SOURCE: Mackinac Financial Corporation

Mackinac Financial Corporation

October 30, 2014 16:00 ET

Mackinac Financial Corporation Reports Nine Month and Third Quarter 2014 Results; Announces a 50% Increase in Annual Dividend From $.20 to $.30 per Share

MANISTIQUE, MI--(Marketwired - Oct 30, 2014) -  Mackinac Financial Corporation (NASDAQ: MFNC), the bank holding company for mBank (the "Bank"), today announced third quarter 2014 income of $.886 million or $.16 per share compared to net income available to common shareholders of $.846 million, or $.15 per share for the third quarter of 2013. Operating results for the first nine months of 2014 totaled $2.352 million or $.43 per share compared to $2.719 million or $.49 per share for the same period in 2013. 

The consolidated operating results for 2014 were impacted by costs associated with several strategic initiatives. The Corporation incurred $.461 million of expenses related to acquisition initiatives and also recorded an after tax loss from the asset based lending subsidiary of $.379 million. The combination of these two initiatives had a negative after tax impact of $.683 million, or $.12 per share. Weighted average shares totaled 5,532,966 shares for the nine month period in 2014 and 5,540,200 shares in the 2014 third quarter compared to 5,559,108 shares for the nine month period and 5,562,835 shares in the third quarter of 2013.

The Corporation's subsidiary, mBank, recorded net income of $3.654 million for the first nine months of this year compared to $3.820 million for the same period in 2013. The largest adverse variance from 2013 results was noninterest income due to a reduced level of fees and gains on the sale of loans from secondary market mortgage lending of $.326 million as a result of the national mortgage refinance slowdown.

Total assets of the Corporation at September 30, 2014 were $613.943 million, up 8.10% from the $567.917 million reported at September 30, 2013 and up 7.18 % from the $572.800 million of total assets at year-end 2013. The Corporation and the Bank are both "well-capitalized."

Key highlights for the first nine months of 2014 results include:

  • Increased annual dividend by 50%, from $.20 to $.30 per share

  • Credit quality remains strong with a Texas Ratio of 6.27% compared to 9.56% one year ago, and nonperforming assets of $4.538 million, a $2.343 million reduction from a year earlier.

  • Healthy new loan growth, with nine-month production of $141 million and balance sheet growth of $35 million.

  • Continued core deposit procurement, up $28 million from year end primarily in lower cost transactional accounts to augment funding of loan growth.

  • Margin is steady at 4.20%, with solid growth in interest income from $15.773 million in the first nine months of 2013 to $17.138 million in the 2014 nine month period, an 8.7% increase.

  • The pending acquisition of Peninsula Bank, a 127-year old, $132 million asset bank headquartered in the Upper Peninsula with six banking locations in Marquette County remains on schedule for a close in early December, subject to Peninsula shareholder approval. With the expected consummation of this transaction, total assets of the Corporation will reach close to $750 million and good earnings accretion in 2015 remains projected as noted in our original press release on the transaction from July of this year. 

Loans and Nonperforming Assets

Total loans at September 30, 2014 were $518.373 million, a 9.71% increase from the $472.495 million at September 30, 2013 and up $34.541 million from year-end 2013 total loans of $483.832 million. In addition to the aforementioned balance sheet totals, the company services $144 million of sold mortgage loans and $70 million of sold SBA and USDA loans. Total loans under management now reside at $732 million. 

New loan production totaled $140.8 million with the Upper Peninsula contributing $82.4 million, the Northern Lower Peninsula $28.5 million and Southeast Michigan $29.9 million. Commercial loan production accounted for $85.9 million of the nine month total, with consumer, primarily 1-4 family mortgages of $54.9 million. Commenting on new loan production and overall lending activities, Kelly W. George, President and CEO of mBank stated, "We were very pleased with our overall continued success in new loan production, primarily balance sheet this year given the slowdown of secondary market mortgage sales as compared to previous years. Loan balance growth has accelerated in recent months with good activity in all of our markets and lending segments. Our pipeline remains good moving into the remainder of the year especially within the commercial loan area that has seen funding needs from clients for various capital outlays such as new equipment purchases, expansion and purchase of new business opportunities, and working capital to fund growth." 

