Mackinac Financial Corporation Reports Nine Month and Third Quarter Results Following Second Acquisition of 2016
(firmenpresse) - MANISTIQUE, MI -- (Marketwired) -- 11/03/16 -- Mackinac Financial Corporation (NASDAQ: MFNC) (the "Corporation"), the bank holding company for mBank, today announced third quarter 2016 net income of $1.778 million, or $.28 per share, compared to net income available to common shareholders of $1.018 million, or $.16 per share for the third quarter of 2015. In connection with the acquisitions of Niagara Bancorporation, Inc. ("Niagara") and First National Bank of Eagle River ("Eagle River"), the Corporation had total GAAP pre-tax transaction related expenses for the third quarter of $.359 million that reduced net income by $.237 million or $.04 per share, on an after tax basis. The adjusted net income for the third quarter of 2016 (exclusive of all transaction related expenses) is $2.015 million, or $.32 per share.
Operating results for the first nine months of 2016, including transaction related expenses from both Niagara and Eagle River, totaled $2.785 million or $.45 per share compared to $4.003 million or $.64 per share for the same period in 2015. Year-to-date transaction related expenses, largely associated with the early termination of the Eagle River data processing system, totaled $2.928 million with an after-tax impact of $1.932 million on earnings equating to $.31 per share. Adjusted net income for the first nine months of 2016 for the Corporation is $4.718 million, or $.76 per share.
Total assets of the Corporation at September 30, 2016 were $959.121 million, compared to $754.972 million at September 30, 2015. Shareholders'' equity at September 30, 2016 totaled $78.285 million, compared to $76.091 million on September 30, 2015. The book value per share equated to $12.50 on September 30, 2016 compared to $12.18 per share a year ago. Quarter-end tangible book value was $11.23 per and share and market price was $11.49, or 102% of tangible book value. Weighted average shares outstanding totaled 6,226,371 for the first nine months of 2016 compared to 6,247,416 for the same period in 2015.
mBank, the Corporation''s subsidiary bank, recorded nine-month adjusted net income of $5.611 million compared to $5.003 million in 2015. Inclusive of $2.512 million of transaction related expenses at the bank ($1.658 million after tax), net income was $3.953 million for the first nine months of 2016.
The 2016 acquisitions of Niagara and Eagle River added approximately $194 million in assets, $115 million in loan balances and $163 million in core deposits to the Corporation. Since September 30, 2014 (which is inclusive of the Peninsula Financial Corporation acquisition in December 2014 and organic growth) the company has grown assets approximately $345 million from $613.943 million to the current $959.121 million, an increase of 56%.
Healthy new loan production of $206.8 million through September 2016 compared to $175.4 million through September 2015.
Total interest income of $27.398 million through September 2016 compared to $25.117 million for the same period in 2015.
Margin remains solid, at 4.21% through disciplined pricing of loan and deposit products. Net interest income increased from $21.755 million in 2015 to $23.980 million in 2016, a 10% increase.
Credit quality remains strong with a Texas Ratio of 10.55% compared to 13.41% one year ago, and nonperforming assets of $7.938 million, or .83% of total assets, compared with $10.324 million, or 1.37% of total assets, for the same period in 2015.
Increased contribution from secondary mortgage market activity. Income from this source in the 2016 nine-month period totaled $1.118 million compared to $.750 million in the 2015 nine-month period.
Gains on sold SBA (Small Business Administration) loan premiums through September 2016 was $.717 million compared to $.440 million for the same period of 2015.
Total loans at September 30, 2016 were $756.804 million, a $136.898 million increase from $619.906 million at September 30, 2015. The Corporation is up $138.410 million, or 22.3%, from year-end 2015 total loans of $618.394 million. In addition to the aforementioned balance sheet totals, the company services $233.356 million of sold mortgage loans and $43.160 million of sold SBA and USDA loans. Total loans under management now total $1.033 billion.
New loan production totaled $206.777 million with the Upper Peninsula region contributing $127.880 million, the Northern Lower Peninsula $38.479 million, Southeast Michigan $34.099 million and the newly acquired Wisconsin markets $6.319 million. Commercial loan production accounted for $114.842 million of the nine month total, with consumer loans, primarily 1-4 family mortgages, of $91.935 million. Commenting on new loan production and overall lending activities, Kelly W. George, President and CEO of mBank, stated, "We are very pleased with the new loan opportunities and production in all our markets which is up over $31 million from the prior year. Our net loan balances did not quite increase commensurate with production as we experienced some loan portfolio runoff early in the year due, in part, to customers shopping rates that we would not match. The strategic acquisitions of both Eagle River and Niagara have, however, provided loan balance growth and scale as expected. We have a healthy loan pipeline for the remainder of the year for both commercial and mortgage business. As noted in our totals, we are also excited about the momentum in our newly acquired markets in Wisconsin and the new loan generation potential they carry."
