Mackinac Financial Corporation Reports 2020 Third Quarter Results and COVID-19 Operating Update
10/29/2020 - 04:10 PM
MANISTIQUE, Mich., Oct. 29, 2020 (GLOBE NEWSWIRE) -- Mackinac Financial Corporation (Nasdaq: MFNC) (“we”, or the “Corporation”) the bank holding company for mBank (“the Bank”) today announced 2020 third quarter net income of $3.32 million , or $.32 per share, compared to 2019 third quarter net income of $3.72 million , or $.35 per share. Net income for the first three quarters of 2020 was $9.83 million , or $.93 per share, compared to $10.56 million , or $.98 per share for the same period of 2019.
Total assets of the Corporation at September 30, 2020 were $1.52 billion , compared to $1.36 billion at September 30, 2019. Shareholders’ equity at September 30, 2020 totaled $166.17 million , compared to $160.17 million at September 30, 2019. Book value per share outstanding equated to $15.78 at the end of the third quarter 2020, compared to $14.91 per share outstanding a year ago. Tangible book value at quarter-end was $142.05 million , or $13.49 per share outstanding, compared to $135.38 million , or $12.60 per share outstanding at the end of the third quarter 2019.
A dditional notes :
mBank, the Corporation’s primary asset, recorded net income of $3.70 million for the third quarter of 2020 and $10.98 million for the first nine months of 2020. COVID-19 loan modifications reside at a nominal $30.2 million , or 3.1% of total loans with no commercial loans remaining in total payment deferral at September 30, 2020, down from peak levels of $201 million in the spring. Core bank deposit growth has been very strong this year with an increase of approximately $175 million , or 17% , 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 was very solid for the third quarter, including strong secondary market mortgage fee income and gain on sale of $1.97 million and premiums on the sale of Small Business Administration (SBA) guaranteed loans of $477 thousand . Year-to-date secondary market mortgage fees are $4.02 million and SBA premiums $1.46 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 third quarter, which is inclusive of accretion from acquired loans that were subject to purchase accounting adjustments and some recognition of PPP loan origination fees, was 3.98% . Estimated core operating margin when adjusting for purchase accounting accretion and PPP impact is approximately 4.04% . C OVID -19 Operating Update
As we have reported in the past, upon the onset of the COVID-19 pandemic, management took proactive measures and moved quickly to implement protocols and adjust operations to continue to serve all constituencies. These protocols have been refined throughout the second and third quarters as the pandemic operating environment evolved within the Corporation’s respective regions. Speaking to these ongoing operational activities, President of the Corporation and President and CEO of mBank, Kelly W. George, stated, “Most of our branch lobbies reopened to the public in the second quarter and operated under enhanced safety and cleaning protocols. However, as schools went back into session in early September, we made a strategic decision to proactively return to restricted lobby access via appointment only as we felt it would promote the safest possible work environment while still servicing all of our clients through our other channels, as was the case at the onset of the pandemic. Unfortunately, though still comparatively less than much of the U.S., we have seen an uptick in COVID-19 cases in some of our northern markets with the reopening of schools. However, the uptick in cases this fall has not stunted commerce activity in many of our northern markets and they continue to have strong tourism inflows and revenues longer into the fall than usual coming off a very busy summer. The southern part of our franchise remains stable, but given the lack of air travel and other larger gathering events, its recovery continues to be more muted than those clients in the north.”
Revenue & PPP Recognition
Total revenue of the Corporation for third quarter 2020 was $17.80 million , compared to $17.91 million for the third quarter of 2019. Total interest income for the third quarter was $14.69 million , compared to $16.03 million for the same period in 2019. The 2020 third quarter interest income included accretive yield of $420 thousand from combined credit mark accretion associated with acquisitions, compared to $404 thousand in the same period of 2019.
