SOURCE: Mackinac Financial Corporation

Mackinac Financial Corporation

January 30, 2014 13:13 ET

Mackinac Financial Corporation Announces Solid 2013 Results of Operations

MANISTIQUE, MI--(Marketwired - Jan 30, 2014) - Mackinac Financial Corporation (NASDAQ: MFNC), the holding Corporation for mBank, today announced net income of $5.629 million or $1.01 per share, for the year ended December 31, 2013, compared to net income of $6.458 million, or $1.51 per share, for 2012. The 2013 and 2012 consolidated and bank results include a deferred tax valuation adjustment of $2.250 million, or $.40 per share and $3.000 million, $.70 per share, respectively. The Corporation's primary asset, mBank, recorded net income of $7.189 million for the fiscal year 2013 compared to $7.884 million for 2012. Excluding the aforementioned deferred tax asset, the Bank subsidiary's core operations improved year over year from 2012 earnings of $4.884 million to $4.939 million in 2013.

Total assets of the Corporation at 2013 year-end totaled $572.800 million, an increase of 4.91% from the $545.980 million at 2012 year-end. The Corporation and the Bank are both "well-capitalized" with Tier 1 Capital at the Corporation of 10.30% and 10.00% at the Bank.

Some highlights from 2013 include:

  • New loan production of $190.9 million, with balance sheet growth of $34.7 million, an increase of 7.7%, in loans outstanding from 2012 year end.

  • Secondary mortgage loan income of $1.028 million.

  • Continued success with the sale of SBA and USDA loan guarantees with sales generating $.951 million for the year and a good pipeline of pending transactions at 2013 year-end.

  • Stable and above peer average net interest margin at 4.17% for the year.

  • Asset quality improved with further reductions in nonperforming assets from $7.899 at 2012 year end to $3.908 million at year-end 2013 with our Texas Ratio now residing at 5.59%.

  • Consolidation of our owner occupied branch and mortgage offices in Marquette, to a new leased facility in December of 2013.

  • Redemption of $11.000 million of preferred stock.

  • Increased common stock cash dividend from $.04 per share quarterly to $.05 per share quarterly.

  • Successful launching of our asset based lending subsidiary, Mackinac Commercial Credit, LLC late in 2013 located in Birmingham, MI.

Loan Production

Total loans at 2013 year-end, totaled $483.832 million, an increase of 7.7%, from the $449.177 million at 2012 year-end. The Corporation had total loan production for all loan types of $191 million in 2013. Production included $88 million in commercial loans, and $103 million in consumer loans, $95 million of which were mortgages. The Upper Peninsula continues to drive a large majority of the new originations, with $125 million, followed by our Northern Lower Region with $48 million and Southeast Michigan Region at $18 million. Commenting on new loan opportunities, Kelly W. George, President and Chief Executive Officer of mBank, stated, "We were extremely pleased with our success in loan production for 2013 and the growth of good quality assets to our balance sheet as we were able to achieve this in a still very challenging interest rate environment and state economy where the procurement of new loans for all banks has led to a highly competitive lending environment. As was the case with most banks, our mortgage pipeline decreased in the latter half of the year with the increasing mortgage rates which slowed refinance business but we are still seeing a good deal of new home purchases and are optimistic that mortgage lending will rebound some in the new year. The government shutdown in the early part of the fourth quarter also stymied our momentum of SBA loan transactions being adjudicated for the end of the year, which results in a strong pipeline to start 2014. In addition to the $484 million in balance sheet loans, $59 million of SBA/USDA loans and $133 million of secondary market mortgage loans were sold with retained servicing. This increases our loans under management to $676 million."

Secondary Market Mortgage Lending

The Corporation's production totaled $56.0 million in secondary market mortgage loans in 2013 compared to $74.1 million in 2012. Gains and fees from secondary mortgage activity totaled $1.028 million in 2013 compared to $1.390 million in 2012. In addition, the Corporation also received $.299 million in fees on its secondary market servicing portfolio which totaled $133 million at 2013 year end.

