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CST: 17/07/2019 03:46:47   

Mackinac Financial Corporation reports 2019 First Quarter Results

76 Days ago

MANISTIQUE, Mich., May 01, 2019 (GLOBE NEWSWIRE) -- Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”), the bank holding company for mBank, today announced 2019 first quarter net income of $3.17 million, or $.30 per share, compared to 2018 first quarter net income of $1.54 million, or $.24 per share.  The 2018 first quarter results included expenses related to the acquisition of First Federal of Northern Michigan (“FFNM”), which had an after-tax impact of $200 thousand on earnings.  Adjusted net income (net of transaction related and other one-time expenses) for the first quarter of 2018 was $1.74 million or $.28 per share.  First quarter 2019 net income compared to 2018 adjusted net income increased by $1.43 million, or 82%.

Weighted average shares outstanding for the first quarter 2019 were 10,720,127 compared to 6,304,203 for the same period of 2018.  The Corporation issued 2,146,378 new shares for the FFNM purchase in May 2018 and issued an additional 2,225,807 shares related to the common stock offering completed in June 2018. 

Total assets of the Corporation at March 31, 2019 were $1.32 billion, compared to $983.93 million at March 31, 2018.  Shareholders’ equity at March 31, 2019 totaled $154.75 million, compared to $81.86 million at March 31, 2018.  Book value per share outstanding equated to $14.41 at the end of the first quarter 2019 compared to $12.93 per share outstanding a year ago.  Tangible book value at quarter-end was $129.97 million or $12.10 per share outstanding compared to $74.30 million or $11.73 per share at the end of the first quarter 2018. 

Additional notes:

  • mBank, the Corporation’s primary asset, recorded net income of $3.46 million for the first quarter of 2019, compared to $2.05 million for the same period of 2018, equating to an increase of $1.41 million or 69%. The increase in net income equated to an improvement in Return on Average Assets at the bank from .85% in first quarter 2018 to 1.06% in the first quarter of 2019.
     
  • Reliance on higher-cost brokered deposits continues to decrease significantly from $191.46, million or 23.73% of total deposits at the end of the first quarter 2018, to $136.76 million, or 12.46% of total deposits at year-end 2018 to a first quarter 2019 balance of $119.18, million or 10.86% of total deposits.
     
  • Total core bank deposits increased $17.29 million in the first quarter of 2019 through more proactive sales activity in the treasury management line of business and increased marketing efforts in key retail markets.
     
  • New loan production of $81.4 million in the first quarter of 2019, compared to $44.9 million in 2018 first quarter.
     
  • First quarter 2019 net interest margin remains strong at 4.55%.  Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments, was 4.37%.  
     
  • mBank was awarded the 2018 Diversity Community Lender of the Year award from the U.S. Small Business Administration of Michigan for its continued work and commitment to using government sponsored loan programs to provide funding to local businesses and provide the capital they need to grow and strengthen communities. mBank was selected based on superior support provided to advance diverse participation among small businesses from historically underrepresented groups including minorities, women, and veterans.  Community activities were also considered in the selection process.

Revenue

Total revenue of the Corporation for first quarter 2019 was $16.95 million compared to $11.67 million for the first quarter of 2018.  Total interest income for the first three months of 2019 was $15.83 million compared to $11.06 million for the same period in 2018. The 2019 first quarter interest income included accretive yield of $526 thousand from combined credit mark accretion associated with acquisitions compared to $204 thousand in the same period of 2018. 

Loan Production and Portfolio Mix

Total balance sheet loans at March 31, 2019 were $1.05 billion compared to March 31, 2018 balances of $812.44 million.  Total loans under management reside at $1.38 billion, which includes $329.87 million of service retained loans.  Overall loan production for the first three months of 2019 was $81.4 million compared to $44.9 million in the first quarter 2018, an increase of $36.5 million, or 80.9%.  Increased production was evident in all lines of business and across the entire market footprint.  As illustrated in the chart below, first quarter production levels were similar to historical production levels in our busier seasonal months.

