Mackinac Financial Corp. Reports Operating Results (10-Q)
Mackinac Fin Cp has a market cap of $21.6 million; its shares were traded at around $6.3 with a P/E ratio of 13.2 and P/S ratio of 0.8.
Highlight of Business Operations:Net interest margin on a fully taxable equivalent basis amounted to $4.767 million, 4.17% of average earning assets, in the first quarter of 2012, compared to $4.166 million, and 3.94% of average earning assets, in the first quarter of 2011. Margin improvement in 2012 was primarily due to a reduction in funding costs between periods.
Other income increased by $.029 million for the three months ended March 31, 2012, compared to the three months ended March 31, 2011. In the first quarter of 2012, revenue due to 1-4 family loans produced and sold in the secondary market, amounted to $.298 million compared to $.078 million a year ago. We expect to continue to benefit from secondary market activity in future periods. While we recorded no SBA fees in the first quarter of 2012, we anticipate this activity to significantly increase as the year progresses. Service fees and other noninterest income decreased slightly between periods largely because of lower NSF fees, which we believe will continue due to customers being more diligent in managing their accounts.
The Corporation recognized deferred taxes of approximately $.349 million and $.214 million for the quarter ended March 31, 2012 and 2011, respectively. Management believes that the Corporation will ultimately utilize all of the NOL carryforwards and a portion of the tax credit carryforwards. The valuation allowance, which stands at $6.010 million as of March 31, 2012 is a conservative measurement of the uncertainty related to the current economy and level of profitability the Corporation will attain in the near term.
Loans are the most significant earning asset. Management offers commercial and real estate loans priced at interest rates which fluctuate with various indices such as the prime rate or rates paid on various government issued securities. In addition, the Corporation prices the majority of fixed rate loans so it has an opportunity to reprice the loan within 12 to 36 months.
The Corporation also has $36.788 million of securities providing for scheduled monthly principal and interest payments as well as unanticipated prepayments of principal. These cash flows are then reinvested into other earning assets at current market rates. The Corporation also has federal funds sold to correspondent banks as well as other interest-bearing deposits with correspondent banks. These funds are generally repriced on a daily basis.
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