Nonperforming loans totaled $2.695 million, .52% of total loans at September 30, 2014 compared to $4.313 million, or .91% of total loans at September 30, 2013 and up $.671 million from December 31, 2013. Nonperforming assets were reduced by $2.343 million from a year ago and stood at .38% of total assets and equated to $4.538 million. Total loan delinquencies greater than 30 days resided at a nominal .76% or $3.871 million. George, commenting on credit quality, stated, "Our micro credit risk metrics and overall loan portfolio payment performance remains strong. We are diligent within our loan origination structures and will not stretch our prudent lending parameters for new loans. From a macro perspective, our loan origination mix and concentrations remain well manageable and will improve with the mix and types of loans that will be acquired in the Peninsula Bank acquisition." 

Margin Analysis

Net interest income in the first nine months of 2014 increased to $17.138 million, 4.20%, compared to $15.773 million, or 4.15%, in the first nine months of 2014. George stated, "The growth of our net interest income and stability of our net interest margin is a direct reflection of our continued pricing discipline for loans and deposits within our various markets. We will continue our efforts to maintain our strong net interest margin within this historically low interest rate cycle through the use of continued targeted funding strategies and disciplined loan pricing and terms in efforts to mitigate longer term interest rate risk. We will also utilize alternative funding sources such as internet CDs and small levels of wholesale deposits when deemed necessary to structure different liabilities to match asset durations for competitive lending situations that arise, and cover any potential short term funding gaps that could develop."

Deposits

Total deposits of $491.206 million at September 30, 2014 increased by 6.39% from deposits of $461.688 million on September 30, 2013 and were up $24.907 million from year-end deposits $466.299 million. The overall increase in deposits for the first nine months of 2014 from year-end is comprised of an increase in core deposits, mostly in transactional accounts. George, commenting on core deposits and overall liquidity needs, stated, "The Corporation maintains a strong liquidity position to fund operations and loan growth. We were pleased with the continued seasonal pick up of our deposit balances as we expand our client base through lending relationships and also the procurement of some in market municipality accounts we had been targeting for several years. We will remain committed to our core banking philosophy which emphasizes funding loan growth with core deposits to build long term franchise value and help grow the economic bases in our local communities."

Noninterest Income/Expense

Noninterest income, at $2.109 million in the first nine months of 2014, decreased $.638 million from the first nine months 2013 level of $2.747 million. Noninterest income decreased primarily as a result of a reduced level of fees and gains on the sale of loans from secondary market mortgage activity of $.326 million from prior year period, along with slower sales on SBA loans and reduced levels of service fee income. Noninterest expense, at $15.131 million in the first nine months of 2014, increased $1.938 million, or 14.70% from the same period in 2013. The largest increase from the first nine months of 2013 was in salaries and benefits, largely reflective of the compensation packages for the staff up of our asset based lending subsidiary formed in the third quarter of 2013. Overall salary and benefit costs at the subsidiary bank remain below peer levels. 

Assets and Capital

Total assets of the Corporation at September 30, 2014 were $613.943 million, up 8.10% from the $567.917 million reported at September 30, 2013 and up $41.143 million from the $572.800 million of total assets at year-end 2013. The increase in assets during the first nine months of 2014 was primarily loan growth. Total common shareholders' equity at September 30, 2014 was $67.132 million, or $12.06 per share, compared to $63.045 million, or $11.30 per share on September 30, 2013, an increase of $4.087 million, or 6.48 %. 

Paul D. Tobias, Chairman and Chief Executive Officer, concluded, "We are very excited about our proposed acquisition of Peninsula State Bank. This community bank has an impressive tradition. We are pleased to inherit this tradition within our largest and growing commerce hub in the Upper Peninsula. We expect this acquisition to be immediately accretive.

