 Overall Quarterly Loan Production Overall Quarterly Loan Production New Loan Production less PPP loans New Loan Production less PPP loans MFNC Composition of Loans June 30, 2020 MFNC Composition of Loans June 30, 2020 COVID-19 Loan Modifications Still in Deferral COVID-19 Loan Modifications Still in Deferral Breakdown of the 15.3M of CML COVID-19 Mods Breakdown of the 15.3M of CML COVID-19 Mods Margin Analysis Per Quarter Margin Analysis Per QuarterMANISTIQUE, Mich., July 30, 2020 GLOBE NEWSWIRE -- Mackinac Financial Corporation Nasdaq: MFNC we, or the Corporation the bank holding company for mBank the Bank today announced 2020 second quarter net income of 3.45 million, or .33 per share, compared to 2019 second quarter net income of 3.67 million, or .34 per share. Net income for the first two quarters of 2020 was 6.50 million, or .61 per share, compared to 6.84 million, or .64 per share for the same period of 2019. Total assets of the Corporation at June 30, 2020 were 1.52 billion, compared to 1.33 billion at June 30, 2019. Shareholders equity at June 30, 2020 totaled 164.16 million, compared to 157.84 million at June 30, 2019. Book value per share outstanding equated to 15.58 at the end of the second quarter 2020, compared to 14.70 per share outstanding a year ago. Tangible book value at quarter-end was 139.88 million, or 13.28 per share outstanding, compared to 133.24 million, or 12.40 per share outstanding at the end of the second quarter 2019. Additional notes: mBank, the Corporations primary asset, recorded net income of 3.88 million for the second quarter of 2020 and 7.28 million for the first six months of 2020. As reflected in the size of the balance sheet, the Corporation funded approximately 150 million of Payroll Protection Program PPP loans in the second quarter with origination fees totaling approximately 5.1 million. These loans are supporting over one thousand small businesses throughout our footprint with the majority of recipients residing in the Upper Peninsula and Northern Michigan. Only 15.3 million of commercial loan payment deferrals remain from peak levels of approximately 201 million, equating to a reduction of 92. Non-interest income was very solid for the second quarter including strong secondary market mortgage fees of 1.51 million and premiums on the sale of Small Business Administration SBA guaranteed loans of 274 thousand. Year-to-date secondary market mortgage fees were 2.05 million and SBA premiums 984 thousand. The residential mortgage pipeline resides at very robust levels and we expect sustained output from this line of business as we look to upcoming quarters. Core operating margin, which is net of accretion from acquired loans that were subject to purchase accounting adjustments and PPP loan origination fees, was 3.75. However, we also estimate, on a non-GAAP basis, that PPP loan yields not inclusive of fee income are roughly a 26 basis point strain. Estimated core operating margin is approximately 4.01.COVID-19 Operating UpdateUpon the onset of the COVID-19 pandemic, management took proactive measures and moved quickly to implement protocols and adjust operations to continue to serve all constituencies. These protocols have been refined throughout the second quarter as the pandemic operating environment evolved within the Corporations respective regions. Speaking to these ongoing operational activities, President of the Corporation and President and CEO of mBank, Kelly W. George, stated, When the Coronavirus crisis started to heighten around mid-March, we began to swiftly activate our pandemic response plan in each critical risk area of the bank. We subsequently closed our lobby access in the middle of March and began serving clients who needed in-person transactions almost exclusively via drive-thru windows. Most of our branch lobbies are now open to the public and all are operating under enhanced safety and cleaning protocol. Overall, the majority of our bank footprint, outside of Southeast Michigan, resides in markets where active COVID-19 cases are very nominal compared to other areas of the country. This is a trend we hope continues so that we do not need to take steps back to a more restrictive pandemic operating environment. The much lower COVID-19 case totals in most of our Northern Michigan and Wisconsin regions led to a sustained uptick in commerce activity, starting around Memorial Day, for both our tourism and retail industries. Specifically, hotel occupancies have come back to more normalized levels for this time of year. We remain cautiously optimistic that these positive health and commerce