Overall Quarterly Loan Production: http://www.globenewswire.com/NewsRoom/AttachmentNg/f4235c3a-e5c1-4244-8009-48e68637b163

First Quarter 2019 New Loan Production: http://www.globenewswire.com/NewsRoom/AttachmentNg/6a3a71a6-1885-409e-94c1-ac84a68fa59c

Payoff activity, outside of normal amortization, continued to somewhat constrain portfolio growth and was elevated once again in the first quarter with $27.9 million of total commercial credits paid off ahead of scheduled maturity. Out of this $27.9 million, approximately $10 million resulted from collateral divestments by various borrowers, and another  $8.2 million in client relationships were refinanced into real estate investment trusts at pricing and structure terms that the Corporation does not offer within our traditional bank lending guidelines.

As noted in the charts below, the loan portfolio remains well balanced between fixed and variable rate loans and diversified in terms of geography.  This prudent diversification should help mitigate both interest rate risk and concentration risk should the current elongated good credit cycle outlook begin to turn bearish in light of any adverse national market economic conditions that may arise.

Loan Composition March 31, 2019: http://www.globenewswire.com/NewsRoom/AttachmentNg/e176bfdb-dccc-4eec-a563-febe48f669cd

Total Loans by Region March 31, 2019: http://www.globenewswire.com/NewsRoom/AttachmentNg/5291d05c-3951-47d1-b024-1f3d8fecd02e

Commenting on new loan production and overall lending activities, President of the Corporation and President and CEO of mBank, Kelly W. George, stated, “Overall loan production increased significantly throughout the first quarter and outpaced last year’s totals by $36 million during the seasonally slowest origination period of the year. Additional markets and the full integration of the new lending teams from the two acquisitions last year provided positive impact to these totals, as expected.   Further, secondary market mortgage activity has been significantly augmented by our larger bank platform and the market expansion in 2018 appears to be positively tempering some seasonality in that specific business line. The first quarter has also provided for a strong pipeline of commercial loan transactions that we expect will close and fund in the second quarter, which are some larger lines of credit and construction loans that will take a period of time to fully draw throughout the year.”

“We continue to monitor payoff activity on the commercial side given the continued competitive pressure for loans from all types of lending conduits.  We will stay true to our underwriting and pricing discipline and not stretch to keep credits on the books that could negatively impact our balance sheet long term. In addition, we are very proud of our continued focus on building our communities through providing capital to small businesses and supporting them through a variety of resources. This commitment remains a cornerstone of our culture and was rewarded by the Small Business Administration (SBA), which recognized the bank with the Diversity Community Lender of the Year Award for 2018. Our commercial lenders do a great job of looking for opportunities to use the various programs from the SBA and other governmental agencies, which are so important in communities such as ours to help augment lending terms for businesses and provide the capital necessary for job creation and economic growth throughout our local markets.”      

Credit Quality

Nonperforming loans totaled $5.59 million, or .53% of total loans at March 31, 2019 compared to $4.34 million, or .53% of total loans at March 31, 2018. Total loan delinquencies greater than 30 days resided at a nominal .95%, compared to .69% in 2018.  The Nonperforming assets to total assets ratio resided at .57% for first quarter of 2019 compared to .70% for the first quarter of 2018.

Commenting on overall credit risk, Mr. George stated, “As expected, we have normalized the slight increase in our non-performing and problem loan credit ratios that occurred in 2018 following the FFNM and Lincoln acquisitions. We have seen no signs of any adverse systemic issues in terms of increased payment period times for legacy clients or material deterioration in commercial client financial statements in any of our core industries in which we lend. We also carry a very low level of Other Real Estate Owned, limiting expenses and time and expense in resolution of those properties. Purchase accounting marks from the previously acquired banks have continued to prove accurate, attaining expected accretion levels which should continue into 2019.”

Margin Analysis and Funding

Net interest income for first quarter 2019 was $13.24 million, resulting in a Net Interest Margin (NIM) of 4.55% compared to $9.31 million in the first quarter 2018 and a NIM of 4.19%.  Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments, was 4.37% for the first quarter 2019.  Comparatively, net interest income for the fourth quarter of 2018 resided at $13.79 million, a NIM of 4.64%, and core NIM of 4.32%.  As illustrated in the chart below, while total Net Interest Margin decreased slightly quarter-over-quarter, the decrease resulted from $420 thousand less in purchase accounting interest income (accretion) from acquired loans.  This decrease consisted of a $155 thousand decrease in performing accretion, which is following its expected schedule and a $265 thousand decrease in non-performing accretion, which is less predictable as to when it will be recognized. 