"In addition, our organic growth will be enhanced when our asset based lending subsidiary grows to a level that sustains profitability by January 2015. This new business is complementary to our commercial lending and to our SBA/USDA efforts. These current initiatives will produce positive returns on our investment and significantly add to shareholder value in the near future. As we look beyond 2014 during our year-end planning processes, we will continue to evaluate opportunities for both organic and external growth to enhance shareholder value. We are pleased to announce a dividend increase to 7.5 cents per quarter. This represents a 50% increase and reflects our confidence in our anticipated earnings growth."

Mackinac Financial Corporation is a registered bank holding company formed under the Bank Holding Company Act of 1956 with assets in excess of $610 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 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: our failure to consummate the Peninsula Bank acquisition, material changes to the expected operating results of Peninsula Bank, 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.

Important Additional Information

Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed Merger, Mackinac has filed with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 that includes a Proxy Statement of Peninsula and a Prospectus of Mackinac which was been declared effective by the SEC on October 22, 2014 (as supplemented, the "Proxy Statement/Prospectus"), as well as other relevant documents concerning the Merger. PENINSULA SHAREHOLDERS AND MACKINAC INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the Proxy Statement/Prospectus and other documents containing important information about Mackinac and Peninsula through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by Mackinac are available free of charge on Mackinac's website at www.bankmbank.com under the tab "MFNC Investor Relations," and then under the tab "SEC Filings."

Participants in the Solicitation

The directors, executive officers, and certain other members of management and employees of Mackinac may be deemed to be participants in the solicitation of proxies in favor of the Merger from the shareholders of Peninsula. Information about the directors and executive officers of Mackinac is included in the proxy statement for its 2014 annual meeting of shareholders, which was filed with the SEC on April 30, 2014 and in the Proxy Statement/Prospectus referenced above. 

 
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
 SELECTED FINANCIAL HIGHLIGHTS
                   
(Dollars in thousands, except per share data)   September 30,
2014
    December 31,
2013
    September 30,
2013
 
    (Unaudited)           (Unaudited)  
Selected Financial Condition Data (at end of period):                        
Assets   $ 613,943     $ 572,800     $ 567,917  
Loans     518,373       483,832       472,495  
Investment securities     48,742       44,388       48,096  
Deposits     491,206       466,299       461,688  
Borrowings     52,409       37,852       35,852  
Common Shareholders' Equity     67,132       65,249       63,045  
Shareholders' equity     67,132       65,249       67,045  
                         
                         
Selected Statements of Income Data (nine months and year ended):                         
Net interest income   $ 17,138     $ 21,399     $ 15,773  
Income before taxes and preferred dividend     3,555       5,534       4,477  
Net income     2,352       5,629       2,719  
Income per common share - Basic*     .43       1.01       .49  
Income per common share - Diluted*     .42       1.00       .49  
Weighted average shares outstanding     5,532,966       5,558,313       5,559,108  
Weighted average shares outstanding- Diluted     5,594,040       5,650,058       5,559,108  
                         
Three Months Ended:                        
Net interest income   $ 5,886     $ 5,626     $ 5,348  
Income before taxes and preferred dividend     1,341       1,057       1,352  
Net income     886       2,910       846  
Income per common share - Basic     .16       .52       .15  
Income per common share - Diluted*     .16       .51       .15  
Weighted average shares outstanding*     5,540,200       5,555,952       5,562,835  
Weighted average shares outstanding- Diluted     5,611,959       5,555,952       5,562,835  
                         
Selected Financial Ratios and Other Data:                        
Performance Ratios:                        
Net interest margin     4.20 %     4.17 %     4.15 %
Efficiency ratio     77.34       67.46       70.36  
Return on average assets     .53       1.01       .66  
Return on average common equity     4.77       9.07       5.89  
Return on average equity     4.77       8.26       5.30  
                         
Average total assets   $ 590,001     $ 555,152     $ 550,013  
Average common shareholders' equity     65,862       62,082       61,776  
Average total shareholders' equity     65,862       68,172       68,599  
Average loans to average deposits ratio     103.52 %     103.46 %     103.40 %
                         
                         
Common Share Data at end of period:                        
Market price per common share   $ 11.30     $ 9.90     $ 9.10  
Book value per common share   $ 12.06     $ 11.77     $ 11.30  
Common shares outstanding     5,564,815       5,541,390       5,581,339  
Dividends per share, annualized   $ .20     $ .17     $ .16  
                         
