##### 



For Release:
    
    April 20, 2006Nasdaq:
    
    MFNCContact:
    
    Investor Relations at (888) 343-8147Website:
    
    www.bankmbank.com




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##### 



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 form 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




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##### 



MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
    For The Period EndedMarch 31,
    
    December 31,
    
    March 31,2006
    
    2005
    
    2005(Unaudited)
    
    
    
    
    
    (Unaudited)Selected Financial Condition Data (at
end of period):Total assets
    
    $
    334,591
    
    
    $
    298,722
    
    
    $
    275,216Total loans
    
    
    264,471
    
    
    
    239,771
    
    
    
    194,831Total deposits
    
    
    267,954
    
    
    
    232,632
    
    
    
    205,239Borrowings and subordinated debentures
    
    
    36,417
    
    
    
    36,417
    
    
    
    38,135Total shareholders equity
    
    
    27,173
    
    
    
    26,588
    
    
    
    28,854Selected Statements of Income Data:Net interest income
    
    $
    3,279
    
    
    $
    9,780
    
    
    $
    2,205Income (loss) before taxes
    
    
    498
    
    
    
    (7,364
    )
    
    
    (5,241
    )Net income (loss)
    
    
    498
    
    
    
    (7,364
    )
    
    
    (5,241
    )Income (loss) per common share  Basic
    
    
    .15
    
    
    
    (2.15
    )
    
    
    (1.53
    )Income (loss) per common share  Diluted
    
    
    .15
    
    
    
    (2.15
    )
    
    
    (1.53
    )Selected Financial Ratios and Other Data:Performance Ratios:Net interest margin
    
    
    3.62
    %
    
    
    3.64
    %
    
    
    3.21
    %Efficiency ratio
    
    
    82.88
    %
    
    
    160.43
    
    
    
    300.96Return on average assets
    
    
    .63
    
    
    
    (2.58
    )
    
    
    (7.16
    )Return on average equity
    
    
    7.47
    
    
    
    (25.63
    )
    
    
    (69.25
    )Average total assets
    
    $
    319,007
    
    
    $
    285,896
    
    
    $
    296,856Average total shareholders equity
    
    $
    27,055
    
    
    $
    28,732
    
    
    $
    30,692Average loans to average deposits ratio
    
    
    126.73
    %
    
    
    98.17
    %
    
    
    95.54
    %Common Share Data (at end of period):Market price per common share
    
    $
    9.81
    
    
    $
    9.10
    
    
    $
    18.13Book value per common share
    
    $
    7.93
    
    
    $
    7.76
    
    
    $
    8.42Common shares outstanding
    
    
    3,428,695
    
    
    
    3,428,695
    
    
    
    3,428,695Other Data (at end of period):Allowance for loan losses
    
    $
    5,415
    
    
    $
    6,108
    
    
    $
    6,836Non-performing assets
    
    $
    952
    
    
    $
    1,059
    
    
    $
    3,787Allowance for loan losses to total loans
    
    
    2.05
    %
    
    
    2.55
    %
    
    
    3.51
    %Non-performing assets to total assets
    
    
    .28
    %
    
    
    .35
    %
    
    
    1.38
    %Number of:Branch locations
    
    
    13
    
    
    
    12
    
    
    
    12




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##### 



MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
   (Dollars in thousands except per share data)
 March 31,
    
    
    December 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2005(Unaudited)
    
    
    
    
    
    
    (Unaudited)ASSETSCash and due from banks
    
    $
    6,220
    
    
    $
    4,833
    
    
    $
    3,656Federal funds sold
    
    
    12,000
    
    
    
    3,110
    
    
    
    10,207Cash and cash equivalents
    
    
    18,220
    
    
    
    7,943
    
    
    
    13,863Interest-bearing deposits in other financial
institutions
    
    
    853
    
    
    
    1,025
    
    
    
    14Securities available for sale
    
    
    34,140
    
    
    
    34,210
    
    
    
    52,298Federal Home Loan Bank stock
    
    
    4,855
    
    
    
    4,855
    
    
    
    4,805Total loans
    
    
    264,471
    
    
    
    239,771
    
    
    
    194,831Allowance for loan losses
    
    
    (5,415
    )
    
    
    (6,108
    )
    
    
    (6,836
    )Net loans
    
    
    259,056
    
    
    
    233,663
    
    
    
    187,995Premises and equipment
    
    
    12,318
    
    
    
    11,987
    
    
    
    10,588Other real estate held for sale
    
    
    952
    
    
    
    945
    
    
    
    1,515Other assets
    
    
    4,197
    
    
    
    4,094
    
    
    
    4,138Total assets
    
    $
    334,591
    
    
    $
    298,722
    
    
    $
    275,216LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Non-interest-bearing deposits
    
    $
    20,463
    
    
    $
    19,684
    
    
    $
    19,722Interest-bearing deposits
    
    
    247,491
    
    
    