Margin breakdown by quarter: http://www.globenewswire.com/NewsRoom/AttachmentNg/53d4eb6d-32fb-45f1-a8d7-23db0c00c233

Total bank deposits (excluding brokered deposits) have increased by $362.73 million year-over-year from $615.34 million at March 31, 2018 to $978.07 million at first quarter-end 2019.  Total brokered deposits have decreased significantly and were $119.18 million at March 31, 2019 compared to $191.46 million at March 31, 2018, a decrease of 38%.  FHLB (Federal Home Loan Bank) borrowings were also reduced from $60 million at the end of the first quarter 2018 to $47 million at the end of the first quarter 2019. 

Funding Sources March 31, 2019: http://www.globenewswire.com/NewsRoom/AttachmentNg/2d3d920d-0d58-49f8-a6bd-577931d7653b

Funding Sources March 31, 2018: http://www.globenewswire.com/NewsRoom/AttachmentNg/045c27cf-3a29-4f3d-bd10-c131a87a2834

Mr. George stated, “Core bank deposits have increased significantly year-over-year as a result of both our 2018 acquisition activity and strong deposit gathering efforts in our branches and by our treasury management team.  Our bank deposits are up $17 million since year end 2018 and have allowed for an additonal $17 million reduction in higher cost brokered deposits over the course of the first quarter. With continued focus and progress, we have significantly lessened our reliance on wholesale funding while maintaining a strong liquidity position.  Our focus on new core deposit procurement remains a key initiative for 2019 as we look to continue to wind down our wholesale funding sources through continued aggressive marketing and business development initiatives in our higher volume markets.”

Noninterest Income / Expense

First quarter 2019 Noninterest Income was $1.12 million compared to $614 thousand for the same period of 2018.  The significant year-over year improvement is a combination of the scale provided by the two 2018 acquisitions as well as continued focus on drivers of noninterest income, including secondary market mortgage and SBA sales. Noninterest Expense for the first quarter of 2019 was $10.24 million compared to $7.93 million for the same period of 2018.  The expense variance from 2018 was heavily impacted by the additional expense related to the larger bank platform following the FFNM and Lincoln transactions, including additional salary, benefits and occupancy costs as well as some transaction related expenses.  For comparison purposes, noninterest expense remains slightly improved quarter-over-quarter with the fourth quarter of 2018 equating to $10.68 million.

Assets and Capital

Total assets of the Corporation at March 31, 2019 were $1.32 billion, compared to $983.93 million at March 31, 2018.  Shareholders’ equity at March 31, 2019 totaled $154.75 million compared to $81.86 million at March 31, 2018.  Book value per share outstanding equated to $14.41 at the end of the first quarter 2019 compared to $12.93 per share outstanding a year ago.  Tangible book value at quarter-end was $129.97 million or $12.10 per share outstanding compared to $74.30 million, or $11.73 per share, at the end of the first quarter 2018.   Both the common stock offering and the acquisitions had positive impacts on the Corporation’s overall capitalization and regulatory capital ratios. Both the Corporation and the Bank are “well-capitalized” with total risk-based capital to risk-weighted assets of 12.79% and 12.58% and tier 1 capital to total tier 1 average assets at the Corporation of 9.54% and at the bank of 9.44%.

Paul D. Tobias, Chairman and Chief Executive Officer of the Corporation and Chairman of mBank concluded, “We believe that the first quarter of 2019 reflects the positive impact of our 2018 acquisitions and organic growth efforts with an improved balance sheet and higher bottom line net income levels. We reviewed several external opportunities for acquisition later in 2018 and in the first quarter of this year, but pricing levels were too high.  We will continue to be receptive to acquisitions with sound economics as we focus on organic growth, credit trends and operating efficiencies in 2019.”

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $1.3 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 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.