The third 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. The origination efforts resulted in fees earned of $5.09 million , which were deferred and initially recognized over the life of the PPP loans, which is 24 months. Fee income of $2.13 million was recognized in the second quarter. This revenue was recognized per GAAP to offset $1.7 million of direct origination costs and accrete $425 thousand of the deferred fees. There were remaining deferred fees of $2.97 million to start the third quarter. Approximately $700 thousand of the fees were recognized in the third quarter. Remaining earned but not recognized fees at September 30, 2020 were approximately $2.3 million which will be amortized over the remaining 18-months of the loan terms (approximately $130 thousand per month) or accelerated upon forgiveness of the loans by the Small Business Administration (“SBA”). Loan Production and P ortfolio M ix
Total balance sheet loans at September 30, 2020 were $1.14 billion , which is inclusive of $152.51 million of PPP loans, compared to September 30, 2019 balances of $1.06 billion . Total loans under management reside at $1.42 billion , which includes $270.32 million of service retained loans. Driven by strong consumer mortgage activity, overall traditional loan production (non-PPP) for the first nine months of 2020 was $291.62 million , compared to $289.16 million for the same period of 2019. When including PPP loans, total production was $444.13 million . Of the total production, traditional commercial loans equated to $93 million , consumer $199 million and the aforementioned $152 million of PPP. Within the consumer totals was $155 million of secondary market mortgage production.
Overall Quarterly Loan Production is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/35d1c4b9-014e-469e-8584-138432c19603
New Loan Production (excluding PPP) Q1 Q2 Q3 2020 Upper Peninsula $ 34,104 $ 44,721 $ 50,690 $ 129,515 Northern Lower Peninsula 17,261 46,490 42,058 105,809 Southeast Michigan 3,834 2,580 3,565 9,979 Wisconsin 11,681 14,142 15,995 41,818 Asset-Based Lending - - 4,500 4,500 Total $ 66,880 $ 107,933 $ 116,808 $ 291,621
Commenting on new loan production and overall lending activities, Mr. George stated, “As can be seen from our production totals, we had a very busy third quarter, which was dominated by record mortgage production. We continue to see very good mortgage activity early in the fourth quarter, given the elongated low market offering rates for refinance activity and the high demand for properties in the UP and the Northern part of our franchise as people continue to look for more space and with remote work becoming more of a permanent part of the business culture given the pandemic. As with the rest of the industry, traditional commercial lending activities have remained slower than normal, but we are seeing a gradual increase in new client requests. We continue to have a nice flow of SBA deals that have allowed us to exceed prior year income levels on the sale of the guaranteed portion of these loans thus far in 2020 and expect this focus to continue into 2021. The PPP forgiveness process remains cumbersome, though some relief was provided with a more streamlined approach for those loans less than $50,000 , which impacts about 690 of our clients, or about 60% of our remaining outstanding PPP loans.”
Credit Quality and COVID-19 Loan Activity
Nonperforming loans totaled $5.41 million , or .47% (.55% excluding PPP balances) of total loans at September 30, 2020, compared to .46% of total loans at September 30, 2019. The nonperforming assets to total assets ratio resided at .48% (.53% excluding PPP balances) for the third quarter of 2020, compared to .55% for the third quarter of 2019. Total loan delinquencies greater than 30 days resided at 1.41% (1.63% excluding PPP balances), compared to .84% in 2019. The increase in delinquencies is tied to the maturity of a large participation loan where the lead bank was still finalizing the negotiations for an extension renewal that was not consummated by quarter end. Delinquencies would have been .56% (.64% excluding PPP balances) when omitting this single loan. COVID-19 related loan modification activity has continued its positive trend down throughout the third quarter. Currently only $30.2 million of loan balances ($27.6 million of commercial and $2.6 million of consumer) remain in some form of modification relief and we expect this downward trajectory to continue.
COVID-19 Loan Modifications Remaining in Deferral (dollars in millions) Covid-19 Loans in Deferral Bank Total Loans Remaining Deferrals to Total Loans Ratio mBank CML Loans (interest only) $ 27.6 $ 737.7 3.74 % mBank CML Loans (deferral) $ - $ - 0.00 % mBank Consumer Loans (deferral) $ 2.6 $ 239.9 1.10 % Total Loans $ 30.2 $ 977.6 3.09 %
Below is an industry breakdown as a percentage of total loans of the remaining $27.6 million of COVID-19 commercial loan modifications currently in their interest only period highlighting “high impact” sectors of hotel/ tourism, retail sales and restaurant / drinking establishments. The higher risk industry credits total approximately $10.9 million and include:
Hotel: $8.08 million or .82% of total loans. Retail: $2.43 million or .24% of total loans. Restaurant/ drinking establishments: $416 thousand or .04% of loans. COVID-19 Commercial Loan Modifications Remaining on Interest Only is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/de109c34-6bfd-4e40-9b86-e5055966b58d
The third quarter provision for loan losses was $400 thousand . This amount was slightly increased from last quarter as a precaution given COVID-19 conditions generally, but was not due to any increase in loan loss activity or an increased risk identified within the portfolio quarter-over-quarter. The resulting Allowance for Loan Loss (“ALLL”) coverage ratio was .51% of total loans. However, the total coverage ratio (equivalent to ALLL plus remaining purchase accounting credit marks to total loans less PPP balances) is 1.04% . 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 all of our COVID-19 full payment deferments for commercial loans are now expired with the remaining modifications being interest only accommodations. 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, given further national stimulus actions are probable, and expect more clarity to evolve as to the virus spread and containment efforts. We remain ever vigilant in terms of monitoring deterioration in any isolated specific situations that could arise for a client or two where provisions 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 third quarter 2020 was $13.05 million , resulting in a Net Interest Margin (NIM) of 3.98% , compared to $13.32 million in the third 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 3.65% for the third quarter of 2020, compared to 4.39% 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 third quarter to be .39% . Estimated adjusted core margin for the third quarter is 4.04% .