    212,948
    
    
    
    185,517Total deposits
    
    
    267,954
    
    
    
    232,632
    
    
    
    205,239Borrowings
    
    
    36,417
    
    
    
    36,417
    
    
    
    38,135Other liabilities
    
    
    3,047
    
    
    
    3,085
    
    
    
    2,988Total liabilities
    
    
    307,418
    
    
    
    272,134
    
    
    
    246,362Shareholders equity:Preferred stock  No par value:Authorized 500,000 shares, no shares
outstanding
    
    
    
    
    
    
    
    
    
    
    Common stock  No par value:Authorized 18,000,000 sharesIssued and outstanding  3,428,695
    
    
    42,489
    
    
    
    42,412
    
    
    
    42,335Accumulated deficit
    
    
    (14,961
    )
    
    
    (15,461
    )
    
    
    (13,338
    )Accumulated other comprehensive income
    
    
    (355
    )
    
    
    (363
    )
    
    
    (143
    )Total shareholders equity
    
    
    27,173
    
    
    
    26,588
    
    
    
    28,854Total liabilities and shareholders equity
    
    $
    334,591
    
    
    $
    298,722
    
    
    $
    275,216




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##### 



MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
    Three Months EndedMarch 31,2006
    
    
    2005(Unaudited)
    
    
    (Unaudited)Interest income:Interest and fees on loans:Taxable
    
    $
    4,499
    
    
    $
    3,059Tax-exempt
    
    
    194
    
    
    
    242Interest on securities:Taxable
    
    
    273
    
    
    
    462Tax-exempt
    
    
    41
    
    
    
    42Other interest income
    
    
    168
    
    
    
    183Total interest income
    
    
    5,175
    
    
    
    3,988Interest expense:Deposits
    
    
    2,080
    
    
    
    1,130Borrowings
    
    
    416
    
    
    
    653Total interest expense
    
    
    2,496
    
    
    
    1,783Net interest income
    
    
    2,679
    
    
    
    2,205Provision for loan losses
    
    
    (600
    )
    
    
    Net interest income after provision for loan losses
    
    
    3,279
    
    
    
    2,205Other income:Service fees
    
    
    111
    
    
    
    161Gain (loss) on sale of securities
    
    
    
    
    
    
    (1
    )Other loan and lease income
    
    
    17
    
    
    
    7Net gains on sale of loans
    
    
    40
    
    
    
    Gain on sale of property and equipment
    
    
    
    
    
    
    2Other operating income
    
    
    48
    
    
    
    15Total other income
    
    
    216
    
    
    
    184Other expenses:Salaries, commissions, and related benefits
    
    
    1,594
    
    
    
    1,504Occupancy expense
    
    
    317
    
    
    
    226Furniture and equipment expense
    
    
    156
    
    
    
    159Data processing
    
    
    154
    
    
    
    246Accounting, legal, and consulting fees
    
    
    200
    
    
    
    318Loan and deposit expense
    
    
    129
    
    
    
    293Telephone
    
    
    49
    
    
    
    60Advertising expense
    
    
    70
    
    
    
    139Penalty on prepayment of FHLB borrowings
    
    
    
    
    
    
    4,320Other
    
    
    328
    
    
    
    365Total other expenses
    
    
    2,997
    
    
    
    7,630Income (loss) before provision for income taxes
    
    
    498
    
    
    
    (5,241
    )Provision for income taxes
    
    
    
    
    
    
    Net income (loss)
    
    $
    498
    
    
    $
    (5,241
    )Income (loss) per common share:Basic
    
    $
    .15
    
    
    $
    (1.53
    )Diluted
    
    $
    .15
    
    
    $
    (1.53
    )




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##### 



MACKINAC FINANCIAL CORPORATION AND SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT QUALITY
    Loan Portfolio Balances (at end of period):
 March 31,
    
    
    December 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2005Commercial LoansHospitality and tourism
    
    $
    38,045
    
    
    $
    37,681
    
    
    $
    45,390Gaming
    
    
    7,181
    
    
    
    7,553
    
    
    
    12,618Petroleum
    
    
    6,664
    
    
    
    6,508
    
    
    
    7,939Forestry
    
    
    5,332
    
    
    
    5,370
    
    
    
    5,486Other
    
    
    133,825
    
    
    
    118,211
    
    
    
    73,110Total Commercial Loans
    
    
    191,047
    
    
    
    175,323
    
    
    
    144,5431-4 family residential
real estate
    
    
    50,119
    
    
    
    44,660
    
    
    
    45,425Consumer
    
    
    2,300
    
    
    
    2,285
    
    
    
    2,277Construction
    
    
    21,005
    
    
    
    17,503
    
    
    
    2,586Total Loans
    
    $
    264,471
    
    
    $
    239,771
    
    
    $
    194,831
 Credit Quality (at end of period):
 March 31,
    
    
    December 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2005Nonperforming AssetsNonaccrual loans
    
