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Clarkston Financial Corporation Reports 2016 Q3 Results

CLARKSTON, Mich., Oct. 26, 2016 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC) - (News), the holding company for Clarkston State Bank (“Bank”), today reported a net income of $371,000 or $0.11 per share for the three months ended September 30, 2016, compared to net income of $336,000 or $0.10 per share for the three months ended September 30, 2015. For the nine months ended September 30, 2016, the corporation reported a net income of $881,000 or $0.27 per share compared to a net income of $803,000 or $0.25 per share for the same period in 2015.

J. Grant Smith, CEO, said, "With each passing quarter our performance continues to get better and better. Earlier this year we reengineered some of our processes within our deposit operations which helped to further reduce costs. In addition, our lending performance has been very good this year. The combination of these two factors has resulted in a significant improvement in our financial performance. Our asset quality fundamentals continue to out-perform industry peers and when combined with a robust net interest margin (4.13%) are the catalyst for very good bottom line performance. We expect the performance to continue to improve as we execute the initiative within our strategic plan.”

Operating Results

The Corporation’s net interest income increased to $1,618,000 for the quarter ended September 30, 2016 compared to $1,421,000 for the same period ended September 30, 2015. The net interest margin of the Bank remains elevated compared to peers, but continues to have compression, ending at 4.13% for the quarter ended September 30, 2016, down from 4.41% for the quarter ended September 30, 2015.

Noninterest income decreased during the third quarter 2016. The quarter ended at $195,000 compared to $326,000 for the quarter ended September 30, 2015, a decrease of $131,000 or 40.18%. The decrease in noninterest income is attributable to the gain on sale of loans recognized in the third quarter 2015. Noninterest expense decreased, ending the third quarter 2016 at $1,195,000 compared to $1,247,000 for the same period ended September 30, 2015, a decrease of $52,000 or 4.17%. The decline in noninterest expense has helped to improve the Corporation’s efficiency ratio, ending the quarter at 65.89% compared to 71.40% at September 30, 2015.

Balance Sheet

Total assets at September 30, 2016 were $176,814,000 compared to $156,777,000 at September 30, 2015, an increase of $20,037,000 or 12.78%. The increase in assets is largely due to increases in noninterest-bearing demand deposits.

Net loans increased $26,848,000 from $120,586,000 at September 30, 2015 to $147,434,000 at September 30, 2016, an increase of 22.26%. Total deposits increased $16,576,000 or 12.11%, ending at $153,473,000 for September 30, 2016, up from $136,897,000 at September 30, 2015. Total stockholders’ equity increased from $13,672,000 at September 30, 2015 to $14,852,000 at September 30, 2016, an increase of $1,180,000 or 8.63%.

Asset Quality

The Bank continued to not have any non-performing loans at September 30, 2016. The allowance for loan loss decreased to 1.07% of total loans as of September 30, 2016, compared to 1.47% 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)
9/30/2016 12/31/2015 9/30/2015
Assets
Cash and due from banks $ 7,214 $ 24,264 $ 16,272
Securities – Available for sale 10,558 9,649 6,764
Federal Home Loan Bank stock, at cost 232 232 232
Loans 149,027 127,028 122,387
Allowance for possible loan losses (1,593) (1,529) (1,801)
Net loans 147,434 125,499 120,586
Banking premises and equipment 3,726 3,915 4,426
Deferred tax asset 5,782 6,276 6,400
Other real estate owned 1,221 1,581 1,396
Accrued interest receivable and other assets 647 886 701
Total assets $ 176,814 $ 172,302 $ 156,777
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing demand deposits 83,635 82,408 62,585
Interest-bearing 69,838 69,959 74,312
Total deposits 153,473 152,367 136,897
Other Liabilities
Other borrowings 7,968 5,621 5,673
Accrued interest payable and other liabilities 521 422 535
Total liabilities 161,962 158,410 143,105
Stockholders' Equity
Common stock 11,945 11,945 11,945
Paid-in capital 11,826 11,826 11,826
Restricted stock - Unearned compensation (37) (45) (48)
Accumulated deficit (8,908) (9,789) (10,016)
Acc. other comprehensive income (loss) 26 (45) (35)
Total stockholders' equity 14,852 13,893 13,672
Total liabilities and stockholders' equity $ 176,814 $ 172,302 $ 156,777
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)(unaudited) (unaudited)
Three Months Ended Nine Months Ended
9/30/2016 9/30/2015 9/30/2016 9/30/2015
Interest Income
Interest and fees on loans$ 1,667 $ 1,493 $ 4,925 $ 4,370
Interest on investment securities: 44 37 149 106
Interest on federal funds sold 11 2 40 12
Total interest income 1,722 1,532 5,114 4,488
Interest Expense
Deposits 42 52 129 160
Borrowings 62 59 196 223
Total interest expense 104 111 325 383
Net Interest Income 1,618 1,421 4,789 4,105
Provision for Possible Loan Losses 30 - 30 -
Net Interest Income after provision for
possible loan losses
1,588 1,421 4,759 4,105
Noninterest Income
Service fees on loan and deposit accounts 124 118 368 355
Gain on sale of securities - - - 34
Loss on sale of other real estate owned - - (14) -
Other 71 208 139 571
Total noninterest income 195 326 493 960
Noninterest Expense
Salaries and employee benefits 703 701 2,277 2,223
Occupancy 122 117 372 414
Advertising 35 19 105 78
Outside processing 116 105 356 336
Professional fees 41 57 139 152
FDIC insurance 32 26 85 71
Defaulted loan expense 22 86 125 172
Other 124 136 379 415
Total noninterest expense 1,195 1,247 3,838 3,861
Income before income taxes 588 500 1,414 1,204
Income Tax Expense 217 164 533 401
Net Income$ 371 $ 336 $ 881 $ 803