SBA/USDA Program Lending

The Corporation continues to have success in this line of business as in years past with 2013 gains from sales of SBA/USDA guaranteed loan balances amounting to $.951 million compared to $1.176 million in 2012. The guaranteed SBA/USDA loan balances sold totaled $8.393 million for 2013, compared to $11.962 million in 2012. The Bank also services approximately $59 million of SBA/USDA loans which generated an additional $.402 million in fees during 2013. The Corporation remains a state leader in the origination of these government lending programs which the bank recognizes are critical for many small businesses to obtain the capital they need to grow or improve their operations throughout the state.

Nonperforming Loans /Assets

Nonperforming loans totaled $2.024 million, .42% of total loans at December 31, 2013 compared to $4.687 million, or 1.04% of total loans at December 31, 2012. Nonperforming assets were reduced by $3.991 million from a year ago and stood at $3.908 million, or .68% of total assets. Mr. George, commenting on credit quality, stated, "We have been diligent and aggressive in resolving our problem credit relationships and in our overall new loan approval process which is illustrated with the strong underlying credit metrics of our current portfolio encompassing low manageable levels of nonperforming assets and loan delinquencies residing at a nominal .38% of total loans."

It should be noted the Corporation recorded a provision for loan losses of $1.675 million in 2013 compared to $.945 million in 2012. The increase in provision this year is not indicative of the current underwriting or loan performance standards. The reason for the increased provision in 2013 is solely due to the divesture of a distressed legacy hotel loan, with no personal recourse, in the Northern Lower Peninsula. This loan was originated in 2002 prior to the recapitalization and has been long identified as a problem asset. The company elected to divest of this loan after all other attempts to minimize exposure and loss related to this property were exhausted. The final charge-off in the fourth quarter of 2013 totaled $.698 million which had been previously reserved for, with cumulative losses of $1.680 million. At this time the loan loss reserve, at .96% of loans outstanding is deemed more than adequate based on the companies methodology, and the allowance as a percent of nonperforming loans stands at 230.29%, well above peer comparisons. Mr. George, commenting on this loan divesture, stated, "We were approached by the owners of this property at the end of the year, informing us that they had finally procured a buyer for the hotel. After our internal analysis, which included assessments of the net operating income of the property and external market reports, the sale price appeared reasonable. We determined it was in the best interest of the bank to remove this ongoing costly asset we had been managing for years in the event market prices declined further and additional reserves would be necessary. The removal of this loan has also improved the overall make-up of our balance sheet from both a micro and macro aspect." 

Deposits/Funding

Total deposits of $466.299 million at 2013 year-end increased 7.30% from deposits of $434.557 million at 2012 year-end. The overall increase in deposits for 2013 is comprised of an increase in core deposits of $3.097 million and increased noncore deposits of $28.645 million. Mr. George, commenting on core deposits, stated, "In 2013, we were proactive with rate reductions on deposit products to maximize margin dollars which led to some balance reductions from strictly price driven time deposit customers. The bank saw increased levels of transactional deposits as we pushed to increase deposit share with our high value relationship clients. We also experienced some larger withdrawals from commercial clients that used their excess liquidity to fund business expansion or pay down debt. We augmented our funding sources this year as well with some nominal and manageable levels of brokered and internet deposits, primarily to extend the maturities of some of our liabilities to support fixed rate lending structures to better mitigate any long term interest rate risk."

Margin Analysis

Net interest income in 2013 increased to $21.399 million, compared to $ 19.824 million in 2012. The net interest margin was 4.17% for both years. Mr. George, commenting on the margin, stated, "We expect continued margin pressure from a national economic policy that fosters a low interest rate environment but remain positive of our ability to prudently manage the balance sheet to mitigate the downward pressure and maintain an above peer and strong net interest margin. In addition, this low interest rate environment has severely limited many investment options which in turns puts more pressure on our loan portfolio yields and the maintaining of good loan pricing and interest rate floors where applicable. We remain highly cognizant as we continue growing our loan portfolio to structure lending relationship as much as possible to mitigate long-term interest rate risk when an upward interest rate movement eventually begins to occur." 

