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Clarkston Financial Corporation Reports 2014 Q3 Results

CLARKSTON, Mich., Oct. 30, 2014 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation ("Corporation") (OTCBB:CKFC), the holding company for Clarkston State Bank ("Bank"), today reported a net income of $299,000 or $0.09 per share for the three months ended September 30, 2014, compared to net income of $205,000 or $.06 per share for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the corporation reported net income of $811,000 or $0.25 per share compared to a net income of $486,000 or $0.15 per share for the same period in 2013.

J. Grant Smith, CEO, said, "The positive operating performance of the Bank continues. Local market conditions are improving which has translated into new opportunities for loans and deposits. We expect to achieve our financial goals established at the start of the year and we remain confident our team will continue to grow our balance sheet."

Operating Results

The Corporation's net interest income increased to $1,366,000 for the quarter ended September 30, 2014 compared to $1,275,000 for the same period ended September 30, 2013. The net interest margin of the Bank showed a slight decrease, ending at 4.71% for the quarter ended September 30, 2014, down from 4.78% for the quarter ended September 30, 2013. The decrease in net interest margin is representative of the competitive lending environment of today's market.

Noninterest income increased in the third quarter due to one-time gains recognized in the third quarter of 2014 associated with the guaranteed portion of SBA loans, which were sold off. The quarter ended at $194,000 compared to $161,000 for the quarter ended September 30, 2013, an increase of $33,000 or 20.50%. Noninterest expense continued to increase, ending the third quarter 2014 at $1,261,000 compared to $1,231,000 for the same period ended September 30, 2013, an increase of $30,000 or 2.44%.

Balance Sheet

Total assets at September 30, 2014 were $141,587,000 compared to $126,008,000 at September 30, 2013, an increase of $15,579,000 or 12.36%. The growth in assets is attributable to increases in deposits, as well as the reversal of the valuation allowance against the deferred tax asset in December 2013.

Total loans increased $9,139,000 from $101,322,000 at September 30, 2013 to $110,461,000 at September 30, 2014, an increase of 9.02%. Total deposits increased $9,016,000 or 7.90%, ending at $123,110,000 for September 30, 2014, up from $114,094,000 at September 30, 2013. Noninterest bearing demand deposits increased $9,304,000 from September 30, 2013 to September 30, 2014, reflecting an increase of 20.79%.

Total stockholders' equity increased from $5,947,000 at September 30, 2013 to $11,921,000 at September 30, 2014, an increase of $5,974,000 or 100.45%. This increase is attributable to improvements in net income in 2013 and 2014, mainly driven by the recapture of $4,906,000 in the previously disallowed deferred tax asset in 2013.

Asset Quality

Total non-performing loans decreased to $144,000 at September 30, 2014 compared to $816,000 from the same period in 2013, a decrease of $672,000, or 82.35%. The allowance for loan loss decreased to 1.65% of total loans as of September 30, 2014, compared to 2.25% for the same period ended 2013. Management continually monitors the allowance for loan loss to determine its adequacy.

Clarkston State Bank opened in January 1999 and operates four branches in Clarkston, Waterford, and Independence Township, Michigan.

Safe Harbor. This news release contains comments or information that constitute forward-looking statements within the context of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve significant risks and uncertainties. Actual results may differ materially from the results discussed in the forward-looking statements. Factors that may cause such a difference include: changes in interest rates and interest-rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior and their ability to repay loans; and changes in the national and local economy. The Corporation assumes no responsibility to update forward-looking statements.

CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars, in thousands)
(unaudited)
9/30/2014
12/31/2013 (unaudited)
9/30/2013
Assets
Cash and due from banks $ 11,874 $ 5,154 $ 7,938
Securities – Available for sale 5,828 6,689 7,013
Federal Home Loan Bank stock, at cost 556 556 556
Loans 112,314 104,836 103,655
Allowance for possible loan losses (1,853) (1,821) (2,333)
Net loans 110,461 103,015 101,322
Banking premises and equipment 4,851 4,814 4,815
Deferred tax asset 6,077 6,115 1,534
Other real estate owned 1,396 1,396 2,436
Accrued interest receivable and other assets 544 517 394
Total assets $ 141,587 $ 128,256 $ 126,008
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing demand deposits 54,052 40,993 44,748
Interest-bearing 69,058 70,251 69,346
Total deposits 123,110 111,244 114,094
Other Liabilities
Other borrowings 5,625 5,300 5,400
Accrued interest payable and other liabilities 931 738 567
Total liabilities 129,666 117,282 120,061
Stockholders' Equity
Common stock 11,917 11,909 11,908
Paid-in capital 11,798 11,790 11,789
Restricted stock - Unearned compensation (42) (96) (113)
Accumulated deficit (11,744) (12,555) (17,571)
Accumulated other comprehensive loss (8) (74) (66)
Total stockholders' equity 11,921 10,974 5,947
Total liabilities and stockholders' equity $ 141,587 $ 128,256 $ 126,008
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)
(unaudited)
Three Months Ended
(unaudited)
Nine Months Ended
9/30/2014 9/30/2013 9/30/2014 9/30/2013
Interest Income
Interest and fees on loans $ 1,466 $ 1,399 $ 4,336 $ 4,077
Interest on investment securities 31 28 106 75
Interest on federal funds sold 2 4 5 14
Total interest income 1,499 1,431 4,447 4,166
Interest Expense
Deposits 53 69 157 233
Borrowings 80 87 248 257
Total interest expense 133 156 405 490
Net Interest Income 1,366 1,275 4,042 3,676
Provision for Possible Loan Losses -- -- -- 60
Net Interest Income after provision for possible loan losses 1,366 1,275 4,042 3,616
Noninterest Income
Service fees on loan and deposit accounts 132 131 391 404
Loss on sale of other real estate owned -- -- (3) 44
Other 62 30 246 93
Total noninterest income 194 161 634 541
Noninterest Expense
Salaries and employee benefits 710 618 2,135 1,837
Occupancy 142 149 431 455
Advertising 24 21 63 60
Outside processing 118 138 362 415
Professional fees 69 97 244 251
FDIC insurance 41 47 121 143
Defaulted loan expense 31 59 118 192
Other 126 102 391 318
Total noninterest expense 1,261 1,231 3,865 3,671
Net Income $ 299 $ 205 $ 811 $ 486
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per share data)
Quarter Ended
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
MARKET DATA
Book value per share $ 3.67 $ 3.58 $ 3.48 $ 3.38 $ 1.83
Market value per share $ 4.35 $ 4.30 $ 4.60 $ 5.00 $ 5.05
Earnings per share - basic & diluted $ 0.09 $ 0.07 $ 0.09 $ 1.55 $ 0.06
Period end common shares 3,246,156 3,246,156 3,246,156 3,242,596 3,242,533
PERFORMANCE RATIOS
Return on average assets 0.87% 0.70% 0.87% 15.94% 0.66%
Return on average assets - CSB 1.21% 1.11% 1.29% 13.36% 1.15%
Return on average equity 10.21% 8.13% 10.06% 330.03% 14.25%
Return on average equity - CSB 9.82% 8.92% 10.49% 123.70% 12.47%
Net interest margin - CSB 4.71% 4.93% 5.03% 4.87% 4.78%
Efficiency ratio 80.84% 84.64% 82.60% 100.78% 85.70%
Texas Ratio 11.40% 11.36% 12.54% 13.18% 25.11%
CAPITAL & LIQUIDITY
Tier 1 Leverage - CSB 8.82% 9.30% 9.17% 8.98% 8.59%
Tier 1 Risk Based Capital - CSB 9.52% 9.82% 9.96% 9.71% 9.56%
Total Risk Based Capital - CSB 10.77% 11.08% 11.21% 10.96% 10.82%
Loan to deposit ratio 91.23% 94.72% 91.04% 94.24% 90.85%
ASSET QUALITY
Gross loan charge-offs $ 11 $ -- $ 25 $ 65 $ 0
Net loan charge-offs $ (12) $ (20) $ 0 $ 42 $ (24)
Allowance for loan and lease losses to total loans 1.65% 1.67% 1.73% 1.74% 2.25%
Nonperforming loans to total loans 0.13% 0.13% 0.14% 0.27% 0.79%
Nonperforming assets to total assets 1.09% 1.15% 1.24% 1.31% 2.58%
CLARKSTON FINANCIAL CORPORATION
LOAN INFORMATION
CATEGORY (unaudited)
9/30/2014
12/31/2013 (unaudited)
9/30/2013
Commercial Loans $ 12,182 $ 12,727 $ 13,616
Real Estate Mortgage Loans:
Commercial 90,782 82,874 81,291
1-4 Residential 5,585 6,017 6,239
Construction and other 3,565 3,017 2,387
Total mortgage loans on real estate 99,932 91,908 89,917
Consumer 200 201 122
Total Loans 112,314 104,836 103,655
Less: Allowance for loan losses (1,853) (1,821) (2,333)
Net Loans $ 110,461 $ 103,015 $ 101,322
ASSET QUALITY (unaudited)
9/30/2014
12/31/2013 (unaudited)
9/30/2013
Total nonaccrual loans $ 144 $ 279 $ 816
Total loans past due 90 days or more and still accruing -- -- --
Total nonperforming loans 144 279 816
Other real estate owned 1,396 1,396 2,436
Total nonperforming assets $ 1,540 $ 1,675 $ 3,252

CONTACT: Media Contact: Clarkston Financial Corporation - J. Grant Smith, CEO, 248-922-6945Source:Clarkston Financial Corporation