conditions can be maintained throughout our more traditionally busier seasonal months as we continue into the latter part of summer and early fall.Revenue PPP RecognitionTotal revenue of the Corporation for second quarter 2020 was 18.81 million, compared to 17.87 million for the second quarter of 2019. Total interest income for the second quarter was 16.44 million, compared to 16.76 million for the same period in 2019. The 2020 second quarter interest income included accretive yield of 320 thousand from combined credit mark accretion associated with acquisitions, compared to 741 thousand in the same period of 2019.The second quarter 2020 interest income was also positively impacted by the recognition of a portion of the PPP loan origination fees that were earned during the quarter: The bank originated approximately 150 million of PPP loans in the second quarter. The origination efforts resulted in fees earned of 5.09 million, which are deferred and will be recognized over the life of the PPP loans, which is 24 months. Fee income of 2.13 million was recognized in the current quarter, offsetting 1.7 million of direct origination costs and the 425 thousand of accretion of the deferred fees. The remaining deferred fees of 2.97 million will be accreted over the remaining 21 months, or accelerated upon early payoff of the PPP loans.Loan Production and Portfolio Mix Total balance sheet loans at June 30, 2020 were 1.15 billion, which is inclusive of 149.82 million of PPP loans, compared to June 30, 2019 balances of 1.06 billion. Total loans under management reside at 1.44 billion, which includes 281.27 million of service retained loans. Driven by strong mortgage refinance activity, overall traditional loan production non-PPP for the first six months of 2020 was 174.81 million, compared to 184.6 million for the same period of 2019. When including PPP loans, total production was 324.63 million. Of the total production, traditional commercial loans equated to 64 million, consumer 111 million and the aforementioned 150 million of PPP. Within the consumer totals was 86 million of secondary market mortgage production. In total, 77 of PPP funds went to existing mBank clients. There were also 295 new customers that received PPP loans and 44 included a new deposit relationship.Overall Quarterly Loan Production: Loan Production less PPP loans: on new loan production and overall lending activities, Mr. George stated, As can be seen from our production totals, we had a very busy second quarter, which was dominated by record mortgage production and PPP activity. The overall make up of the portfolio remains well diversified. We also continue to partake in some other specific pandemic-based relief programs that are being sponsored at the state and federal levels to help support the working capital needs of our local small businesses in terms of reopening. The relatively low number of virus cases in the majority of our footprint provide a safer environment for tourists to travel via automobile driving the strong local commerce uptick we have seen over the last several months. Our northern markets are also seeing heightened real estate activity from families and businesses looking to avoid a possible second wave of the virus and relocate for an overall healthier quality of life where working remote may become more of the norm for some time. These attributes, coupled with lack of large concentrations of inventory, have driven up prices and shortened marketing times for everything from second homes to vacant land.MFNC Composition of Loans June 30, 2020: Quality and COVID-19 Loan ActivityNonperforming loans totaled 6.124 million, or .53 .61 excluding PPP balances of total loans at June 30, 2020, compared to 6.416 million, or .61 of total loans at March 31, 2020 and 4.673 million, or .44 of total loans at June 30, 2019. Total loan delinquencies greater than 30 days resided at .54 .61 excluding PPP balances, compared to 1.23 a quarter ago, and 1.05 in 2019. The nonperforming assets to total assets ratio resided at .55 .61 excluding PPP balances for the second quarter of 2020, compared to .51 for the second quarter of 2019. COVID-19 related loan deferral activity has slowed significantly in the second quarter reducing by 90 from peak levels and equating to a nominal 2.3 of total loans. Of the original 219.60 million of payment deferred loans, 196.70 have already returned to contractual obligations of either principal and interest or interest only, for a short period, as they come off of full payment deferral to build up cash flow.COVOD-19 Loan Modifications Still in Deferral: the 15. 