiums on the sale of Small Business Administration (SBA) guaranteed loans of $269 thousand. Year-to-date secondary market mortgage sale revenue and fees were $5.93 million and SBA premiums were $1.73 million. The residential mortgage pipeline resides at very robust levels and we expect sustained output from this line of business as we look to upcoming quarters.
  • Reported margin in the fourth quarter, which is inclusive of accretion from acquired loans that were subject to purchase accounting adjustments and recognition of some Paycheck Protection Program (“PPP”) loan origination fees, was 4.42%. Estimated non-GAAP core operating margin, when adjusted for purchase accounting accretion and PPP impact, is approximately 4.20% for the fourth quarter. Reportable margin for the entirety of the year was 4.37%.
  • The Corporation resumed buying back Mackinac Financial Corporation (MFNC) shares in the fourth quarter. Total purchases for the quarter were 43,135 shares at a blended price of $12.76 per share. For the entire year of 2020, the Corporation has repurchased 283,779 shares at a total weighted average price of $11.55 per share. All repurchase activity was completed at prices below tangible book value per share.

Revenue & PPP Recognition

Total revenue of the Corporation for 2020 was $72.23 million, compared to $70.34 million in 2019. Total revenue for the three months ended December 31, 2020 equated to $18.01 million, compared to $17.61 million for the same period of 2019. Total interest income for the fourth quarter was $15.23 million, compared to $15.77 million for the same period in 2019. The 2020 fourth quarter interest income included accretive yield of $661 thousand from combined credit mark accretion associated with acquisitions, compared to $488 thousand in the same period of 2019.

The fourth quarter 2020 interest income was also positively impacted by the recognition of a portion of the PPP loan origination fees that were deferred in accordance with the following required accounting treatment:

  • The Bank originated approximately $152 million of PPP loans in 2020.
  • For these originations, the company earned $5.18 million in PPP fees. Of that amount, $1.69 million was recognized immediately to offset direct costs of the program, leaving roughly $3.49 million to be recognized through GAAP monthly amortization or upon forgiveness of the loan by the Small Business Administration (“SBA”).
  • Of the $3.49 million, $2.33 million was recognized during the remainder of 2020. The greatest amounts occurred in the third and fourth quarters as acceleration of recognition due to forgiveness increased.
  • The 2020 fourth quarter results include recognition of $1.21 million in PPP fees.
  • The remaining $1.15 million of PPP fees are likely to be recognized in 2021.
  • The remaining $1.15 million of PPP origination fee income will continue to be amortized monthly, but more likely will be accelerated earlier upon forgiveness of the debt by SBA.

Loan Production and Portfolio Mix

Total balance sheet loans at December 31, 2020 were $1.08 billion, which is inclusive of $105.49 million of PPP loans, compared to December 31, 2019 balances of $1.06 billion. Total loans under management reside at $1.33 billion, which includes $204.55 million of service retained loans. Driven by strong consumer mortgage activity, overall traditional loan production (non-PPP) for 2020 was $393.06 million, compared to $385.55 million for the same period of 2019. When including PPP loans, total production was $545.57 million. Of the total production, commercial loans equated to $128 million, consumer $265 million and the aforementioned $152 million of PPP. Within the consumer totals was $205 million of secondary market mortgage production compared to $89 million for 2019.

Overall Quarterly Loan Production is available at  https://www.globenewswire.com/NewsRoom/AttachmentNg/ae61b4ba-da63-4647-b83f-09b0990f7844

New Loan Production (excluding PPP) is available at  https://www.globenewswire.com/NewsRoom/AttachmentNg/0acf431b-93b6-415f-9b16-9019b800397a

Commenting on new loan production and overall lending activities, Mr. George stated, “As can be seen from our production totals, we continued our positive lending momentum and have started to see some more traditional commercial loan opportunities in the quarter, which also continues to be dominated by record mortgage production. We are also seeing very good mortgage activity early in 2021 as our markets continue to see a continued influx of buyers for all types of properties. This migration from more populated areas is in light of the ongoing pandemic and the quality of life and work changes many continue to seek, which entails residing in more rural areas that offer larger space acquisition opportunities. We have also begun to participate in the recently announced second round of PPP funding. Initial forecasts based on client demand indicate it could potentially yield $75 million to $100 million of additional PPP loans.”