Noninterest Income/Expense

Noninterest income, at $3.938 million was slightly lower than the $4.043 million recorded in 2012. The largest driver of noninterest income in 2013 was secondary market mortgage activities and gains from SBA/USDA loan sales. Income from secondary mortgage activities totaled $1.028 million in 2013 compared to $1.390 million in 2012. This reduction was due in part to a slowdown in refinancing activity as mortgage rates increased in the latter half of 2013. SBA/USDA loan sale gains were $.951 million in 2013 compared to 2012 gains of $1.176 million. As discussed previously, this activity was hampered in late 2013 due to the Government shutdown when a bottleneck occurred for processing of these loans once the government agencies reopened.

Noninterest expense, at $18.128 million in 2013, increased $1.371 million, or 8.18%, from 2012 levels. This increase was higher than normal due to several initiatives undertaken during the year including start-up costs for our asset based lending subsidiary of approximately $.671 million, the write down of the old mortgage loan office, of $.270 million, in our Marquette market as we moved to the new leased facility, and other costs incurred in the exploration of a possible acquisition which totaled approximately $.162 million. Mr. George, commenting on the areas of increased expenses, stated, "We remain diligent in our efforts to manage our operating expenses in the ongoing evaluation of our personnel infrastructure and banking lines of business to improve future efficiencies, keep pace with ongoing regulatory requirements, and in providing avenues for increased business growth we ascertain will enhance overall franchise value in the long run."

Capital

At 2013 year-end the Corporation completed the redemption of its outstanding preferred stock. The preferred shares were originally issued to the US Treasury under the TARP Capital Purchase Program and were subsequently sold to private investors. Total shareholders' equity at December 31, 2013 totaled $65.429 million, compared to $72.448 million at 2012 year-end. Book value of common shareholders' equity was $11.77 per share at December 31, 2013 compared to $11.05 per share at December 31, 2012.

Paul D. Tobias, Chairman and Chief Executive Officer, concluded, "We delivered a solid performance in 2013 in what is proving to be an extremely challenging environment for community banking. Looking forward, we believe that there will be some consolidation in the banking industry as companies, like MFNC, look for growth in order to achieve enhanced shareholder value with increased economies of scale.

"Our capital strength and our earnings momentum provided the impetus for both the redemption of our preferred stock and the increase in our cash dividend from $.16 per share to $.20 per share, annually. We were also able to recognize deferred tax benefits given the current level of sustained profitability of our company.

"In 2014 we will explore more opportunities for creating added shareholder value including expansion within our current markets, acquisitions that complement our current footprint and through the growth of our new asset based lending and factoring subsidiary Mackinac Commercial Credit. We have a management team and infrastructure that we can leverage for increased returns to our shareholders. We will be patient in evaluating and executing our growth strategy while continuing with the day to day execution of organic growth and increased operational efficiencies."

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets of $573 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 11 branch locations; seven in the Upper Peninsula, three in the Northern Lower Peninsula and one in Oakland County, Michigan. 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: 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, branch closings 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  
   
(Dollars in thousands, except per share data)   December 31, 2013     December 31, 2012  
    (Unaudited)     (Unaudited)  
Selected Financial Condition Data (at end of period):                
Assets   $ 572,800     $ 545,980  
Loans     483,832       449,177  
Investment securities     44,388       43,799  
Deposits     466,299       434,557  
Borrowings     37,852       35,925  
Common Shareholders' Equity     65,249       61,448  
Shareholders' equity     65,249       72,448  
                 
                 
Selected Statements of Income Data:                
Net interest income   $ 21,399     $ 19,824  
Income before taxes and preferred dividend     5,534       6,165  
Net income     5,629       6,458  
Income per common share - Basic     1.01       1.51  
Income per common share - Diluted     1.00       1.46  
Weighted average shares outstanding     5,558,313       4,285,043  
Weighted average shares outstanding- Diluted     5,650,058       4,412,625  
                 