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: 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 Company 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  
  Quarter Ending   Year Ending   Quarter Ending  
    March 31,   December 31,   March 31,  
(Dollars in thousands, except per share data)   2019   2018   2018  
    (Unaudited)   (Unaudited)   (Unaudited)  
Selected Financial Condition Data (at end of period) :              
Assets   $     1,316,996   $   1,318,040   $   983,929  
Loans       1,045,428       1,038,864       812,441  
Investment securities       113,460       116,748       73,902  
Deposits       1,097,248       1,097,537       806,797  
Borrowings       53,658       60,441       90,002  
Shareholders' equity       154,746       152,069       81,857  
               
               
Selected Statements of Income Data:              
Net interest income   $     13,236   $   47,130   $   9,309  
Income before taxes       4,009       10,593       1,945  
Net income       3,167       8,367       1,537  
Income per common share - Basic     .30     .94     .24  
Income per common share - Diluted     .30     .94     .24  
Weighted average shares outstanding - Basic       10,720,127       8,891,967       6,304,203  
Weighted average shares outstanding- Diluted       10,723,921       8,921,658       6,330,210  
               
Selected Financial Ratios and Other Data:              
Performance Ratios:                
Net interest margin       4.55 %     4.44 %     4.19 %
Efficiency ratio       70.81       77.70       79.25  
Return on average assets     .97     .71     .63  
Return on average equity       8.36       6.94       7.61  
               
Average total assets   $     1,320,080   $   1,177,455   $   982,679  
Average total shareholders' equity       153,689       120,478       81,894  
Average loans to average deposits ratio       95.10 %     97.75 %     100.70 %
               
               
Common Share Data at end of period:              
Market price per common share   $     15.74   $   13.65   $   16.25  
Book value per common share       14.41       14.20       12.93  
Tangible book value per share       12.10       11.61       11.73  
Dividends paid per share, annualized     .480     .480     .480  
Common shares outstanding       10,740,712       10,712,745       6,332,560  
               
Other Data at end of period:              
Allowance for loan losses   $     5,154   $   5,183   $   5,101  
Non-performing assets   $     7,549   $   8,196   $   6,868  
Allowance for loan losses to total loans     .49 %   .50 %   .63 %
Non-performing assets to total assets     .57 %   .62 %   .70 %
Texas ratio       5.59 %     6.33 %     6.87 %
               
Number of:              
Branch locations       29       29       23  
FTE Employees       305       288       227  
                     


 
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
             
    March 31,     December 31,     March 31
    2019   2018   2018
    (Unaudited)         (Unaudited)
ASSETS                  
                   
Cash and due from banks   $   55,923     $   64,151     $   40,411  
Federal funds sold       1,040         6         16  
Cash and cash equivalents       56,963         64,157         40,427  
                   
Interest-bearing deposits in other financial institutions       12,712         13,452         11,391  
Securities available for sale       113,460         116,748         73,902  
Federal Home Loan Bank stock       4,924         4,924         3,112  
                   
Loans:                  
Commercial       732,678         717,032         579,718  
Mortgage       293,126         301,461         215,804  
Consumer       19,624         20,371         16,919  
Total Loans     1,045,428       1,038,864         812,441  
Allowance for loan losses       (5,154 )       (5,183 )       (5,101 )
Net loans       1,040,274         1,033,681         807,340  
                   
Premises and equipment       23,479         22,783         16,329  
Other real estate held for sale       1,961         3,119         2,526  
Deferred tax asset       6,906         5,763         4,674  
Deposit based intangibles       5,549         5,720         1,860  
Goodwill       19,224         22,024         5,694  
Other assets       31,544         25,669         16,674  
                   
TOTAL ASSETS   $   1,316,996     $   1,318,040     $   983,929  
                   
LIABILITIES AND SHAREHOLDERS’ EQUITY                  
                   
LIABILITIES:                  
Deposits:                  
Noninterest bearing deposits   $   245,201     $   241,556     $   143,129  
NOW, money market, interest checking       363,753         368,890         260,051  
Savings       110,978         111,358         63,867  
CDs<$250,000       245,427         225,236         135,554  
CDs>$250,000       12,706         13,737         12,738  
Brokered       119,183         136,760         191,458  
Total deposits       1,097,248         1,097,537         806,797  
                   
Federal funds purchased       6,780         2,905         10,000  
Borrowings       46,878         57,536         80,002  
Other liabilities       11,344         7,993         5,273  
Total liabilities       1,162,250         1,165,971         902,072  
                   
SHAREHOLDERS’ EQUITY:                  
Common stock and additional paid in capital - No par value Authorized - 18,000,000 shares Issued and outstanding - 10,740,712; 10,712,745 and 6,332,560 respectively       129,204         129,066         62,080  
Retained earnings       25,347         23,466         20,493  
Accumulated other comprehensive income (loss)                  
Unrealized (losses) gains on available for sale securities       413         (245 )       (495 )
Minimum pension liability       (218 )       (218 )       (221 )
Total shareholders’ equity       154,746         152,069         81,857  
                   