Credit Quality and COVID-19 Loan Activity

Nonperforming loans totaled $5.46 million, or .51% (.56% excluding PPP balances) of total loans at December 31, 2020, compared to .49% of total loans at December 31, 2019. The nonperforming assets to total assets ratio resided at .48% (.52% excluding PPP balances) for the fourth quarter of 2020, compared to .56% for the fourth quarter of 2019.  Total loan delinquencies greater than 30 days resided at .58% (.65% excluding PPP balances), compared to 1.10% in 2019.

COVID-19 related loan modification activity has continued its positive trend downward throughout the fourth quarter. Currently, only $2.4 million of loan balances ($1.98 million of commercial and $.4 million of consumer) remain in some form of modification relief.

Remaining COVID-19 Loan Modifications is available at  https://www.globenewswire.com/NewsRoom/AttachmentNg/4f3e1a1c-235f-4fa7-8c2e-3f1210296a5e

The fourth quarter provision for loan losses was $400 thousand. This amount was consistent with last quarter and we remain “risk neutral” quarter-over-quarter within the portfolio given the continued improvement in deferral activity and absence of any known pending credit issues. The resulting Allowance for Loan Loss (“ALLL”) coverage ratio was .54% of total loans. However, the total coverage ratio (equivalent to ALLL plus remaining purchase accounting credit marks to total loans less PPP balances) is .95%. Management will actively refine the provision and loan reserves as client impact and broader economic data from the pandemic become more clear. The Corporation is not currently required to utilize CECL.

Commenting on overall credit risk, Mr. George stated, “The credit book has seen no signs of any systemic adverse trends and our COVID-19 modifications are extremely modest at $2.4 million. A very small segment of consumer loans remain in deferment as we continue to work with retail clients who have been adversely impacted for an elongated period of time within the pandemic. While certainly not clear of all headwinds, we remain cautiously optimistic in terms of overall credit performance as many of our hospitality and tourism related businesses in our northern footprint experienced strong demand and revenues throughout the second half of 2020. We remain ever vigilant in terms of monitoring deterioration in any isolated specific situations that could arise for our clients where provisions and/or COVID relief could be needed in light of ongoing pandemic conditions within a particular industry that we all know can still change quickly.”

Margin Analysis, Funding and Liquidity

Net interest income for the year ended December 31, 2020 was $54.81 million, with a net interest margin (NIM) of 4.37% compared to the same period of 2019 of $53.91 million and a NIM of 4.57%. Net interest income for the fourth quarter 2020 was $13.90 million, resulting in a NIM of 4.42%, compared to $13.35 million in the fourth quarter 2019 and a NIM of 4.39%. Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and recognized PPP fee income, was 3.82% for the fourth quarter of 2020, compared to 4.23% for the same period of 2019. Items impacting margin, outside of the overall current low interest rate environment, include higher than normal cash balances as well as negative impact from the yields associated with PPP loans. On a non-GAAP basis, management currently estimates the direct negative impact of the PPP loan balances for the fourth quarter to be .38%. Estimated adjusted core margin for the fourth quarter is 4.20% for the quarter.

Margin Analysis Per Quarter is available at  https://www.globenewswire.com/NewsRoom/AttachmentNg/2e632676-eaaf-488a-8e72-6a5d6528970a

Total bank deposits (excluding brokered deposits) have increased by $196.55 million year-over-year from $1.02 billion at December 31, 2019 to $1.21 billion at fourth quarter-end 2020. Total brokered deposits have also decreased and were $45.17 million at December 31, 2020, compared to $58.62 million at December 31, 2019, a decrease of 23%. FHLB (Federal Home Loan Bank) borrowings have remained mostly flat year-over-year from $63.48 million to $64.55 million. Further maturities are expected to be paid off in both the first and second quarters of 2021. The Corporation utilized the Paycheck Protection Program Liquidity Facility (“PPPLF”) to fund a portion of the initial PPP loan originations. There was no balance on this facility as of December 31, 2020 and management does not expect the need to utilize the facility for the new round of PPP funding based on the Corporation’s current liquidity position. Overall access to short-term functional liquidity remains very strong through multiple sources.