Margin Analysis Per Quarter is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0ebbf7fd-4425-46ee-a2b7-20e1b905590f
Total bank deposits (excluding brokered deposits) have increased by $175.64 million year-over-year from $1.04 billion at September 30, 2019 to $1.21 billion at third quarter-end 2020. Total brokered deposits have also decreased and were $70.17 million at September 30, 2020, compared to $78.50 million at September 30, 2019, a decrease of 10% . The Corporation will also retire an additional $25 million of brokered deposits in the fourth quarter of 2020. FHLB (Federal Home Loan Bank) borrowings have also decreased roughly 10% year-over-year from $70.1 million to $63.5 million with further maturities expected to be paid off in both the first and second quarters of 2021. The Corporation utilized the Payroll Protection Program Liquidity Facility (PPPLF) to fund a portion of the PPP loan originations but has no balance on this facility as of September 30, 2020. 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 17% core deposit growth this year within the more challenging pandemic environment. This is also reflective on the strong commerce activity many of our retail and tourism related clients had over the summer and into the fall and the cash buildup. We had also put some conservative measures in place at the onset of the pandemic to ensure funds availability given the large unknowns, but those wholesale funding sources were short-term in nature and have since been repaid in full. Like many banks, we remain flush with liquidity with stunted commercial loan demand given the pandemic and limited prudent investment opportunities in light of market rates, both of which have continued to compress our margin.”
Noninterest Income / Expense
Third quarter 2020 noninterest income was $3.12 million , compared to $1.88 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 the third quarter of 2020 was $11.56 million , compared to $10.44 million for the same period of 2019. Specific items associated with COVID-19 equated to $81 thousand relating to compensation for retail centric employees. As Management expected, expenses (excluding the COVID-19 related expenses) normalized in the third quarter to $11.48 million .
Assets and Capital
Total assets of the Corporation at September 30, 2020 were $1.52 billion , compared to $1.36 billion at September 30, 2019. Shareholders’ equity at September 30, 2020 totaled $166.17 million , compared to $160.17 million at September 30, 2019. Book value per share outstanding equated to $15.78 at the end of the third quarter 2020, compared to $14.91 per share outstanding a year ago. Tangible book value at quarter-end was $142.05 million , or $13.49 per share outstanding, compared to $135.38 million , or $12.60 per share outstanding at the end of the third quarter 2019.
Both the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 14.49% at the Corporation and 14.16% at the Bank and tier 1 capital to total tier 1 average assets (the “leverage ratio”) at the Corporation of 9.20% and at the Bank of 9.00% . 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, “Even with the continued impact of COVID-19 on our economy and the likely challenges ahead for all banking institutions, we remain very optimistic about the future of the company and our ability to create value for our shareholders. In the face of some pretty significant economic headwinds thus far in 2020, we have been able to maintain solid earnings while adjusting to a new working environment and continuing to meet the needs of our valued clients. While we are anxious to get back to a normal operating environment, we are committed to doing whatever is necessary to protect the safety of our employees and clients as we work through the pandemic.”