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $   1,316,996     $   1,318,040     $   983,929  
                         

 

     
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
     
    Three Months Ended
    March 31,
      2019       2018  
     
    (Unaudited)
INTEREST INCOME:        
Interest and fees on loans:        
Taxable   $     14,595     $   10,390  
Tax-exempt       47         25  
Interest on securities:        
Taxable       703         372  
Tax-exempt       98         69  
Other interest income       385         199  
Total interest income       15,828         11,055  
         
INTEREST EXPENSE:        
Deposits       2,354         1,236  
Borrowings       238         510  
Total interest expense       2,592         1,746  
         
Net interest income       13,236         9,309  
Provision for loan losses       100         50  
Net interest income after provision for loan losses       13,136         9,259  
         
OTHER INCOME:        
Deposit service fees       406         269  
Income from loans sold on the secondary market       312         177  
SBA/USDA loan sale gains       125         51  
Mortgage servicing amortization       (8 )       (8 )
Other       282         125  
Total other income       1,117         614  
         
OTHER EXPENSE:        
Salaries and employee benefits       5,435         4,154  
Occupancy       1,081         811  
Furniture and equipment       718         531  
Data processing       709         504  
Advertising       309         195  
Professional service fees       434         304  
Loan origination expenses and deposit and card related fees       179         126  
Writedowns and losses on other real estate held for sale       28         26  
FDIC insurance assessment       134         156  
Communications expense       228         155  
Transaction related expenses       -         189  
Other       989         777  
Total other expenses       10,244         7,928  
         
Income before provision for income taxes       4,009         1,945  
Provision for income taxes       842         408  
         
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $     3,167     $   1,537  
         
INCOME PER COMMON SHARE:        
Basic   $ .30     $ .24  
Diluted   $ .30     $ .24  
         

 

 
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY

(Dollars in thousands)

Loan Portfolio Balances (at end of period):

    March 31,      December 31,     March 31,   
  2018   2018   2018  
  (Unaudited)   (Unaudited)   (Unaudited)  
Commercial Loans:            
Real estate - operators of nonresidential buildings $     147,752   $   150,251   $   118,458  
Hospitality and tourism     85,604       77,598       75,046  
Lessors of residential buildings     46,702       50,204       33,127  
Gasoline stations and convenience stores     24,663       24,189       21,771  
Logging     21,073       20,860       16,628  
Commercial construction     33,118       29,765       8,004  
Other     373,766       364,165       306,684  
Total Commercial Loans     732,678       717,032       579,718  
             
1-4 family residential real estate     281,104       286,908       204,542  
Consumer     19,624       20,371       16,919  
Consumer construction     12,022       14,553       11,262  
             
Total Loans $     1,045,428   $   1,038,864   $   812,441  

Credit Quality (at end of period):

             
  March 31,    December 31,    March 31,  
  2018   2018   2018  
  (Unaudited)   (Unaudited)   (Unaudited)  
Nonperforming Assets :            
Nonaccrual loans $     5,588   $   5,054   $   4,165  
Loans past due 90 days or more     -       23       -  
Restructured loans     -       -       177  
Total nonperforming loans     5,588       5,077       4,342  
Other real estate owned     1,961       3,119       2,526  
Total nonperforming assets $     7,549   $   8,196   $   6,868  
Nonperforming loans as a % of loans   .53 %   .49 %   .53 %
Nonperforming assets as a % of assets   .57 %   .62 %   .70 %
Reserve for Loan Losses:            
At period end $     5,154   $   5,183   $   5,101  
As a % of average loans   .49 %   .50 %   .63 %
As a % of nonperforming loans     92.23 %     102.09 %     117.48 %
As a % of nonaccrual loans     92.23 %     102.55 %     122.47 %
Texas Ratio     5.59 %     6.33 %     6.87 %
             
Charge-off Information (year to date):            
Average loans $     1,046,740   $   941,221   $   810,688  
Net charge-offs (recoveries) $     129   $   396   $   28  
Charge-offs as a % of average loans, annualized   .05 %   .04 %   .01 %
             


                     
MA CKINAC FINANCIAL CORPORATION AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS
                     