Mr. George stated, “We are very pleased with our organic efforts in terms of core deposit growth this year within the more challenging pandemic environment. While this is partially due to the significant amount of liquidity in the economic system from various stimulus packages, we have also procured and expanded client relationships that we expect to be with us well beyond the pandemic. This is also reflective of the strong commerce activity many of our retail and tourism related clients had over the summer and into the fall and the cash buildup within those businesses. Like many banks, we remain flush with liquidity with slowed commercial loan demand (compared to prior years) given the pandemic and limited prudent investment opportunities in light of market rates, both of which have continued to negatively impact our core margin. We expect that we will use some of this excess cash on our balance sheet for PPP funding, additional retirement of higher priced brokered deposits and FHLB maturities and to fund expected loan growth in 2021.”

Noninterest Income / Expense

Noninterest income (which is not inclusive of PPP fees) for 2020 was $10.20 million, compared to 2019 of $5.95 million, an increase of 71%. Fourth quarter 2020 noninterest income was $2.78 million, compared to $1.85 million for the same period of 2019. The significant year-over-year improvement is mainly a combination of the secondary market mortgage and SBA sales. The SBA 7A sales were not inclusive of any PPP loan fees, all of which are recognized through interest income. Noninterest expense for 2020 was $46.95 million, compared to 2019 of $41.76 million. Noninterest expense for the fourth quarter of 2020 was $11.66 million, compared to $10.81 million for the same period of 2019. Year-over-year increases were mainly associated with the COVID operating environment as well as incentives associated with retail and mortgage related activity.

Assets and Capital

Total assets of the Corporation at December 31, 2020 were $1.50 billion, compared to $1.32 billion at December 31, 2019. Shareholders’ equity at December 31, 2020 totaled $167.86 million, compared to $161.92 million at December 31, 2019. Book value per share outstanding equated to $15.99 at the end of the fourth quarter 2020, compared to $15.06 per share outstanding a year ago. Tangible book value at quarter-end was $143.92 million, or $13.71 per share outstanding, compared to $137.30 million, or $12.77 per share outstanding at the end of the fourth quarter 2019.

Both the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 15.07% at the Corporation and 14.42% at the Bank and tier 1 capital to total tier 1 average assets (the “leverage ratio”) at the Corporation of 9.63% and at the Bank of 9.25%. The leverage ratio is calculated inclusive of PPP loan balances. The Corporation is monitoring the impact of the recent pandemic-associated market volatility on its Goodwill asset. The Corporation continues to conduct Goodwill impairment analysis to confirm the value of this intangible asset as market events unfold.

Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation and Chairman of mBank concluded, “2020 saw our company overcome significant hurdles and obstacles to achieve net income of $13.47 million, or $1.27 of earnings per share for the year. Considering significant downward rate moves, a pandemic operating environment and significant global economic pressures, we successfully managed through a very difficult year with our credit book and operating platform in-tact. We executed on PPP to both support our clients and communities and supplement earnings. With commercial loan production slowed by COVID, we pivoted to originate record levels of residential mortgage loans and drive significant noninterest income. This further proved our ability to be agile within our operations. We also accreted capital while executing the repurchase of approximately 284,000 shares of MFNC on the open market and maintaining our $.56 annual dividend. Overall, we could not be more pleased with our team’s efforts and execution during this unprecedented year.”

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $1.5 billion and whose common stock is traded on the NASDAQ stock market as “MFNC.” The principal subsidiary of the Corporation is mBank. Headquartered in Manistique, Michigan, mBank has 29 branch locations; eleven in the Upper Peninsula, ten in the Northern Lower Peninsula, one in Oakland County, Michigan, and seven in Northern Wisconsin. The Corporation’s banking services include commercial lending and treasury management products and services geared toward small to mid-sized businesses, as well as a full array of personal and business deposit products and consumer loans.