Selected Financial Ratios and Other Data:                
Performance Ratios:                
Net interest margin     4.17 %     4.17 %
Efficiency ratio     67.46       67.95  
Return on average assets     1.01       1.23  
Return on average common equity     9.07       12.43  
Return on average equity     8.26       10.26  
                 
Average total assets   $ 555,152     $ 526,740  
Average common shareholders' equity     62,082       51,978  
Average total shareholders' equity     68,172       62,939  
Average loans to average deposits ratio     103.46 %     99.45 %
                 
                 
Common Share Data at end of period:                
Market price per common share   $ 9.90     $ 7.09  
Book value per common share   $ 11.77     $ 11.05  
Common shares outstanding     5,541,390       5,559,859  
                 
Other Data at end of period:                
Allowance for loan losses   $ 4,661     $ 5,218  
Non-performing assets   $ 3,908     $ 7,899  
Allowance for loan losses to total loans     .96 %     1.16 %
Non-performing assets to total assets     .68 %     1.45 %
Texas ratio     5.59 %     10.17 %
                 
Number of:                
  Branch locations     11       11  
  FTE Employees     133       121  
                   
                   
                   
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
   
    December 31, 2013     December 31, 2012  
    (Unaudited)     (Audited)  
ASSETS                
                 
Cash and due from banks   $ 18,216     $ 26,958  
Federal funds sold     3       3  
  Cash and cash equivalents     18,219       26,961  
                 
Interest-bearing deposits in other financial institutions     10       10  
Securities available for sale     44,388       43,799  
Federal Home Loan Bank stock     3,060       3,060  
                 
Loans:                
  Commercial     359,368       342,841  
  Mortgage     110,663       95,413  
  Consumer     13,801       10,923  
    Total Loans     483,832       449,177  
      Allowance for loan losses     (4,661 )     (5,218 )
  Net loans     479,171       443,959  
                 
Premises and equipment     10,210       10,633  
Other real estate held for sale     1,884       3,212  
Deferred Tax Asset     9,933       9,131  
Other assets     5,925       5,215  
                 
TOTAL ASSETS   $ 572,800     $ 545,980  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
LIABILITIES:                
Deposits:                
  Noninterest bearing deposits   $ 72,936     $ 67,652  
  NOW, money market, interest checking     149,123       155,465  
  Savings     13,039       13,829  
  CDs less than $100,000     140,495       135,550  
  CDs greater than $100,000     23,159       24,355  
  Brokered     67,547       37,706  
      Total deposits     466,299       434,557  
                   
  Borrowings     37,852       35,925  
  Other liabilities     3,400       3,050  
    Total liabilities     507,551       473,532  
                 
SHAREHOLDERS' EQUITY:                
  Preferred stock - No par value:                
    Authorized 500,000 shares, Issued and outstanding - none and 11,000 shares     -       11,000  
  Common stock and additional paid in capital - No par value                
    Authorized - 18,000,000 shares                
    Issued and outstanding - 5,541,390 and 5,559,914, shares respectively     53,621       53,797  
    Retained earnings     11,412       6,727  
    Accumulated other comprehensive income     216       924  
                   
      Total shareholders' equity     65,249       72,448  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 572,800     $ 545,980  
                 
                 
                 
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
             
    For the Years Ended December 31,  
    2013     2012     2011  
    (Unaudited)     (Audited)     (Audited)  
INTEREST INCOME:                        
  Interest and fees on loans:                        
    Taxable   $ 24,295     $ 23,197     $ 21,627  
    Tax-exempt     105       116       147  
  Interest on securities:                        
    Taxable     961       948       1,162  
    Tax-exempt     34       27       28  
  Other interest income     128       139       108  
    Total interest income     25,523       24,427       23,072  
                         
INTEREST EXPENSE:                        
  Deposits     3,468       3,946       4,530  
  Borrowings     656       657       613  
    Total interest expense     4,124       4,603       5,143  
                         
Net interest income     21,399       19,824       17,929  
Provision for loan losses     1,675       945       2,300  
Net interest income after provision for loan losses     19,724       18,879       15,629  
                         