Other Data at end of period:                        
Allowance for loan losses   $ 5,279     $ 4,661     $ 4,959  
Non-performing assets   $ 4,538     $ 3,908     $ 6,881  
Allowance for loan losses to total loans     1.02 %     .96 %     1.05 %
Non-performing assets to total assets     .74 %     .68 %     1.21 %
Texas ratio     6.27 %     5.59 %     9.56 %
                         
Number of:                        
  Branch locations     11       11       11  
  FTE Employees     134       133       128  
                   
                   
                   
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
                   
    September 30,     December 31,     September 30,  
    2014     2013     2013  
    (Unaudited)           (Unaudited)  
ASSETS                        
                         
Cash and due from banks   $ 22,399     $ 18,216     $ 22,791  
Federal funds sold     2       3       3  
  Cash and cash equivalents     22,401       18,219       22,794  
                         
Interest-bearing deposits in other financial institutions     235       10       10  
Securities available for sale     48,742       44,388       48,096  
Federal Home Loan Bank stock     3,060       3,060       3,060  
                         
Loans:                        
  Commercial     383,759       359,368       353,526  
  Mortgage     119,039       110,663       104,504  
  Consumer     15,575       13,801       14,465  
    Total Loans     518,373       483,832       472,495  
      Allowance for loan losses     (5,279 )     (4,661 )     (4,959 )
  Net loans     513,094       479,171       467,536  
                         
Premises and equipment     9,821       10,210       10,484  
Other real estate held for sale     1,843       1,884       2,568  
Deferred tax asset     8,681       9,933       7,953  
Other assets     6,066       5,925       5,416  
                         
TOTAL ASSETS   $ 613,943     $ 572,800     $ 567,917  
                         
LIABILITIES AND SHAREHOLDERS' EQUITY                        
                         
LIABILITIES:                        
Deposits:                        
  Noninterest bearing deposits   $ 84,073     $ 72,936     $ 70,063  
  NOW, money market, interest checking     173,793       149,123       158,588  
  Savings     15,263       13,039       12,694  
  CDs < $100,000     130,821       140,495       133,821  
  CDs > $100,000     24,891       23,159       23,816  
  Brokered     62,365       67,547       62,706  
      Total deposits     491,206       466,299       461,688  
                         
  Federal funds purchased     7,500       -       -  
  Borrowings     44,909       37,852       35,852  
  Other liabilities     3,196       3,400       3,332  
    Total liabilities     546,811       507,551       500,872  
                         
SHAREHOLDERS' EQUITY:                        
  Preferred stock - No par value:                        
    Authorized - 500,000 shares, none issued and outstanding     -       -       4,000  
  Common stock and additional paid in capital - No par value                        
    Authorized - 18,000,000 shares                        
    Issued and outstanding - 5,564,815; 5,541,390 and 5,581,339 respectively     53,800       53,621       53,915  
    Retained earnings     12,923       11,412       8,780  
    Accumulated other comprehensive income     409       216       350  
                         
      Total shareholders' equity     67,132       65,249       67,045  
                         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 613,943     $ 572,800     $ 567,917  
         
         
         
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
         
    Three Months Ended   Six Months Ended
    September 30,   September 30,
    2014   2013   2014   2013
    (Unaudited)   (Unaudited)
INTEREST INCOME:                        
  Interest and fees on loans:                        
    Taxable   $ 6,651   $ 6,077   $ 19,305   $ 17,980
    Tax-exempt     4     26     27     81
  Interest on securities:                        
    Taxable     230     245     711     726
    Tax-exempt     14     9     41     22
  Other interest income     34     33     114     96
    Total interest income     6,933     6,390     20,198     18,905
                         
INTEREST EXPENSE:                        
  Deposits     813     879     2,435     2,642
  Borrowings     234     163     625     490
    Total interest expense     1,047     1,042     3,060     3,132
                         
Net interest income     5,886     5,348     17,138     15,773
Provision for loan losses     187     375     561     850
Net interest income after provision for loan losses     5,699     4,973     16,577     14,923
                         