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 As of and For the Period Ending Year Ending Period Ending September 30, December 31, September 30, (Dollars in thousands, except per share data) 2020 2019 2019 (Unaudited) (Unaudited) Selected Financial Condition Data (at end of period) : Assets $ 1,522,917 $ 1,320,069 $ 1,355,383 Loans 1,144,325 1,058,776 1,059,942 Investment securities 106,830 107,972 107,091 Deposits 1,280,887 1,075,677 1,113,579 Borrowings 63,505 64,551 70,079 Shareholders' equity 166,168 161,919 160,165 Selected Statements of Income Data (nine months and year ended) Net interest income $ 40,907 $ 53,907 $ 40,557 Income before taxes 12,442 17,710 13,361 Net income 9,829 13,850 10,555 Income per common share - Basic .93 1.29 .98 Income per common share - Diluted .93 1.29 .98 Weighted average shares outstanding - Basic 10,594,824 10,737,653 10,733,926 Weighted average shares outstanding - Diluted 10,599,035 10,757,507 10,744,119 Three Months Ended: Net interest income $ 13,052 $ 13,350 $ 13,324 Income before taxes 4,207 4,350 4,708 Net income 3,324 3,296 3,719 Income per common share - Basic .32 .31 .35 Income per common share - Diluted .32 .31 .35 Weighted average shares outstanding - Basic 10,533,589 10,748,712 10,740,712 Weighted average shares outstanding - Diluted 10,473,827 10,768,841 10,752,178 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin 4.35 % 4.57 % 4.61 % Efficiency ratio 72.55 69.10 68.81 Return on average assets .90 1.04 1.06 Return on average equity 8.03 8.78 9.01 Average total assets $ 1,452,306 $ 1,332,882 $ 1,333,734 Average total shareholders' equity 163,521 157,831 156,565 Average loans to average deposits ratio 94.18 % 95.03 % 93.91 % Common Share Data at end of period: Market price per common share $ 9.65 $ 17.56 $ 15.46 Book value per common share 15.78 15.06 14.91 Tangible book value per share 13.49 12.77 12.60 Dividends paid per share, annualized .56 .52 .52 Common shares outstanding 10,533,589 10,748,712 10,740,712 Other Data at end of period: Allowance for loan losses $ 5,832 $ 5,308 $ 5,308 Non-performing assets $ 7,265 $ 7,377 $ 7,473 Allowance for loan losses to total loans .51 % .49 % .50 % Non-performing assets to total assets .48 % .56 % .55 % Texas ratio 4.91 % 4.41 % 5.31 % Number of: Branch locations 29 29 29 FTE Employees 319 304 301
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 30, December 31, September 30, 2020 2019 2019 (Unaudited) (Unaudited) ASSETS Cash and due from banks $ 173,693 $ 49,794 $ 66,722 Federal funds sold 76 32 16,202 Cash and cash equivalents 173,769 49,826 82,924 Interest-bearing deposits in other financial institutions 5,367 10,295 11,275 Securities available for sale 106,830 107,972 107,091 Federal Home Loan Bank stock 4,924 4,924 4,924 Loans: Commercial 865,726 765,524 752,715 Mortgage 259,024 272,014 287,013 Consumer 19,575 21,238 20,214 Total Loans 1,144,325 1,058,776 1,059,942 Allowance for loan losses (5,832 ) (5,308 ) (5,308 ) Net loans 1,138,493 1,053,468 1,054,634 Premises and equipment 25,754 23,608 23,709 Other real estate held for sale 1,851 2,194 2,618 Deferred tax asset 1,758 3,732 4,599 Deposit based intangibles 4,537 5,043 5,212 Goodwill 19,574 19,574 19,574 Other assets 40,060 39,433 38,823 TOTAL ASSETS $ 1,522,917 $ 1,320,069 $ 1,355,383 LIABILITIES AND SHAREHOLDERS EQUITY LIABILITIES: Deposits: Noninterest bearing deposits $ 432,390 $ 287,611 $ 285,887 NOW, money market, interest checking 417,508 373,165 375,267 Savings 129,633 109,548 110,455 CDs<$250,000 215,531 233,956 250,506 CDs>$250,000 15,654 12,775 12,964 Brokered 70,171 58,622 78,500 Total deposits 1,280,887 1,075,677 1,113,579 Federal funds purchased 6,225 Borrowings 63,505 64,551 