OTHER INCOME:                        
  Deposit service fees     667       699       832  
  Income from secondary market loans sold     1,028       1,390       700  
  SBA/USDA loan sale gains     951       1,176       1,500  
  Mortgage servicing income     790       417       400  
  Net security gains     73       -       (1 )
  Other     429       361       225  
    Total other income     3,938       4,043       3,656  
                         
OTHER EXPENSE:                        
  Salaries and employee benefits     9,351       8,288       7,275  
  Occupancy     1,481       1,372       1,376  
  Furniture and equipment     1,102       885       827  
  Data processing     1,071       991       761  
  Professional service fees     1,069       1,196       756  
  Loan and deposit     617       877       1,137  
  Writedowns and losses on other real estate held for sale     265       489       1,137  
  FDIC insurance assessment     385       459       849  
  Telephone     303       233       215  
  Advertising     436       376       351  
  Other     2,048       1,591       1,285  
    Total other expenses     18,128       16,757       15,969  
                         
Income before income taxes     5,534       6,165       3,316  
Provision (benefit of) for income taxes     (403 )     (922 )     1,098  
                         
NET INCOME     5,937       7,087       2,218  
                         
Preferred dividend and accretion of discount     308       629       766  
                         
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $ 5,629     $ 6,458     $ 1,452  
                         
INCOME PER COMMON SHARE:                        
  Basic   $ 1.01     $ 1.51     $ .42  
  Diluted   $ 1.00     $ 1.51     $ .41  
                           
                           
                           
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
 
(Dollars in thousands)
 
Loan Portfolio Balances (at end of period):
         
    December 31,
2013
  December 31,
2012
    (Unaudited)   (Unaudited)
Commercial Loans:            
Real estate - operators of nonresidential buildings   $ 100,333   $ 95,151
Hospitality and tourism     45,360     40,787
Lessors of residential buildings     14,191     12,128
Gasoline stations and convenience stores     11,534     11,393
Real estate agents and managers     10,922     10,597
Commercial construction     10,904     17,229
Other     166,124     155,556
  Total Commercial Loans     359,368     342,841
             
1-4 family residential real estate     103,768     87,948
Consumer     13,801     10,923
Consumer construction     6,895     7,465
             
  Total Loans   $ 483,832   $ 449,177
             
             
             
Credit Quality (at end of period):  
   
    December 31,
2013
    December 31, 
2012
 
    (Unaudited)     (Unaudited)  
Nonperforming Assets :                
Nonaccrual loans   $ 2,024     $ 4,687  
Loans past due 90 days or more     -       -  
Restructured loans     -       -  
  Total nonperforming loans     2,024       4,687  
Other real estate owned     1,884       3,212  
  Total nonperforming assets   $ 3,908     $ 7,899  
Nonperforming loans as a % of loans     .42 %     1.04 %
Nonperforming assets as a % of assets     .68 %     1.45 %
Reserve for Loan Losses:                
At period end   $ 4,661     $ 5,218  
As a % of average loans     .96 %     1.24 %
As a % of nonperforming loans     230.29 %     111.33 %
As a % of nonaccrual loans     230.29 %     111.33 %
Texas Ratio     5.59 %     10.17 %
                 
Charge-off Information (year to date):                
  Average loans   $ 462,500     $ 422,440  
  Net charge-offs   $ 2,232     $ 978  
  Charge-offs as a % of average loans, annualized     .48 %     .23 %
                 
                 
                 
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES  
LOAN PORTFOLIO AND CREDIT QUALITY  
   
       
    QUARTER ENDED  
    (Unaudited)  
    December 31, 2013     September 30,  2013     June 30, 2013     March 31, 2013     December 31, 2012  
BALANCE SHEET (Dollars in thousands)                                        
                                         