Nonperforming loans totaled $4.669 million, .62% of total loans at September 30, 2016, down $3.359 million from September 30, 2015 balances of $8.028 million. Total loan delinquencies greater than 30 days resided at a nominal .65%, or $4.975 million. Mr. George, commenting on credit quality, stated, "Our credit quality risk metrics and overall loan portfolio payment performance remains strong with no systemic issues within any segments of the portfolio. The pick-up in retail segment loans from our two acquisitions this year has also provided increased granularity and better overall diversity for the entire loan portfolio on a macro level. Our credit due diligence and purchase accounting marks on the acquired loan portfolios of Eagle River and Niagara have proven accurate as well, and they are providing accretion at anticipated levels post-closing."
In the first nine months of 2016 net interest income and net interest margin were $23.980 million and 4.21%, and $21.755 million and 4.29%, in the first nine months of 2015. The increase in net interest income was largely due to the Niagara and Eagle River acquisitions. The Corporation also had increased net interest contribution due to the accretive attributes associated with the purchase accounting adjustments related to the three acquisitions completed in the past two years. Mr. George stated, "We have been successful in maintaining our strong net interest margin within this historically low interest rate cycle through the use of continued targeted funding strategies and disciplined loan pricing in efforts to mitigate longer term interest rate risk. We continue to look for any loan and investment opportunities that fit our balance sheet structure but will not take unnecessary risk or extend durations in order to enhance short term yields. While we acquired some excess liquidity through the acquisitions and experienced summer seasonal increases in our deposit portfolio, we have been able to normalize the cash position and put those dollars to work funding good loan opportunities. Further, we remain predominantly asset sensitive within our balance sheet structure and expect that upward movements of short term interest rates will be beneficial for future earnings."
Total deposits of $807.180 million at September 30, 2016 increased by $184.846 million (including approximately $163 million from the Niagara and Eagle River acquisitions) from deposits of $622.334 million on September 30, 2015 and increased $196.857 million from year end deposits of $610.323 million. Mr. George, commenting on core deposits and overall liquidity, stated. "We proactively review our short and long term funding needs and pricing levels within the different segments of our deposit products in order to best manage our net interest margin while still offering competitive products to our clientele. We will also utilize alternative funding sources such as internet CDs and smaller levels of wholesale deposits when deemed necessary to structure different liabilities to match asset growth durations, and cover any potential short term funding gaps that could arise to protect our balance sheet in various interest rate change scenarios. Through the acquisitions, we have augmented our core deposit base to where our utilization of non-core sources has decreased as a percent of our total assets."
Noninterest income, at $3.012 million in the first nine months of 2016, increased $.265 million from $2.747 million in the first nine months of 2015. The primary reason for the improvement was increased year over year activity in the secondary mortgage market as well as SBA gains. Income from sold secondary mortgages totaled $1.118 million compared to $.750 million in the 2015 nine-month period while SBA gains were $.717 million compared to $.440 million in 2015. Noninterest expense, at $22.376 million in the first nine months of 2015, increased $4.806 million from the first nine months of 2015. The 2016 increase from the first nine months of 2015 was largely attributable to the acquisition costs including the aforementioned termination fee. There were also customary increases in salaries and benefits for new staff, along with increased occupancy expense due to the acquired branch offices. Consistent with management''s operating diligence projections prior to both acquisitions, the Corporation has reached the attained levels of overall efficiencies as management looks to grow market presence heading into 2017. Management remains diligent in monitoring and controlling the Corporation''s overall expense base, which continues to reside at or below peer levels.
Total assets of the Corporation at September 30, 2016 were $959.121 million, up $204.149 million from the $754.972 million reported at September 30, 2015, with approximately $194 million attributable to the acquisitions in 2016, and up from the $739.269 million of total assets at year-end 2015. The Corporation is "adequately" capitalized and the Bank is "well-capitalized" with Total Capital to Risk Weighted Assets at the Corporation of 8.81% and 11.61% at the Bank.
Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation, added, "Overall, we are pleased with the execution of our plan through the first three quarters of 2016. Even with a very competitive market for good loans and the stagnant interest rate environment, we have continued to add accretive scale. Our entry into the Wisconsin markets provides a larger platform for continued organic growth and adds complementary markets to our Upper Peninsula footprint. We have maintained our key core operating metrics and have positioned the company in a way that will allow us to take advantage of any future strategic opportunities that present themselves. We are looking forward to a solid finish to the year now that the integration of both Niagara and Eagle River is complete."
Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $950 million and whose common stock is traded on the NASDAQ stock market as "MFNC." The principal subsidiary of the Corporation is mBank. Headquartered in Manistique, Michigan, mBank has 23 branch locations; twelve in the Upper Peninsula, three in the Northern Lower Peninsula, in Oakland County, Michigan and seven in Northern Wisconsin. The Company''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.
Contact:
Paul D. Tobias
(248) 290-5901
Jesse A. Deering
(248) 290-5906
Website:
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Datum: 03.11.2016 - 13:59 Uhr
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