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Clarkston Financial Corporation Reports 2012 Q4 Results - Returns to Profitability

CLARKSTON, Mich., Feb. 7, 2013 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation ("Corporation") (OTCBB:CKFC), the holding company for Clarkston State Bank ("Bank"), today reported a net income of $1,258,000 or $0.04 per share for the three months ended December 31, 2012, compared to net loss of $3,554,000 or $0.44 per share for the three months ended December 31, 2011. For the twelve months ended December 31, 2012, the corporation reported a net income of $1,635,000 or $0.05 per share compared to a net loss of $3,654,000 or $0.11 per share for the same period in 2011. This represents the corporation's first full year net income since 2004.

J. Grant Smith, CEO, said, "These results are a testament to the hard work and perseverance of our board of directors, management team, and the entire staff. The positive financial performance serves as an exclamation point to the completion of the turnaround of the Corporation. A plan was developed some years ago and was very well executed by our entire organization with fortitude, determination and without any Federal bailout or incentive money. Our team has worked very hard to execute our plan and survive the financial crises much like many of the businesses in Southeast Michigan have had to do over the past several years. We have a very seasoned team of banking professionals and we look forward to continued positive financial results and future growth. "

Operating Results

The Corporation's net interest income was $1,168,000 for the quarter ended December 31, 2012 compared to $1,244,000 for the same period ended December 31, 2011, a decrease of $76,000 or 6.11%. The net interest margin of the Bank showed a modest decrease, ending at 4.65% for the quarter ended December 31, 2012, down from 4.85% for the quarter ended December 31, 2011. This decrease in net interest margin is representative of decreased yields on new loans and investments.

Noninterest income increased in the fourth quarter 2012, due to lower losses on the sale of other real estate owned, ending at $220,000 compared to ($714,000) for the quarter ended December 31, 2011, an increase of $934,000 or 130.81%. Noninterest expense increased, ending the fourth quarter 2012 at $1,585,000 compared to $1,500,000 for the same period ended December 31, 2011.

During the fourth quarter of 2012, net income was positively impacted by the reversal of a portion of the previously established net deferred tax asset valuation allowance, resulting in federal income tax benefit of $1,500,000.

Balance Sheet

Total assets at December 31, 2012 were $123,503,000 compared to $114,374,000 at December 31, 2011, an increase of $9,129,000 or 7.98%. The growth in total assets represents increased cash balances as a result of additional growth in core deposits.

Total loans increased $4,731,000 from $88,081,000 at December 31, 2011 to $92,812,000 at December 31, 2012, an increase of 5.37%. Total deposits increased $7,572,000 or 7.22%, ending at $112,467,000 for December 31, 2012, up from $104,895,000 at December 31, 2011. Total stockholders' equity increased from $3,934,000 at December 31, 2011 to $5,448,000 at December 31, 2012, an increase of $1,514,000 or 38.49%. This increase is due to the net income in 2012.