Forward-Looking Statements

This release contains certain forward-looking statements. Words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “should,” “will,” and variations of such words and similar expressions are intended to identify forward-looking statements: as defined by the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current beliefs as to expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Factors that could cause a difference include among others: the effects of the COVID-19 pandemic, particularly potentially negative effects on our customers, borrowers, third party service providers and our liquidity; changes in the national and local economies or market conditions; changes in interest rates and banking regulations; the impact of competition from traditional or new sources; and the possibility that anticipated cost savings and revenue enhancements from mergers and acquisitions, bank consolidations, and other sources may not be fully realized at all or within specified time frames as well as other risks and uncertainties including but not limited to those detailed from time to time in filings of the Corporation with the Securities and Exchange Commission. These and other factors may cause decisions and actual results to differ materially from current expectations. Mackinac Financial Corporation undertakes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS




















































            As of and For the   As of and For the  
            Year Ending   Year Ending  
            December 31,   December 31,  
(Dollars in thousands, except per share data)    2020    2019  
            (Unaudited)      
Selected Financial Condition Data (at end of period):        
Assets           $ 1,501,730   $ 1,320,069  
Loans             1,077,592     1,058,776  
Investment securities         111,836     107,972  
Deposits             1,258,776     1,075,677  
Borrowings           63,479     64,551  
Shareholders’ equity         167,864     161,919  
                   
Selected Statements of Income Data            
Net interest income         $ 54,806   $ 53,907  
Income before taxes         17,056     17,710  
Net income           13,473     13,850  
Income per common share – Basic       1.27     1.29  
Income per common share – Diluted       1.27     1.29  
Weighted average shares outstanding – Basic     10,580,044     10,737,653  
Weighted average shares outstanding- Diluted     10,580,044     10,757,507  
                   
Selected Financial Ratios and Other Data:          
Performance Ratios:              
Net interest margin           4.37 %   4.57 %
Efficiency ratio           71.84     69.10  
Return on average assets         0.92     1.04  
Return on average equity         8.19     8.78  
                   
Average total assets         $ 1,464,674   $ 1,332,882  
Average total shareholders’ equity       164,505     157,831  
Average loans to average deposits ratio       93.34 %   95.03 %
                   
Common Share Data at end of period:            
Market price per common share     $ 12.76   $ 17.56  
Book value per common share       15.99     15.06  
Tangible book value per share       13.71     12.77  
Dividends paid per share, annualized       0.52     0.52  
Common shares outstanding         10,500,758     10,748,712  
                   
Other Data at end of period:              
Allowance for loan losses       $ 5,816   $ 5,308  
Non-performing assets         7,210     7,377  
Allowance for loan losses to total loans       0.51 %   0.49 %
Non-performing assets to total assets       0.48 %   0.56 %
Texas ratio           4.82 %   4.41 %
                   
Number of:                
Branch locations           28     29  
FTE Employees           315     304  
                   

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
























































    December 31,   December 31,
    2020   2019
    (Unaudited)      
ASSETS            
             
Cash and due from banks   $ 218,901     $ 49,794  
Federal funds sold     76       32  
Cash and cash equivalents     218,977       49,826  
             
Interest-bearing deposits in other financial institutions     2,917       10,295  
Securities available for sale     111,836       107,972  
Federal Home Loan Bank stock     4,924       4,924  
             
Loans:            
Commercial     819,907       765,524  
Mortgage     238,705       272,014  
Consumer     18,980       21,238  
Total Loans     1,077,592       1,058,776  
Allowance for loan losses     (5,816 )     (5,308 )
Net loans     1,071,776       1,053,468  
             
Premises and equipment     25,518       23,608  
Other real estate held for sale     1,752       2,194  
Deferred tax asset     3,303       3,732  
Deposit based intangibles     4,368       5,043  
Goodwill     19,574       19,574  
Other assets     36,785       39,433  
             
TOTAL ASSETS   $ 1,501,730     $ 1,320,069  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
             
LIABILITIES:            
Deposits:            
Noninterest bearing deposits   $ 414,804     $ 287,611  
NOW, money market, interest checking     450,556       373,165  
Savings     130,755       109,548  
CDs<$250,000     202,266       233,956  
CDs>$250,000     15,224       12,775  
Brokered     45,171       58,622  
Total deposits     1,258,776       1,075,677  
             
Federal funds purchased           6,225  
Borrowings     63,479       64,551  
Other liabilities     11,611       11,697  
Total liabilities     1,333,866       1,158,150  
             
SHAREHOLDERS’ EQUITY:            
Common stock and additional paid in capital – No par value Authorized – 18,000,000 shares Issued and outstanding – 10,500,758 and 10,748,712 respectively     127,164       129,564  
Retained earnings     39,318       31,740  
Accumulated other comprehensive income (loss)            
Unrealized (losses) gains on available for sale securities     1,965       1,025  
Minimum pension liability     (583 )     (410 )
Total shareholders’ equity     167,864       161,919  
             