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per
share data)
Quarter Ended
9/30/20166/30/20163/31/201612/31/20159/30/2015
MARKET DATA
Book value per share $ 4.55 $ 4.44 $ 4.33 $ 4.26 $ 4.19
Market value per share $ 3.95 $ 3.85 $ 4.00 $ 3.70 $ 4.30
Earnings per share - basic & diluted $ 0.11 $ 0.11 $ 0.06 $ 0.07 $ 0.10
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 0.84% 0.71% 0.46% 0.57% 0.91%
Return on average equity 10.17% 8.88% 5.64% 6.62% 9.99%
Net interest margin - CSB 4.13% 4.15% 4.29% 4.29% 4.41%
Efficiency ratio 65.89% 71.65% 80.97% 94.80% 71.40%
Texas Ratio 7.32% 7.57% 10.15% 10.90% 9.72%
CAPITAL & LIQUIDITY
Tier 1 Leverage - CSB 8.76% 8.38% 8.40% 8.46% 8.85%
Common Equity Tier 1 Capital - CSB 9.50% 9.67% 9.57% 9.09% 9.15%
Tier 1 Risk Based Capital - CSB 9.50% 9.67% 9.57% 9.09% 9.15%
Total Risk Based Capital - CSB 10.50% 10.70% 10.62% 10.36% 10.40%
Loan to deposit ratio 97.10% 89.11% 84.65% 83.37% 89.40%
ASSET QUALITY
Gross loan charge-offs $ 0 $ 0 $ 0 $ 14 $ 0
Net loan recoveries $ (5)$ (14)$ (16)$ (3)$ (16)
Allowance for loan and lease losses 1.07% 1.12% 1.12% 1.20% 1.47%
Nonperforming loans to total loans 0.00% 0.00% 0.00% 0.00% 0.00%
Nonperforming assets to total assets 0.69% 0.69% 0.87% 0.92% 0.89%


CLARKSTON FINANCIAL CORPORATION
LOAN INFORMATION
(unaudited) (unaudited)
CATEGORY9/30/2016 12/31/2015 9/30/2015
Commercial Loans$ 19,376 $ 14,126 $ 12,529
Real Estate Mortgage Loans:
Commercial 117,313 102,098 99,476
1-4 Residential 3,321 4,077 4,334
Construction and other 2,604 1,369 1,389
Total mortgage loans on real estate 123,238 107,544 105,199
Consumer 6,413 5,358 4,659
Total Loans 149,027 127,028 122,387
Less: Allowance for loan losses (1,593) (1,529) (1,801)
Net Loans$ 147,434 $ 125,499 $ 120,586
(unaudited) (unaudited)
ASSET QUALITY9/30/2016 12/31/2015 9/30/2015
Total nonaccrual loans$ - $ - $ -
Total loans past due 90 days or more and still accruing - - -
Total nonperforming loans - - -
Other real estate owned 1,221 1,581 1,396
Total nonperforming assets$ 1,221 $ 1,581 $ 1,396



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

Source:Clarkston Financial Corporation