70,079 Other liabilities 12,357 11,697 11,560 Total liabilities 1,356,749 1,158,150 1,195,218 SHAREHOLDERS EQUITY: Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,533,589; 10,748,712 and 10,740,712 respectively 127,426 129,564 129,292 Retained earnings 37,144 31,740 29,949 Accumulated other comprehensive income (loss) Unrealized (losses) gains on available for sale securities 2,008 1,025 1,142 Minimum pension liability (410 ) (410 ) (218 ) Total shareholders equity 166,168 161,919 160,165 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 1,522,917 $ 1,320,069 $ 1,355,383
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) INTEREST INCOME: Interest and fees on loans: Taxable $ 13,853 $ 14,829 $ 44,014 $ 45,010 Tax-exempt 47 45 176 134 Interest on securities: Taxable 520 675 1,700 2,058 Tax-exempt 150 78 390 261 Other interest income 118 403 514 1,155 Total interest income 14,688 16,030 46,794 48,618 INTEREST EXPENSE: Deposits 1,353 2,464 4,986 7,333 Borrowings 283 242 901 728 Total interest expense 1,636 2,706 5,887 8,061 Net interest income 13,052 13,324 40,907 40,557 Provision for loan losses 400 50 600 350 Net interest income after provision for loan losses 12,652 13,274 40,307 40,207 OTHER INCOME: Deposit service fees 260 383 900 1,197 Income from loans sold on the secondary market 1,968 586 4,018 1,253 SBA/USDA loan sale gains 477 496 1,460 650 Mortgage servicing amortization 247 238 640 486 Net security gains - - - - Other 164 175 402 519 Total other income 3,116 1,878 7,420 4,105 OTHER EXPENSE: Salaries and employee benefits 6,487 5,669 19,547 16,615 Occupancy 1,163 987 3,295 3,072 Furniture and equipment 846 768 2,452 2,209 Data processing 801 785 2,478 2,202 Advertising 168 203 692 726 Professional service fees 474 536 1,546 1,517 Loan origination expenses and deposit and card related fees 413 314 1,200 677 Writedowns and losses on other real estate held for sale (20 ) (24 ) 13 77 FDIC insurance assessment 135 (141 ) 450 70 Communications expense 248 221 685 681 Transaction related expenses - - - - Other 846 1,126 2,927 3,105 Total other expenses 11,561 10,444 35,285 30,951 Income before provision for income taxes 4,207 4,708 12,442 13,361 Provision for income taxes 883 989 2,613 2,806 NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 3,324 $ 3,719 $ 9,829 $ 10,555 INCOME PER COMMON SHARE: Basic $ .32 $ .35 $ .93 $ .98 Diluted $ .32 $ .35 $ .93 $ .98
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES LOAN PORTFOLIO AND CREDIT QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
September 30, December 31, September 30, 2020 2019 2019 (Unaudited) (Audited) (Unaudited) Commercial Loans: Real estate - operators of nonresidential buildings $ 136,372 $ 141,965 $ 142,176 Hospitality and tourism 100,524 97,721 94,143 Lessors of residential buildings 49,694 51,085 50,891 Gasoline stations and convenience stores 27,965 27,176 24,917 Logging 21,487 22,136 22,725 Commercial construction 39,162 40,107 34,511 Other 490,522 385,334 383,352 Total Commercial Loans 865,726 765,524 752,715 1-4 family residential real estate 237,336 253,918 268,333 Consumer 19,575 21,238 20,214 Consumer construction 21,688 18,096 18,680 Total Loans $ 1,144,325 $ 1,058,776 $ 1,059,942
Credit Quality (at end of period):
