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Clarkston Financial Corporation Reports 2016 Q2 Results

CLARKSTON, Mich., July 27, 2016 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC), the holding company for Clarkston State Bank (“Bank”), today reported a net income of $315,000 or $0.10 per share for the three months ended June 30, 2016, compared to net income of $216,000 or $.07 per share for the three months ended June 30, 2015. For the six months ended June 30, 2016, the corporation reported net income of $510,000 or $0.18 per share compared to net income of $467,000 or $0.15 per share for the same period in 2015.

J. Grant Smith, CEO, said, "We are very pleased with the bank’s financial performance and I expect the earnings momentum to be even better throughout the second half of the year. Our lending team has been very busy as we continue to see good opportunities for additional loan growth. When you combine the loan growth with a very sound and stable deposit funding mix it provides for a very good net interest margin which we continue to post quarter over quarter. It is also noteworthy to mention, the bank’s asset quality continues to be excellent. I expect our operating expenses to decline which will further enhance the bank’s operating performance as we move forward.”

Operating Results

The Corporation’s net interest income increased significantly to $1,620,000 for the quarter ended June 30, 2016 compared to $1,353,000 for the same period ended June 30, 2015. This represents an increase of $267,000 or 19.73% quarter over quarter. The net interest margin of the Bank remains well above its peer group average ending at 4.15% for the quarter ended June 30, 2016. The strength of the net interest margin is the result of a strong core deposit funding base and discipline within the pricing of its commercial loans.

Noninterest income decreased during the second quarter of 2016 when compared to the second quarter 2015. The Corporation posted $159,000 for the quarter compared to $184,000 for the quarter ended June 30, 2015, a decrease of $25,000 or 13.59%. The decrease is mostly attributable to a small loss on the disposition of a parcel of other real estate owned. Noninterest expense increased, ending the second quarter at $1,275,000 compared to $1,214,000 for the same period ended June 30, 2015, an increase of $61,000 or 5.02%. The increase is primarily attributable to an increase in defaulted loan expense associated with preparing parcels of other real estate owned for sale.

Balance Sheet

Total assets at June 30, 2016 were $176,881,000 compared to $146,833,000 at June 30, 2015, an increase of $30,048,000 or 20.46%. The increase in assets is largely due to increases in noninterest-bearing demand deposits.

Gross loans increased $19,527,000 from $119,898,000 at June 30, 2015 to $139,425,000 at June 30, 2016, an increase of 16.29%. Total deposits increased $29,090,000 or 22.84%, ending at $156,466,000 for June 30, 2016, up from $127,376,000 at June 30, 2015. Total stockholders’ equity increased from $13,338,000 at June 30, 2015 to $14,465,000 at June 30, 2016, an increase of $1,127,000 or 8.45%.

Asset Quality

There were no non-performing loans at June 30, 2016 compared to $200,000 from the same period 2015. The allowance for loan loss decreased to 1.12% of total loans as of June 30, 2016, compared to 1.49% for the same period 2015. Management continually monitors the allowance for loan loss to determine its adequacy.

Clarkston State Bank opened in January 1999 and operates two branches in Clarkston and Waterford, 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) (unaudited)
6/30/2016 12/31/2015 6/30/2015
Assets
Cash and due from banks $ 17,191 $ 24,264 $ 8,393
Securities – Available for sale 9,921 9,649 7,084
Federal Home Loan Bank stock, at cost 232 232 232
Loans 139,425 127,028 119,898
Allowance for possible loan losses (1,558) (1,529) (1,785)
Net loans 137,867 125,499 118,113
Banking premises and equipment 3,759 3,915 4,425
Deferred tax asset 5,989 6,276 6,572
Other real estate owned 1,221 1,581 1,396
Accrued interest receivable and other assets 701 886 618
Total assets $ 176,881 $ 172,302 $ 146,833
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing demand deposits 84,356 82,408 53,121
Interest-bearing 72,110 69,959 74,255
Total deposits 156,466 152,367 127,376
Other Liabilities
Other borrowings 5,519 5,621 5,724
Accrued interest payable and other liabilities 431 422 395
Total liabilities 162,416 158,410 133,495
Stockholders' Equity
Common stock 11,945 11,945 11,945
Paid-in capital 11,826 11,826 11,826
Restricted stock - Unearned compensation (40) (45) (51)
Accumulated deficit (9,279) (9,789) (10,351)
Accumulated other comprehensive income (loss) 13 (45) (31)
Total stockholders' equity 14,465 13,892 13,338
Total liabilities and stockholders' equity $ 176,881 $ 172,302 $ 146,833