    $
    
    
    
    $
    15
    
    
    $
    2,272Loans past due 90 days or more
    
    
    
    
    
    
    99
    
    
    
    Restructured loans
    
    
    
    
    
    
    
    
    
    
    Total nonperforming loans
    
    
    
    
    
    
    114
    
    
    
    2,272Other real estate owned
    
    
    952
    
    
    
    945
    
    
    
    1,515Total nonperforming assets
    
    $
    952
    
    
    $
    1,059
    
    
    $
    3,787Nonperforming loans as a % of
loans
    
    
    
    %
    
    
    .05
    %
    
    
    1.17
    %Nonperforming assets as a %
of assets
    
    
    .28
    %
    
    
    .35
    %
    
    
    1.38
    %Reserve for Loan Losses:At period end
    
    $
    5,415
    
    
    $
    6,108
    
    
    $
    6,836As a % of loans
    
    
    2.05
    %
    
    
    2.55
    %
    
    
    3.51
    %As a % of nonperforming loans
    
    
    N/A
    %
    
    
    5,357.89
    %
    
    
    300.88
    %As a % of nonaccrual loans
    
    
    N/A
    %
    
    
    N/M
    %
    
    
    300.88
    %




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##### 



AverageAverage
    
    Average
    
    Average
    
    Shareholders'
    
    Return on Average
    
    Net Interest
    
    Efficiency
    
    Net Income
    
    Book ValueQuarter Ended
    
    Assets
    
    Loans
    
    Deposits
    
    Equity
    
    Assets
    
    Equity
    
    Margin
    
    Ratio
    
    Per Share
    
    Per ShareMarch 31, 2006
    
    $
    319,007
    
    
    $
    250,735
    
    
    $
    254,720
    
    
    $
    27,055
    
    
    
    0.63
    %
    
    
    7.47
    %
    
    
    3.62
    %
    
    
    82.88
    %
    
    $
    0.15
    
    
    $
    7.93December 31, 2005
    
    
    288,619
    
    
    
    224,386
    
    
    
    219,967
    
    
    
    27,288
    
    
    
    (1.41
    )
    
    
    (14.95
    )
    
    
    3.96
    
    
    
    128.37
    
    
    
    (0.30
    )
    
    
    7.76September 30, 2005
    
    
    280,506
    
    
    
    209,795
    
    
    
    211,197
    
    
    
    28,112
    
    
    
    (0.73
    )
    
    
    (7.39
    )
    
    
    3.79
    
    
    
    112.11
    
    
    
    (0.15
    )
    
    
    8.14June 30, 2005
    
    
    277,754
    
    
    
    197,545
    
    
    
    206,875
    
    
    
    28,879
    
    
    
    (0.83
    )
    
    
    (8.01
    )
    
    
    3.67
    
    
    
    119.07
    
    
    
    (0.17
    )
    
    
    8.32March 31, 2005
    
    
    296,856
    
    
    
    199,703
    
    
    
    209,035
    
    
    
    30,692
    
    
    
    (7.16
    )
    
    
    (69.25
    )
    
    
    3.21
    
    
    
    300.96
    
    
    
    (1.53
    )
    
    
    8.42December 31, 2004
    
    
    327,543
    
    
    
    218,962
    
    
    
    211,685
    
    
    
    8,455
    
    
    
    2.95
    
    
    
    114.17
    
    
    
    2.48
    
    
    
    71.83
    
    
    
    8.25
    
    
    
    10.13September 30, 2004
    
    
    346,078
    
    
    
    226,951
    
    
    
    236,418
    
    
    
    6,096
    
    
    
    (0.87
    )
    
    
    (49.53
    )
    
    
    2.25
    
    
    
    120.66
    
    
    
    (2.17
    )
    
    
    18.44June 30, 2004
    
    
    372,246
    
    
    
    244,515
    
    
    
    260,031
    
    
    
    7,628
    
    
    
    (1.72
    )
    
    
    (84.13
    )
    
    
    2.28
    
    
    
    146.88
    
    
    
    (4.56
    )
    
    
    16.77March 31, 2004
    
    
    412,808
    
    
    
    289,027
    
    
    
    283,190
    
    
    
    9,522
    
    
    
    (1.62
    )
    
    
    (70.22
    )
    
    
    2.04
    
    
    
    163.37
    
    
    
    (4.75
    )
    
    
    26.70December 31, 2003
    
    
    439,426
    
    
    
    309,851
    
    
    
    306,848
    
    
    
    11,266
    
    
    
    (2.23
    )
    
    
    (86.77
    )
    
    
    1.70
    
    
    
    181.17
    
    
    
    (7.02
    )
    
    
    30.49
 *
    
    Historical per share data has been adjusted for the 20:1 reverse stock split distributed in December 2004.