OTHER INCOME:                        
  Deposit service fees     168     158     517     495
  Income from loans sold on the secondary market     212     203     455     781
  SBA/USDA loan sale gains     -     135     548     798
  Mortgage servicing income     313     128     415     413
  Other     75     114     174     260
    Total other income     768     738     2,109     2,747
                         
OTHER EXPENSE:                        
  Salaries and employee benefits     2,481     2,226     7,545     6,907
  Occupancy     511     362     1,595     1,107
  Furniture and equipment     305     274     927     799
  Data processing     288     269     862     802
  Advertising     114     119     344     334
  Professional service fees     276     161     883     706
  Loan and deposit     144     55     306     173
  Writedowns and losses on other real estate held for sale     176     57     190     146
  FDIC insurance assessment     92     100     267     300
  Telephone     84     84     248     229
  Other     655     652     1,964     1,690
    Total other expenses     5,126     4,359     15,131     13,193
                         
Income before provision for income taxes     1,341     1,352     3,555     4,477
Provision for income taxes     455     456     1,203     1,508
                         
NET INCOME     886     896     2,352     2,969
                         
Preferred dividend and accretion of discount     -     50     -     250
                         
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS   $ 886   $ 846   $ 2,352   $ 2,719
                         
INCOME PER COMMON SHARE:                        
  Basic   $ .16   $ .15   $ .43   $ .49
  Diluted   $ .16   $ .15   $ .42   $ .49
 
 
 
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,
    2014   2013   2013
    (Unaudited)   (Unaudited)   (Unaudited)
Commercial Loans:                  
Real estate - lessors of nonresidential buildings   $ 100,912   $ 100,333   $ 101,406
Hospitality and tourism     42,538     45,360     41,473
Lessors of residential buildings     16,262     14,191     14,573
Commercial construction     12,242     10,904     16,054
Gasoline stations and convenience stores     11,626     11,534     10,897
Real estate agents and managers     9,810     10,922     10,975
Other     190,369     166,124     158,148
  Total Commercial Loans     383,759     359,368     353,526
                   
1-4 family residential real estate     110,310     103,768     98,770
Consumer     15,575     13,801     14,465
Consumer construction     8,729     6,895     5,734
                   
  Total Loans   $ 518,373   $ 483,832   $ 472,495
                     

Credit Quality (at end of period):

                   
    September 30,     December 31,     September 30,  
    2014     2013     2013  
    (Unaudited)     (Unaudited)     (Unaudited)  
Nonperforming Assets:                        
Nonaccrual loans   $ 2,098     $ 1,410     $ 4,313  
Loans past due 90 days or more     -       -       -  
Restructured loans     597       614       -  
  Total nonperforming loans     2,695       2,024       4,313  
Other real estate owned     1,843       1,884       2,568  
  Total nonperforming assets   $ 4,538     $ 3,908     $ 6,881  
Nonperforming loans as a % of loans     .52 %     .42 %     .91 %
Nonperforming assets as a % of assets     .74 %     .68 %     1.21 %
Reserve for Loan Losses:                        
At period end   $ 5,279     $ 4,661     $ 4,959  
As a % of average loans     1.06 %     1.01 %     1.09 %
As a % of nonperforming loans     195.88 %     230.29 %     114.98 %
As a % of nonaccrual loans     251.62 %     330.57 %     114.98 %
Texas Ratio     6.27 %     5.59 %     9.56 %
                         
Charge-off Information (year to date):                        
  Average loans   $ 496,383     $ 462,500     $ 456,831  
  Net charge-offs (recoveries)   $ (57 )   $ 2,232     $ 1,109  
  Charge-offs as a % of average loans     N/M %     .48 %     .32 %
                     
                     
                     
MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
 
                     
  QUARTER ENDED  
  (Unaudited)  
  September 30,   June 30,   March 31,   December 31,   September 30,  
  2014   2014   2014   2013   2013  
BALANCE SHEET (Dollars in thousands)                              
                               