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)(unaudited) (unaudited)
Three Months Ended Six Months Ended
6/30/2016 6/30/2015 6/30/2016 6/30/2015
Interest Income
Interest and fees on loans$ 1,656 $ 1,445 $ 3,258 $ 2,878
Interest on investment securities: 48 32 105 69
Interest on federal funds sold 21 5 29 9
Total interest income 1,725 1,482 3,392 2,956
Interest Expense
Deposits 42 56 87 108
Borrowings 63 73 134 164
Total interest expense 105 129 221 272
Net Interest Income 1,620 1,353 3,171 2,684
Provision for Possible Loan Losses - - - -
Net Interest Income after provision for possible loan losses
1,620 1,353 3,171 2,684
Noninterest Income
Service fees on loan and deposit accounts 129 123 244 237
Gain on sale of securities - 34 - 34
Loss on sale of other real estate owned (14) - (14) -
Other 44 27 68 363
Total noninterest income 159 184 298 634
Noninterest Expense
Salaries and employee benefits 727 694 1,574 1,522
Occupancy 123 147 250 297
Advertising 35 31 70 59
Outside processing 118 113 240 230
Professional fees 54 41 98 95
FDIC insurance 27 23 53 46
Defaulted loan expense 69 33 103 86
Other 122 132 255 279
Total noninterest expense 1,275 1,214 2,643 2,614
Income before income taxes 504 323 826 704
Income Tax Expense 189 107 316 237
Net Income$ 315 $ 216 $ 510 $ 467


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per share data)Quarter Ended
6/30/20163/31/201612/31/20159/30/20156/30/2015
MARKET DATA
Book value per share $ 4.44 $ 4.33 $ 4.26 $ 4.19 $ 4.09
Market value per share $ 3.85 $ 4.00 $ 3.70 $ 4.30 $ 3.32
Earnings per share - basic & diluted $ 0.10 $ 0.06 $ 0.07 $ 0.10 $ 0.07
Period end common shares 3,261,156 3,261,156 3,261,156 3,261,156 3,261,156
PERFORMANCE RATIOS
Return on average assets 0.71% 0.46% 0.57% 0.91% 0.59%
Return on average equity 8.88% 5.64% 6.62% 9.99% 6.52%
Net interest margin - CSB 4.15% 4.29% 4.29% 4.41% 4.42%
Efficiency ratio 71.65% 80.97% 94.80% 71.40% 79.00%
Texas Ratio 7.57% 10.15% 10.90% 9.72% 11.60%
CAPITAL & LIQUIDITY
Tier 1 Leverage - CSB 8.38% 8.40% 8.46% 8.85% 8.55%
Common Equity Tier 1 Capital - CSB 9.67% 9.57% 9.09% 9.15% 9.18%
Tier 1 Risk Based Capital - CSB 9.67% 9.57% 9.09% 9.15% 9.18%
Total Risk Based Capital - CSB 10.70% 10.62% 10.36% 10.40% 10.43%
Loan to deposit ratio 89.11% 84.65% 83.37% 89.40% 94.13%
ASSET QUALITY
Gross loan charge-offs $ 0 $ 0 $ 14 $ 0 $ 3
Net loan recoveries $ (13)$ (16)$ (3)$ (16)$ (14)
Allowance for loan and lease losses 1.12% 1.12% 1.20% 1.47% 1.49%
Nonperforming loans to total loans 0.00% 0.00% 0.00% 0.00% 0.17%
Nonperforming assets to total assets 0.69% 0.87% 0.92% 0.89% 1.09%


CLARKSTON FINANCIAL CORPORATION
LOAN INFORMATION
(unaudited) (unaudited)
CATEGORY6/30/2016 12/31/2015 6/30/2015
Commercial Loans$ 18,222 $ 14,126 $ 12,895
Real Estate Mortgage Loans:
Commercial 109,408 102,098 97,608
1-4 Residential 3,810 4,077 4,592
Construction and other 1,650 1,369 1,417
Total mortgage loans on real estate 114,868 107,544 103,617
Consumer 6,335 5,358 3,386
Total Loans 139,425 127,028 119,898
Less: Allowance for loan losses (1,558) (1,529) (1,785)
Net Loans$ 137,867 $ 125,499 $ 118,113
(unaudited) (unaudited)
ASSET QUALITY6/30/2016 12/31/2015 6/30/2015
Total nonaccrual loans$ - $ - $ 200
Total loans past due 90 days or more and still accruing - - -
Total nonperforming loans - - 200
Other real estate owned 1,221 1,581 1,396
Total nonperforming assets$ 1,221 $ 1,581 $ 1,596


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

Source:Clarkston Financial Corporation