Asset Quality

Total non-performing loans decreased to $972,000 at December 31, 2012 compared to $2,244,000 from the same period 2011, a decrease of $1,272,000, or 56.68%. The allowance for loan loss decreased to 2.63% of total loans as of December 31, 2012, compared to 3.25% for the same period 2011. 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)
12/31/2012 12/31/2011
Assets
Cash and due from banks $ 14,517 $ 9,783
Securities – Available for sale 7,709 9,412
Federal Home Loan Bank stock, at cost 556 556
Loans 92,812 88,081
Allowance for possible loan losses (2,438) (2,865)
Net loans 90,374 85,216
Banking premises and equipment 4,955 4,586
Other real estate owned 3,431 4,411
Accrued interest receivable and other assets 1,962 410
Total assets $ 123,504 $ 114,374
Liabilities and Stockholders' Equity (Deficit)
Liabilities
Deposits
Noninterest-bearing demand deposits 38,553 23,902
Interest-bearing 73,914 80,993
Total deposits 112,467 104,895
Other Liabilities
Other borrowings 5,300 5,300
Accrued interest payable and other liabilities 289 245
Total liabilities 118,056 110,440
Stockholders' Equity
Common stock 11,908 11,807
Paid-in capital 11,789 11,688
Restricted stock - Unearned compensation (167) --
Accumulated deficit (18,057) (19,691)
Accumulated other comprehensive income (loss) (25) 130
Total stockholders' equity 5,448 3,934
Total liabilities and stockholders' equity $ 123,504 $ 114,374
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)
(unaudited) (unaudited)
Three Months Ended Twelve Months Ended
12/31/2012 12/31/2011 12/31/2012 12/31/2011
Interest Income
Interest and fees on loans $ 1,328 $ 1,362 $ 5,366 $ 5,083
Interest on investment securities: 35 71 173 319
Interest on federal funds sold 6 2 25 19
Total interest income 1,369 1,437 5,562 5,421
Interest Expense
Deposits 93 150 458 705
Borrowings 108 43 341 208
Total interest expense 201 193 799 913
Net Interest Income 1,168 1,244 4,763 4,508
Provision for Possible Loan Losses 45 2,584 180 2,859
Net Interest Income after provision for possible loan losses 1,123 (1,340) 4,583 1,649
Noninterest Income
Service fees on loan and deposit accounts 131 121 504 576
Gain on sale of securities 29 -- 197 55
Loss on sale of other real estate owned (29) (876) (53) (1,033)
Other 89 41 239 151
Total noninterest income 220 (714) 889 (251)
Noninterest Expense
Salaries and employee benefits 862 539 2,527 2,027
Occupancy 154 153 600 603
Advertising 18 14 80 67
Outside processing 135 135 550 532
Professional fees 30 68 342 259
FDIC insurance 36 60 230 294
Defaulted loan expense 151 370 507 816
Other 199 161 501 454
Total noninterest expense 1,585 1,500 5,337 5,052
Income/(Loss) before income taxes (242) (3,554) 135 (3,654)
Income Tax Benefit (1,500) -- (1,500) --
Net Income/(Loss) $ 1,258 $ (3,554) $ 1,635 $ (3,654)
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except share and per share data)
Quarter Ended
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
MARKET DATA
Book value per share $ 0.17 $ 0.13 $ 0.13 $ 0.12 $ 0.12
Market value per share $ 0.15 $ 0.55 $ 0.36 $ 0.36 $ 0.42
Earnings per share - basic & diluted $ 0.04 $ 0.02 $ 0.02 $ 0.01 $ (0.44)
Average basic shares outstanding 32,421,855 32,286,613 32,291,150 31,957,165 31,950,625
Average diluted shares outstanding 32,421,855 32,286,613 32,291,150 31,957,165 31,950,625
Period end common shares 32,421,855 32,421,855 32,433,355 31,957,165 31,950,625
PERFORMANCE RATIOS
Return on average assets 4.23% 0.41% 0.67% 0.18% -12.35%
Return on average equity 123.59% 12.24% 20.03% 5.13% -213.35%
Net interest margin - CSB 4.65% 4.59% 4.74% 4.78% 4.85%
Efficiency ratio 114.20% 87.86% 83.33% 93.09% 283.10%
Texas Ratio 36.52% 48.98% 49.06% 55.80% 58.21%
CAPITAL & LIQUIDITY
Total Risk Based Capital - CSB 10.77% 10.59% 10.22% 10.01% 10.23%
Tier 1 Risk Based Capital - CSB 9.51% 9.33% 8.96% 8.74% 8.96%
Tier 1 Leverage - CSB 8.14% 7.69% 7.56% 7.65% 7.44%
Loan to deposit ratio 82.52% 80.54% 85.61% 82.73% 83.97%
ASSET QUALITY
Gross loan charge-offs $ 136 $ 275 $ 99 $ 352 $ 1,898
Net loan charge-offs $ 78 $ 199 $ 5 $ 325 $ 1,879
Allowance for loan and lease losses to total loans 2.63% 2.71% 2.80% 2.80% 3.25%
Nonperforming loans to total loans 1.05% 1.21% 1.89% 2.12% 2.55%
Nonperforming assets to total assets 3.57% 4.70% 4.83% 5.22% 5.82%
CLARKSTON FINANCIAL CORPORATION
LOAN INFORMATION
(unaudited)
CATEGORY 12/31/2012 12/31/2011
Commercial Loans $ 15,182 $ 14,491
Real Estate Mortgage Loans:
Commercial 66,923 60,453
1-4 Residential 6,977 8,990
Construction and other 3,521 3,677
Total mortgage loans on real estate 77,421 73,120
Consumer 209 470
Total Loans 92,812 88,081
Less: Allowance for loan losses (2,438) (2,865)
Net Loans $ 90,374 $ 85,216
(unaudited)
ASSET QUALITY 12/31/2012 12/31/2011
Total nonaccrual loans $ 969 $ 2,244
Total loans past due 90 days or more and still accruing 3 --
Total nonperforming loans 972 2,244
Other real estate owned 3,431 4,411
Total nonperforming assets $ 4,403 $ 6,655

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