Clarkston Financial Corporation Reports 2015 Q3 Results

CLARKSTON, Mich., Oct. 29, 2015 (GLOBE NEWSWIRE) — Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC), the holding company for Clarkston State Bank (“Bank”), today reported a net income of $336,000 or $0.10 per share for the three months ended September 30, 2015, compared to net income of $299,000 or $0.09 per share for the three months ended September 30, 2014. For the nine months ended September 30, 2015, the corporation reported a net income of $803,000 or $0.25 per share compared to a net income of $811,000 or $0.25 per share for the same period in 2014. During the first quarter 2015 the Corporation returned to booking a provision for income taxes.  The pre-tax net income was $1,204,000 for the nine months ended September 30, 2015.  This represents an increase of $393,000 or 32.64% in pre-tax income year over year.

J. Grant Smith, CEO, said, “Our asset quality fundamentals have improved greatly over the past several years and we are now in the growth phase of our strategic plan. The following performance numbers outline very nice growth in both loans and deposits, 9.17% and 11.20%, respectively. While our net interest margin has declined it still remains well above our peer group at 4.41%. The main catalyst for our excellent net interest margin is our core deposit base. Non-interest bearing deposits represents 45.7% of our total deposits. On another positive note, as a result of the closure of two of our facilities earlier this year the use of our mobile banking products is up 36% as more customers are reaching us through our electronic delivery channels. The excellent balance sheet fundamentals when combined a strong net interest margin we believe will continue to enhance our operating performance going forward.”

Operating Results

The Corporation’s net interest income increased to $1,421,000 for the quarter ended September 30, 2015 compared to $1,366,000 for the same period ended September 30, 2014.  The net interest margin of the Bank remains elevated compared to peers, but continues to have compression, ending at 4.41% for the quarter ended September 30, 2015, down from 4.71% for the quarter ended September 30, 2014.

Noninterest income increased during the second quarter 2015.  The quarter ended at $326,000 compared to $194,000 for the quarter ended September 30, 2014, an increase of $132,000 or 68.04%.  Noninterest expense decreased slightly, ending the third quarter 2015 at $1,247,000 compared to $1,261,000 for the same period ended September 30, 2014, a decrease of $14,000 or 1.11%.     

Balance Sheet

Total assets at September 30, 2015 were $156,777,000 compared to $141,587,000 at September 30, 2014, an increase of $15,190,000 or 10.73%.  The increase in assets is largely due to increases in noninterest-bearing demand deposits.

Net loans increased $10,125,000 from $110,461,000 at September 30, 2014 to $120,586,000 at September 30, 2015, an increase of 9.17%.  Total deposits increased $13,787,000 or 11.20%, ending at $136,897,000 for September 30, 2015, up from $123,110,000 at September 30, 2014.  Total stockholders’ equity increased from $11,921,000 at September 30, 2014 to $13,672,000 at September 30, 2015, an increase of $1,751,000 or 14.69%. 

Asset Quality

Total non-performing loans were zero at September 30, 2015 compared to $144,000 from the same period 2014.  The allowance for loan loss decreased to 1.47% of total loans as of September 30, 2015, compared to 1.65% for the same period 2014.  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)
    9/30/2015   12/31/2014   9/30/2014
Assets            
Cash and due from banks   $   16,272     $   11,908     $   11,874  
Securities – Available for sale     6,764       5,581       5,828  
Federal Home Loan Bank stock, at cost     232       409       556  
             
Loans     122,387       114,680       112,314  
Allowance for possible loan losses     (1,801 )     (1,873 )     (1,853 )
Net loans     120,586       112,807       110,461  
             
Banking premises and equipment     4,426       4,809       4,851  
Deferred tax asset     6,400       6,793       6,077  
Other real estate owned     1,396       1,396       1,396  
Accrued interest receivable and other assets     701       676       544  
Total assets   $   156,777     $   144,379     $   141,587  
             
Liabilities and Stockholders’ Equity            
Liabilities            
Deposits            
Noninterest-bearing demand deposits     62,585       52,919       54,052  
Interest-bearing     74,312       72,449       69,058  
Total deposits     136,897       125,368       123,110  
             
Other Liabilities            
Other borrowings     5,673       5,625       5,625  
Accrued interest payable and other liabilities     535       497       931  
Total liabilities     143,105       131,490       129,666  
             