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $ 1,501,730     $ 1,320,069  

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
























































    For the Years Ended  
    December 31,  
     2020     2019  
    (Unaudited)      
INTEREST INCOME:          
Interest and fees on loans:          
Taxable   $ 58,412     $ 59,673  
Tax-exempt     201       187  
Interest on securities:          
Taxable     2,255       2,708  
Tax-exempt     535       343  
Other interest income     626       1,473  
Total interest income     62,029       64,384  
           
INTEREST EXPENSE:          
Deposits     6,052       9,436  
Borrowings     1,171       1,041  
Total interest expense     7,223       10,477  
           
Net interest income     54,806       53,907  
Provision for loan losses     1,000       385  
Net interest income after provision for loan losses     53,806       53,522  
           
OTHER INCOME:          
Deposit service fees     1,133       1,586  
Income from loans sold on the secondary market     5,935       1,889  
SBA/USDA loan sale gains     1,729       908  
Mortgage servicing amortization     838       693  
Net security gains     2       208  
Other     562       669  
Total other income     10,199       5,953  
           
OTHER EXPENSE:          
Salaries and employee benefits     26,081       22,743  
Occupancy     4,370       4,069  
Furniture and equipment     3,347       3,000  
Data processing     3,093       2,717  
Advertising     912       889  
Professional service fees     1,842       2,100  
Loan origination expenses and deposit and card related fees     1,965       1,546  
Writedowns and (gains) losses on other real estate held for sale     (22 )     212  
FDIC insurance assessment     578       70  
Communications expense     935       885  
Other     3,848       3,534  
Total other expenses     46,949       41,765  
           
Income before provision for income taxes     17,056       17,710  
Provision for income taxes     3,583       3,860  
           
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $ 13,473     $ 13,850  
           
INCOME PER COMMON SHARE:          
Basic   $ 1.27     $ 1.29  
Diluted   $ 1.27     $ 1.29  
           

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY

(Dollars in thousands)

Loan Portfolio Balances (at end of period):




















  December 31,   December 31,  
  2020   2019  
  (Unaudited)   (Audited)  
Commercial Loans:        
Real estate – operators of nonresidential buildings $ 138,992   $ 141,965  
Hospitality and tourism   100,237     97,721  
Lessors of residential buildings   52,035     51,085  
Gasoline stations and convenience stores   29,046     27,176  
Logging   18,651     22,136  
Commercial construction   47,698     40,107  
Other   433,248     385,334  
Total Commercial Loans   819,907     765,524  
         
1-4 family residential real estate   227,044     253,918  
Consumer   18,980     21,238  
Consumer construction   11,661     18,096  
         
Total Loans $ 1,077,592   $ 1,058,776  
         

Credit Quality (at end of period):

























  December 31,   December 31,  
   2020    2019  
  (Unaudited)   (Audited)  
Nonperforming Assets :        
Nonaccrual loans $ 5,458   $ 5,172  
Loans past due 90 days or more       11  
Restructured loans        
Total nonperforming loans   5,458     5,183  
Other real estate owned   1,752     2,194  
Total nonperforming assets $ 7,210   $ 7,377  
Nonperforming loans as a % of loans   0.51 %   0.49 %
Nonperforming assets as a % of assets   0.48 %   0.56 %
Reserve for Loan Losses:        
At period end $ 5,816   $ 5,308  
As a % of outstanding loans   0.54 %   0.50 %
As a % of nonperforming loans   106.56 %   102.41 %
As a % of nonaccrual loans   106.56 %   102.63 %
Texas Ratio   4.82 %   4.41 %
         
Charge-off Information (year to date):      
Average loans $ 1,117,132   $ 1,047,439  
Net charge-offs (recoveries) $ 492   $ 260  
Charge-offs as a % of average        
loans, annualized   0.04 %   0.02 %

MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS








































































                       
  QUARTER ENDED    
  (Unaudited)    
  December 31,   September 30,   June 30,   March 31,   December 31,    
    2020       2020       2020       2020       2019      
BALANCE SHEET (Dollars in thousands)                      
                       
