STOCK OPTION AGREEMENT

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                                                                    EXHIBIT 10.5

                             STOCK OPTION AGREEMENT

     STOCK OPTION AGREEMENT dated September 20, 2005 between MACKINAC FINANCIAL
CORPORATION (the "Company") and DENNIS B. BITTNER (the "Optionee").

                                    RECITALS:

     A. Optionee is a currently serving non-employee director of the Company and
the Company has determined that Optionee's continued service on the Board of
Directors can have a significant effect on the future success of the Company.

     B. The Company has determined to awarded Optionee options to purchase from
the Company Ten Thousand (10,000) shares of the Company's Common Stock (the
"Option Shares") at a purchase price per share equal to equal to 100% of the
Fair Market Value (as defined in the Plan) of each such share, which the parties
agree to be Eleven Dollars 50/100 dollars ($11.50) (the "Exercise Price"). Such
options are to be issued under and in accordance with the terms and conditions
of the Company's 2000 Stock Incentive Plan (the "Plan") and this Agreement.

     C. The Directors of the Company have approved the award to Optionee of the
options to purchase the Option Shares in accordance with the Plan and this
Agreement.

     IT IS HEREBY AGREED AS FOLLOWS:

     1. Grant of Option; Effectiveness. Subject to the terms of the Plan and
this Agreement, the Company hereby grants and awards to Optionee the right and
option to purchase all or any of the Option Shares upon payment to the Company
of the Exercise Price per share as hereinafter provided.

     2. Vesting. (a) The right and option to purchase 20% of the Option Shares
shall vest and be exercisable beginning on the day following the Closing under
the Stock Purchase Agreement and continuing through the balance of the Option
Term (as hereinafter defined). The options for the remaining 80% of the Option
Shares shall vest and be exercisable in increments as provided below as and when
the Ten Day Trading Price (as hereinafter defined) for the Company's Common
Stock shall equal or exceed one or more of the Target Prices during the Pricing
Periods specified below:

<TABLE>
<CAPTION>
                                                      PERCENT OF OPTION SHARES
     TARGET PRICE               PRICING PERIOD                   VESTING
     ------------               --------------          ------------------------
<S>                      <C>                            <C>
Exercise Price x 1.15       During the Option Term                  27%
Exercise Price x 1.30    After the first year of the               27%
                                Option Term
Exercise Price x 1.45      After the second year of                26%
                              the Option Term
</TABLE>

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For purposes of this Agreement, the "Ten Day Trading Price" shall mean the
closing price for the Company's Common Stock on the Nasdaq Small Cap market for
any 10 consecutive days on which the Nasdaq market system is open and available
for trading. For purposes of making the foregoing determination, if for any
reason no shares of the Company's Common Stock are traded on any day that the
Nasdaq market is open and available for trading, the closing price for such date
shall be the closing price on the first preceding day on which shares of the
Company's Common Stock were traded.

(b) Notwithstanding the foregoing vesting schedule, but subject to the terms of
Section 3, all unvested options for Option Shares shall vest and become
immediately exercisable upon: (i) termination of the Employment Agreement by the
Company for any reason other than Cause (as defined in the Employment
Agreement); (ii) Optionee's Retirement (as defined in the Plan), or early
retirement or resignation with the consent of the Company as contemplated by
Section 10(a) and (b) of the Plan; (iii) the death or disability of the
Optionee; or (iv) a Change of Control (as defined in the Plan) of the Company.

     3. Option Period. Subject to the terms of this Agreement (including Section
2), the options may be exercised and Option Shares may be purchased at any time
and from time to time beginning on the first day after the date hereof and
ending on and prior to the tenth anniversary of the date hereof (the "Option
Term"), subject to the following:

          (a) Except as otherwise provided in this Section 3, in the event
Optionee ceases to remain in Service while this option is outstanding, the
options then vested shall remain exercisable until the earlier of (i) the last
day of the 36th month after the month Service is terminated, or (ii) the
expiration of the Option Period; and

          (b) Any vested and unexercised options shall expire at the time the
Opti