Clarkston Financial Corporation Reports 2017 Q4 Results

CLARKSTON, Mich., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC) - (News), the holding company for Clarkston State Bank (“Bank”), today reported a net loss of ($1,367,000) or ($0.42) per share for the three months ended December 31, 2017, compared to net income of $512,000 or $0.16 per share for the three months ended December 31, 2016. For the twelve months ended December 31, 2017, the corporation reported net income of $174,000 or $0.06 per share compared to net income of $1,297,000 or $0.40 per share for the same period in 2016. The net loss is directly attributable to the Tax Cut and Jobs Act (H.R. 1) signed into law on December 22, 2017. The change in tax law resulted in a charge to federal income tax expense of $1.69 million for 2017.

J. Grant Smith, CEO, said, "Despite the year end charge to reduce the Corporation’s deferred tax asset per the change in tax law, the Corporation was on pace for another outstanding year. Pre-tax income grew by 29% year over year. While at the same time, balance sheet fundamentals continue to be outstanding. We expect our strong performance will continue throughout 2018. Excellent asset quality, combined with good expense control and very good core deposits will help to further enhance the Corporation’s performance going forward.”

Operating Results

The Corporation’s net interest income increased slightly to $1,820,000 for the quarter ended December 31, 2017 compared to $1,695,000 for the same period ended December 31, 2016. This represents an increase of $125,000 or 7.37% quarter over quarter. This increase is due to the growth in our loan portfolio. The net interest margin of the Bank remains above its peer group average ending at 3.85% for the quarter ended December 31, 2017.

Noninterest income decreased during the fourth quarter of 2017 when compared to the fourth quarter of 2016. The Corporation posted $59,000 for the quarter compared to $243,000 for the quarter ended December 31, 2016, a decrease of $184,000 or 75.72%. The decrease is mostly attributable to gains realized on the sale of SBA loans in 2016. Noninterest expense increased, ending the fourth quarter at $1,324,000 compared to $1,107,000 for the same period ended December 31, 2016, an increase of $217,000 or 19.60%. However, year-to-date the Corporation’s noninterest expense for 2017 was 1.17% or $58,000 higher at $5,002,000 compared to $4,944,000 in 2016.

Balance Sheet

Total assets at December 31, 2017 were $193,311,000 compared to $179,007,000 at December 31, 2016, an increase of $14,304,000 or 7.99%. The increase in assets is due to an increase of loans.

Gross loans increased $20,699,000 from $151,887,000 at December 31, 2016, to $172,586,000 at December 31, 2017, an increase of 13.63%. Total deposits increased $13,738,000 or 8.70%, ending at $171,580,000 for December 31, 2017, up from $157,842,000 for December 31, 2016. Total stockholders’ equity increased slightly from $15,189,000 at December 31, 2016 to $15,416,000 at December 31, 2017, an increase of $227,000 or 1.49%.

Asset Quality

There was one non-performing loan at December 31, 2017 for $158,500 compared to none for the same period in 2016. The allowance for loan loss slightly increased at 1.19% of total loans as of December 31, 2017 compared to 1.16% for the same period 2016. 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.

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



CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars, in thousands)
(unaudited)
12/31/2017 12/31/2016
Assets
Cash and due from banks $ 7,718 $ 9,004
Securities – Available for sale 6,889 8,481
Federal Home Loan Bank stock, at cost 232 232
Loans 172,586 151,887
Allowance for possible loan losses (2,052) (1,767)
Net loans 170,533 150,119
Banking premises and equipment 3,611 3,682
Deferred tax asset 2,939 5,595
Other real estate owned 721 1,221
Accrued interest receivable and other assets 667 674
Total assets $ 193,311 $ 179,007
Liabilities and Stockholders' Equity
Liabilities
Deposits
Noninterest-bearing demand deposits 77,065 80,217
Interest-bearing 94,515 77,625
Total deposits 171,580 157,842
Other Liabilities
Federal Home Loan Bank advances 0 0
Other borrowings 5,711 5,416
Accrued interest payable and other liabilities 604 560
Total liabilities 177,895 163,818
Stockholders' Equity
Common stock 11,923 11,923
Paid-in capital 11,804 11,804
Restricted stock - Unearned compensation 0 0
Accumulated deficit (8,205) (8,396)
Accumulated other comprehensive income (loss) (105) (141)
Total stockholders' equity 15,416 15,189
Total liabilities and stockholders' equity $ 193,311 $ 179,007



CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)
(unaudited)
(unaudited)
Three Months Ended Twelve Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Interest Income
Interest and fees on loans$2,008 $1,768 $7,516 $6,640
Interest on investment securities: 34 40 153 189
Interest on federal funds sold 27 6 58 46
Total interest income 2,070 1,814 7,727 6,875
Interest Expense
Deposits 176 54 523 183
Borrowings 74 65 256 261
Total interest expense 250 119 779 444
Net Interest Income 1,820 1,695 6,948 6,431
Provision for Possible Loan Losses 45 20 (220) 50
Net Interest Income after provision for possible loan losses 1,775 1,675 7,168 6,381
Noninterest Income
Service fees on loan and deposit accounts 49 124 465 544
Gain on sale of securities 0 12 0 12
Loss on sale of other real estate owned 0 0 4 204
Other 11 108 238 29
Total noninterest income 59 243 706 789
Noninterest Expense
Salaries and employee benefits 808 630 3,011 2,906
Occupancy 90 124 460 504
Advertising 71 (5) 182 101
Outside processing 127 117 494 470
Professional fees 7 54 136 191
FDIC insurance 23 21 83 136
Defaulted loan expense 14 29 30 0
Other 184 138 606 636
Total noninterest expense 1,324 1,107 5,002 4,944
Income/(Loss) before income taxes 510 811 2,871 2,226
Income Tax Expense (1) 1,877 299 2,698 929
Net Income/(Loss)($1,367) $512 $174 $1,297
(1) Income tax expense includes $1,689 in deferred income tax expense as a result of the Tax Cuts and Jobs Act (H.R. 1)


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per share data)Quarter Ended
12/31/20179/30/20176/30/20173/31/201712/31/2016
MARKET DATA
Book value per share$4.74 $5.17 $5.05 $4.80 $4.67
Market value per share$8.10 $6.90 $6.30 $6.60 $5.25
Earnings per share - basic & diluted$(0.42)$0.13 $0.24 $0.11 $0.16
Period end common shares 3,249,156 3,249,156 3,249,156 3,249,156 3,249,156
PERFORMANCE RATIOS
Return on average assets pre-Tax Cuts and Jobs Act 1.10% 0.82% 1.62% 0.79% 1.14%
Return on average assets with Tax Cuts and Jobs Act -2.71% 0.82% 1.62% 0.79% 1.14%
Return on average equity pre-Tax Cuts and Jobs Act 10.45% 7.90% 15.14% 7.56% 10.66%
Return on average equity with Tax Cuts and Jobs Act -26.30% 7.90% 15.14% 7.56% 10.66%
Net interest margin - CSB 3.85% 3.88% 4.01% 4.07% 4.12%
Efficiency ratio 70.48% 64.91% 59.52% 67.08% 57.12%
Texas Ratio 4.35% 4.44% 3.37% 3.60% 6.32%
CAPITAL & LIQUIDITY
Tier 1 Leverage - CSB 9.08% 9.30% 9.53% 9.09% 9.04%
Common Equity Tier 1 Capital - CSB 10.12% 10.07% 9.95% 9.71% 10.01%
Tier 1 Risk Based Capital - CSB 10.12% 10.07% 9.95% 9.71% 10.01%
Total Risk Based Capital - CSB 11.26% 11.19% 11.06% 10.78% 11.12%
Loan to deposit ratio 100.59% 94.66% 101.27% 98.62% 96.23%
ASSET QUALITY
Gross loan charge-offs$0 $1 $ - $ - $0
Net loan charge-offs (recoveries)$(3)$(2)$(495)$(4)$(170)
Allowance for loan and lease losses to total loans 1.19% 1.17% 1.17% 1.12% 1.16%
Nonperforming loans to total loans 0.09% 0.10% 0.00% 0.00% 0.00%
Nonperforming assets to total assets 0.45% 0.44% 0.38% 0.39% 0.68%

Source:Clarkston Financial Corporation