Total loans   $ 483,832     $ 472,495     $ 455,555     $ 454,051     $ 449,177  
Allowance for loan losses     (4,661 )     (4,959 )     (5,177 )     (5,037 )     (5,218 )
  Total loans, net     479,171       467,536       450,378       449,014       443,959  
Total assets     572,800       567,917       553,501       541,896       545,980  
Core deposits     375,593       375,166       357,935       362,911       372,496  
Noncore deposits     90,706       86,522       89,972       62,325       62,061  
  Total deposits     466,299       461,688       447,907       425,236       434,557  
Total borrowings     37,852       35,852       35,925       40,925       35,925  
Common shareholders' equity     65,249       63,045       62,520       62,039       61,448  
Total shareholders' equity     65,249       67,045       66,520       73,039       72,448  
Total shares outstanding     5,541,390       5,581,339       5,554,459       5,557,859       5,559,859  
Weighted average shares outstanding     5,555,952       5,562,835       5,556,133       5,559,859       5,559,859  
                                         
AVERAGE BALANCES (Dollars in thousands)                                        
                                         
Assets   $ 569,443     $ 560,089     $ 548,455     $ 541,279     $ 545,661  
Loans     479,321       464,324       456,937       449,065       438,168  
Deposits     461,630       456,191       439,780       429,174       433,573  
Common Equity     62,950       62,134       62,483       61,238       61,936  
Equity     66,906       66,134       67,483       72,238       72,936  
                                         
INCOME STATEMENT (Dollars in thousands)                                        
                                         
Net interest income   $ 5,626     $ 5,348     $ 5,269     $ 5,156     $ 5,112  
Provision for loan losses     825       375       100       375       150  
  Net interest income after provision     4,801       4,973       5,169       4,781       4,962  
Total noninterest income     1,191       738       1,251       758       983  
Total noninterest expense     4,935       4,359       4,523       4,311       4,349  
Income before taxes     1,057       1,352       1,897       1,228       1,596  
Provision for income taxes     (1,911 )     456       637       415       536  
  Net income     2,968       896       1,260       813       1,060  
Preferred dividend expense     58       50       63       137       138  
Net income available to common shareholders   $ 2,910     $ 846     $ 1,197     $ 676     $ 922  
                                         
PER SHARE DATA                                        
                                         
Earnings   $ .52     $ .15     $ .22     $ .12     $ .21  
Book value per common share     11.77       11.30       11.26       11.16       11.05  
Market value, closing price     9.90       9.10       8.88       9.21       7.09  
                                         
ASSET QUALITY RATIOS                                        
                                         
Nonperforming loans/total loans     .42 %     .91 %     .87 %     .84 %     1.04 %
Nonperforming assets/total assets     .68       1.21       1.17       1.41       1.45  
Allowance for loan losses/total loans     .96       1.09       1.14       1.11       1.16  
Allowance for loan losses/nonperforming loans     230.29       114.98       129.98       131.41       111.33  
Texas ratio (1)     5.59       9.56       9.02       9.81       10.17  
                                         
PROFITABILITY RATIOS                                        
                                         
Return on average assets     2.03 %     .60 %     .88 %     .51 %     .67 %
Return on average common equity     18.34       5.40       7.69       4.47       5.93  
Return on average equity     17.26       5.08       7.12       3.79       5.03  
Net interest margin     4.24       4.12       4.16       4.18       4.11  
Efficiency ratio     66.94       70.64       68.02       72.65       70.52  
Average loans/average deposits     103.83       101.78       103.90       104.63       99.45  
                                         
CAPITAL ADEQUACY RATIOS                                        
                                         
Tier 1 leverage ratio     10.31 %     10.90 %     11.01 %     12.23 %     11.98 %
Tier 1 capital to risk weighted assets     11.83       12.45       12.74       13.98       13.81  
Total capital to risk weighted assets     12.79       13.47       13.85       15.06       14.93  
Average equity/average assets (for the quarter)     11.75       11.81       12.30       13.35       13.37  
Tangible equity/tangible assets (at quarter end)     11.75       11.81       12.30       13.35       13.37  
 
  (1) Texas ratio equals nonperforming assets divided by shareholders' equity plus allowance for loan losses
 

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