Total loans $ 518,373   $ 502,940   $ 485,862   $ 483,832   $ 472,495  
Allowance for loan losses   (5,279 )   (5,097 )   (4,883 )   (4,661 )   (4,959 )
  Total loans, net   513,094     497,843     480,979     479,171     467,536  
Total assets   613,943     595,869     583,592     572,800     567,917  
Core deposits   403,950     380,772     384,846     375,593     375,166  
Noncore deposits   87,256     103,244     90,864     90,706     86,522  
  Total deposits   491,206     484,016     475,710     466,299     461,688  
Total borrowings   52,409     42,087     38,852     37,852     35,852  
Common shareholders' equity   67,132     66,477     65,730     65,249     63,045  
Total shareholders' equity   67,132     66,477     65,730     65,249     67,045  
Total shares outstanding   5,564,815     5,527,690     5,527,690     5,541,390     5,581,339  
Weighted average shares outstanding   5,540,200     5,527,690     5,530,908     5,555,952     5,562,835  
                               
AVERAGE BALANCES (Dollars in thousands)                              
                               
Assets $ 607,840   $ 581,150   $ 580,717   $ 569,443   $ 560,089  
Loans   509,618     492,923     486,354     479,321     464,324  
Deposits   494,599     469,720     473,951     461,630     456,191  
Common Equity   66,558     65,553     65,462     62,950     62,134  
Equity   66,558     65,553     65,462     66,906     66,134  
                               
INCOME STATEMENT (Dollars in thousands)                              
                               
Net interest income $ 5,886   $ 5,659   $ 5,593   $ 5,626   $ 5,348  
Provision for loan losses   187     191     183     825     375  
  Net interest income after provision   5,699     5,468     5,410     4,801     4,973  
Total noninterest income   768     650     691     1,191     738  
Total noninterest expense   5,126     4,898     5,107     4,935     4,359  
Income before taxes   1,341     1,220     994     1,057     1,352  
Provision for income taxes   455     414     334     (1,911 )   456  
  Net income   886     806     660     2,968     896  
Preferred dividend expense   -     -     -     58     50  
Net income available to common shareholders $ 886   $ 806   $ 660   $ 2,910   $ 846  
                               
PER SHARE DATA                              
                               
Earnings $ .16   $ .15   $ .12   $ .52   $ .15  
Book value per common share   12.06     12.03     11.89     11.77     11.30  
Market value, closing price   11.30     12.90     12.54     9.90     9.10  
Dividends per share   .05     .05     .05     .05     .04  
                               
ASSET QUALITY RATIOS                              
                               
Nonperforming loans/total loans   .52 %   .53 %   .31 %   .42 %   .91 %
Nonperforming assets/total assets   .74     .77     .63     .68     1.21  
Allowance for loan losses/total loans   1.02     1.01     1.01     .96     1.09  
Allowance for loan losses/nonperforming loans   195.88     192.19     327.50     230.29     114.98  
Texas ratio (1)   6.27     6.43     5.18     5.59     9.56  
                               
PROFITABILITY RATIOS                              
                               
Return on average assets   .58 %   .56 %   .46 %   2.03 %   .60 %
Return on average common equity   5.28     4.93     4.09     18.34     5.40  
Return on average equity   5.28     4.93     4.09     17.26     5.08  
Net interest margin   4.20     4.18     4.25     4.24     4.12  
Efficiency ratio   73.83     77.55     80.57     66.94     70.64  
Average loans/average deposits   103.03     104.94     102.62     103.83     101.78  
                               
CAPITAL ADEQUACY RATIOS                              
                               
Tier 1 leverage ratio   10.23 %   10.50 %   10.25 %   10.31 %   10.90 %
Tier 1 capital to risk weighted assets   11.68     11.86     11.79     11.83     12.45  
Total capital to risk weighted assets   12.68     12.87     12.79     12.79     13.47  
Average equity/average assets (for the quarter)   10.95     11.28     11.27     11.75     11.81  
Tangible equity/tangible assets (at quarter end)   10.93     11.16     11.26     11.75     11.81  
 
(1) Texas ratio equals nonperforming assets divided by shareholders' equity plus allowance for loan losses
 

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