Total loans $ 1,077,592     $ 1,144,325     $ 1,153,790     $ 1,044,177     $ 1,058,776      
Allowance for loan losses   (5,816 )     (5,832 )     (5,355 )     (5,292 )     (5,308 )    
Total loans, net   1,071,776       1,138,493       1,148,435       1,038,885       1,053,468      
Total assets   1,501,730       1,522,917       1,518,473       1,356,381       1,320,069      
Core deposits   1,198,381       1,195,062       1,122,582       984,936       1,004,280      
Noncore deposits   60,395       85,825       104,970       110,445       71,397      
Total deposits   1,258,776       1,280,887       1,227,552       1,095,381       1,075,677      
Total borrowings   63,479       63,505       114,466       67,120       64,551      
Total shareholders’ equity   167,864       166,168       164,157       160,060       161,919      
Total tangible equity   143,922       142,057       139,877       135,612       137,302      
Total shares outstanding   10,500,758       10,533,589       10,533,589       10,533,589       10,748,712      
Weighted average shares outstanding   10,536,023       10,533,589       10,533,589       10,717,967       10,748,712      
                       
AVERAGE BALANCES (Dollars in thousands)                    
                       
Assets $ 1,505,869     $ 1,536,128     $ 1,501,423     $ 1,321,134     $ 1,347,916      
Earning assets   1,252,038       1,303,102       1,290,012       1,171,551       1,205,241      
Loans   1,118,665       1,154,670       1,147,620       1,047,144       1,081,294      
Noninterest bearing deposits   422,081       422,134       346,180       284,677       283,259      
Deposits   1,255,669       1,269,658       1,211,694       1,076,206       1,080,359      
Equity   167,459       165,450       161,811       162,661       161,588      
                       
INCOME STATEMENT (Dollars in thousands)                    
                       
Net interest income $ 13,898     $ 13,052     $ 14,458     $ 13,397     $ 13,350      
Provision for loan losses   400       400       100       100       35      
Net interest income after provision   13,498       12,652       14,358       13,297       13,315      
Total noninterest income   2,779       3,116       2,367       1,937       1,848      
Total noninterest expense   11,663       11,561       12,352       11,372       10,813      
Income before taxes   4,614       4,207       4,373       3,862       4,350      
Provision for income taxes   970       883       919       811       1,054      
Net income available to common shareholders $ 3,644     $ 3,324     $ 3,454     $ 3,051     $ 3,296      
Income pre-tax, pre-provision $ 5,014     $ 3,724     $ 4,473     $ 3,962     $ 4,385      
                       
PER SHARE DATA                      
                       
Earnings per common share $ 0.35     $ 0.32     $ 0.33     $ 0.28     $ 0.31      
Book value per common share   15.99       15.78       15.58       15.20       15.06      
Tangible book value per share   13.71       13.49       13.28       12.87       12.77      
Market value, closing price   12.76       9.65       10.37       10.45       17.56      
Dividends per share   0.14       0.14       0.14       0.14       0.14      
                       
ASSET QUALITY RATIOS                      
                       
Nonperforming loans/total loans   0.51   %   0.47   %   0.53   %   0.61   %   0.49   %  
Nonperforming assets/total assets   0.48       0.48       0.55       0.64       0.56      
Allowance for loan losses/total loans   0.54       0.51       0.46       0.51       0.50      
Allowance for loan losses/nonperforming loans   106.56       107.72       87.44       82.48       102.41      
Texas ratio   4.82       4.91       4.22       6.13       4.41      
                       
PROFITABILITY RATIOS                      
                       
Return on average assets   0.96   %   0.86   %   0.93   %   0.93   %   0.97   %  
Return on average equity   8.66       7.99       8.58       7.54       8.09      
Net interest margin   4.42       3.98       4.51       4.60       4.39      
Average loans/average deposits   89.09       90.94       94.71       97.30       100.09      
                       
CAPITAL ADEQUACY RATIOS                      
                       
Tier 1 leverage ratio   9.63   %   9.20   %   9.45   %   10.20   %   10.09   %  
Tier 1 capital to risk weighted assets   14.48       13.91       13.27       12.89       12.71      
Total capital to risk weighted assets   15.07       14.49       13.79       13.41       13.22      
Average equity/average assets (for the quarter)   11.12       10.77       10.78       12.31       11.99      
                       

Contact: Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 /[email protected]
Website:  www.bankmbank.com