  QUARTER ENDED  
  (Unaudited)  
  March 31,   December 31   September 30,   June 30   March 31  
    2019       2018       2018       2018       2018    
BALANCE SHEET (Dollars in thousands)                    
                     
Total loans $ 1,045,428     $ 1,038,864     $ 993,808     $ 1,003,377     $ 812,441    
Allowance for loan losses   (5,154 )     (5,183 )     (5,186 )     (5,141 )     (5,101 )  
  Total loans, net   1,040,274       1,033,681       988,622       998,236       807,340    
Total assets   1,316,996       1,318,040       1,254,335       1,274,095       983,929    
Core deposits   965,359       947,040       885,988       844,894       602,601    
Noncore deposits    131,889       150,497       142,070       170,607       204,196    
  Total deposits   1,097,248       1,097,537       1,028,058       1,015,501       806,797    
Total borrowings   53,678       60,441       69,216       91,747       90,002    
Total shareholders' equity   154,746       152,069       149,367       148,867       81,857    
Total tangible equity   129,973       124,325       124,605       123,974       74,303    
Total shares outstanding   10,740,712       10,712,745       10,712,745       10,712,745       6,332,560    
Weighted average shares outstanding   10,720,127       10,712,745       10,712,745       7,769,720       6,304,203    
                     
AVERAGE BALANCES (Dollars in thousands)                    
                     
Assets $ 1,320,080     $ 1,320,996     $ 1,284,068     $ 1,117,188     $ 982,679    
Loans   1,046,740       1,043,409       1,001,763       905,802       810,688    
Deposits   1,099,644       1,087,174       1,042,004       913,220       805,092    
Equity   153,689       149,241       149,202       100,518       81,894    
                     
INCOME STATEMENT (Dollars in thousands)                    
                     
Net interest income $ 13,236     $ 13,795     $ 13,214     $ 10,813     $ 9,309    
Provision for loan losses   100       300       50       100       50    
  Net interest income after provision   13,136       13,495       13,164       10,713       9,259    
Total noninterest income   1,117       1,443       1,343       863       614    
Total noninterest expense   10,244       10,678       10,618       11,077       7,928    
Income before taxes   4,009       4,260       3,889       499       1,945    
Provision for income taxes   842       895       820       103       408    
Net income available to common shareholders $ 3,167     $ 3,365     $ 3,069     $ 396     $ 1,537    
Income pre-tax, pre-provision $ 4,109     $ 4,560     $ 3,939     $ 599     $ 1,995    
                     
PER SHARE DATA                    
                     
Earnings per common share $ .30     $ .31     $ .29     $ .05     $ .24    
Book value  per common share   14.41       14.20       13.94       13.90       12.93    
Tangible book value per share   12.10       11.61       11.63       11.57       11.73    
Market value, closing price   15.74       13.65       16.20       16.58       16.25    
Dividends per share   .120       .120       .120       .120       .120    
                                         
ASSET QUALITY RATIOS                                        
                                         
Nonperforming loans/total loans   .53   %   .49   %   .46   %   .50   %   .53   %
Nonperforming assets/total assets   .57       .62       .53       .59       .70    
Allowance for loan losses/total loans   .49       .50       .52       .51       .63    
Allowance for loan losses/nonperforming loans   92.23       102.09       114.58       102.31       117.48    
Texas ratio    5.59       6.33       5.14       5.80       6.87    
                                         
PROFITABILITY RATIOS                                        
                                         
Return on average assets   .97   %   1.01   %   .95   %   .14   %   .63    % 
Return on average equity   8.36       8.95       8.16       1.58       7.61    
Net interest margin   4.55       4.64       4.60       4.26       4.19    
Average loans/average deposits   95.10       95.97       96.14       99.19       100.70    
                     
CAPITAL ADEQUACY RATIOS                    
                     
Tier 1 leverage ratio   9.54   %   9.24   %   9.51   %   9.39   %   7.25   %
Tier 1 capital to risk weighted assets   12.28       11.95       12.62       11.87       8.79    
Total capital to risk weighted assets   12.79       12.47       13.17       12.39       9.43    
Average equity/average assets (for the quarter)   11.64       11.30       11.62       9.00       8.33    
Tangible equity/tangible assets (at quarter end)   10.06       9.64       10.13       9.92       7.62    
                     


Contact:   Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906 /jdeering@bankmbank.com
Website:   www.bankmbank.com

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