September 30, December 31, September 30, 2020 2019 2019 (Unaudited) (Audited) (Unaudited) Nonperforming Assets : Nonaccrual loans $ 5,414 $ 5,172 $ 4,844 Loans past due 90 days or more - 11 11 Restructured loans - - - Total nonperforming loans 5,414 5,183 4,855 Other real estate owned 1,851 2,194 2,618 Total nonperforming assets $ 7,265 $ 7,377 $ 7,473 Nonperforming loans as a % of loans .47 % .49 % .46 % Nonperforming assets as a % of assets .48 % .56 % .55 % Reserve for Loan Losses: At period end $ 5,832 $ 5,308 $ 5,308 As a % of outstanding loans .51 % .50 % .50 % As a % of nonperforming loans 107.72 % 102.41 % 109.33 % As a % of nonaccrual loans 107.72 % 102.63 % 109.58 % Texas Ratio 4.91 % 4.41 % 5.31 % Charge-off Information (year to date): Average loans $ 1,116,617 $ 1,047,439 $ 1,041,991 Net charge-offs (recoveries) $ 76 $ 260 $ 225 Charge-offs as a % of average loans, annualized .01 % .02 % .03 %
MA CKINAC FINANCIAL CORPORATION AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS
QUARTER ENDED (Unaudited) September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 BALANCE SHEET (Dollars in thousands) Total loans $ 1,144,325 $ 1,153,790 $ 1,044,177 $ 1,058,776 $ 1,059,942 Allowance for loan losses (5,832 ) (5,355 ) (5,292 ) (5,308 ) (5,308 ) Total loans, net 1,138,493 1,148,435 1,038,885 1,053,468 1,054,634 Total assets 1,522,917 1,518,473 1,356,381 1,320,069 1,355,383 Core deposits 1,195,062 1,122,582 984,936 1,004,280 1,022,115 Noncore deposits 85,825 104,970 110,445 71,397 91,464 Total deposits 1,280,887 1,227,552 1,095,381 1,075,677 1,113,579 Total borrowings 63,505 114,466 67,120 64,551 70,079 Total shareholders' equity 166,168 164,157 160,060 161,919 160,165 Total tangible equity 142,057 139,877 135,612 137,302 135,379 Total shares outstanding 10,533,589 10,533,589 10,533,589 10,748,712 10,740,712 Weighted average shares outstanding 10,533,589 10,533,589 10,717,967 10,748,712 10,740,712 AVERAGE BALANCES (Dollars in thousands) Assets $ 1,536,128 $ 1,501,423 $ 1,321,134 $ 1,347,916 $ 1,354,220 Earning assets 1,303,102 1,290,012 1,171,551 1,205,241 1,204,782 Loans 1,154,670 1,147,620 1,047,144 1,081,294 1,065,337 Noninterest bearing deposits 422,134 346,180 284,677 283,259 284,354 Deposits 1,269,658 1,211,694 1,076,206 1,080,359 1,124,433 Equity 165,450 161,811 162,661 161,588 159,453 INCOME STATEMENT (Dollars in thousands) Net interest income $ 13,052 $ 14,458 $ 13,397 $ 13,350 $ 13,324 Provision for loan losses 400 100 100 35 50 Net interest income after provision 12,652 14,358 13,297 13,315 13,274 Total noninterest income 3,116 2,367 1,937 1,848 1,878 Total noninterest expense 11,561 12,352 11,372 10,813 10,444 Income before taxes 4,207 4,373 3,862 4,350 4,708 Provision for income taxes 883 919 811 1,054 989 Net income available to common shareholders $ 3,324 $ 3,454 $ 3,051 $ 3,296 $ 3,719 Income pre-tax, pre-provision $ 3,724 $ 4,473 $ 3,962 $ 4,385 $ 4,758 PER SHARE DATA Earnings per common share $ .32 $ .33 $ .28 $ .31 $ .35 Book value per common share 15.78 15.58 15.20 15.06 14.91 Tangible book value per share 13.49 13.28 12.87 12.77 12.60 Market value, closing price 9.65 10.37 10.45 17.56 15.46 Dividends per share .14 .14 .14 .14 .14 ASSET QUALITY RATIOS Nonperforming loans/total loans .47 % .53 % .61 % .49 % .46 % Nonperforming assets/total assets .48 .55 .64 .56 .55 Allowance for loan losses/total loans .51 .46 .51 .50 .50 Allowance for loan losses/nonperforming loans 107.72 87.44 82.48 102.41 109.33 Texas ratio 4.91 4.22 6.13 4.41 5.31 PROFITABILITY RATIOS Return on average assets .86 % .93 % .93 % .97 % 1.09 % Return on average equity 7.99 8.58 7.54 8.09 9.25 Net interest margin 3.98 4.51 4.60 4.39 4.39 Average loans/average deposits 90.94 94.71 97.30 100.09 94.74 CAPITAL ADEQUACY RATIOS Tier 1 leverage ratio 9.20 % 9.45 % 10.20 % 10.09 % 9.81 % Tier 1 capital to risk weighted assets 13.91 13.27 12.89 12.71 12.39 Total capital to risk weighted assets 14.49 13.79 13.41 13.22 12.90 Average equity/average assets (for the quarter) 10.77 10.78 12.31 11.99 11.77
Contact: Website: Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 / jdeering@bankmbank.comwww.bankmbank.com