Stockholders’ Equity            
Common stock     11,945       11,917       11,917  
Paid-in capital     11,826       11,798       11,798  
Restricted stock – Unearned compensation     (48 )     (24 )     (42 )
Accumulated deficit     (10,016 )     (10,819 )     (11,744 )
Accumulated other comprehensive (loss) income     (35 )     17       (8 )
Total stockholders’ equity     13,672       12,889       11,921  
Total liabilities and stockholders’ equity   $   156,777     $   144,379     $   141,587  

CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars, in thousands)                      
  (unaudited)   (unaudited)
  Three Months Ended   Nine Months Ended
    9/30/2015    9/30/2014
    9/30/2015    9/30/2014
Interest Income                      
Interest and fees on loans $ 1,493    $ 1,466   $ 4,370   $ 4,336
Interest on investment securities:   37     31     106     106
Interest on federal funds sold   2     2     12     5
Total interest income   1,532     1,499     4,488     4,447
Interest Expense                      
Deposits   52     53     160     157
Borrowings   59     80     223     248
Total interest expense   111     133     383     405
Net Interest Income   1,421     1,366     4,105     4,042
Provision for Possible Loan Losses     –       –       –    
Net Interest Income after provision for possible loan losses   1,421     1,366     4,105     4,042
Noninterest Income                      
Service fees on loan and deposit accounts   118     132     355     391
Gain on sale of securities     –       –       34    
Loss on sale of other real estate owned               (3)
Other   208     62     571     246
Total noninterest income   326     194     960     634
Noninterest Expense                      
Salaries and employee benefits   701     710     2,223     2,135
Occupancy   117     142     414     431
Advertising   19     24     78     63
Outside processing   105     118     336     362
Professional fees   57     69     152     244
FDIC insurance   26     41     71     121
Defaulted loan expense   86     31     172     118
Other   136     126     415     391
Total noninterest expense   1,247     1,261     3,861     3,865
Income/(Loss) before income taxes   500     299     1,204     811
Income Tax Benefit     164       –        401       – 
Net Income/(Loss) $  336    $  299   $ 803   $ 811

CLARKSTON FINANCIAL CORPORATION 
CONSOLIDATED FINANCIAL HIGHLIGHTS
                     
(Dollars in thousands, except share and per share data)                  
    Quarter Ended
                     
    9/30/2015   6/30/2015   3/31/2015   12/31/2014   9/30/2014
MARKET DATA                    
Book value per share   $   4.19     $   4.09     $   4.04     $   3.97     $    3.67  
Market value per share   $   4.30     $   3.32     $   4.00     $   3.77     $    4.35  
Earnings per share – basic & diluted   $   0.10     $   0.07     $   0.08     $   0.29     $    0.09  
Period end common shares     3,261,156       3,261,156       3,261,156       3,246,156       3,246,156  
                     
PERFORMANCE RATIOS                    
Return on average assets     0.91 %     0.59 %     0.69 %     2.59 %     0.87 %
Return on average equity     9.99 %     6.52 %     7.81 %     30.80 %     10.21 %
Net interest margin – CSB     4.41 %     4.42 %     4.43 %     4.50 %     4.71 %
Efficiency ratio     71.40 %     79.00 %     78.59 %     82.80 %     80.84 %
Texas Ratio     9.72 %     11.60 %     11.59 %     11.10 %     11.40 %
                     
CAPITAL & LIQUIDITY                    
Tier 1 Leverage – CSB     8.85 %     8.55 %     8.71 %     8.78 %     8.82 %
Common Equity Tier 1 Capital – CSB     9.15 %     9.18 %     9.84 %            
Tier 1 Risk Based Capital – CSB     9.15 %     9.18 %     9.84 %     9.68 %     9.52 %
Total Risk Based Capital – CSB     10.40 %     10.43 %     11.10 %     10.93 %     10.77 %
Loan to deposit ratio     89.40 %     94.13 %     88.83 %     91.47 %     91.23 %
                     
ASSET QUALITY                    
Gross loan charge-offs   $    –     $    3     $   249     $    –     $    11  
Net loan charge-offs (recoveries)   $    (16 )   $    (14 )   $   101     $   (20 )   $    (12 )
Allowance for loan and lease losses
to total loans
    1.47 %     1.49 %     1.55 %     1.63 %     1.65 %
Nonperforming loans to total loans     0.00 %     0.17 %     0.19 %     0.13 %     0.13 %
Nonperforming assets to total assets     0.89 %     1.09 %     1.09 %     1.07 %     1.09 %

CLARKSTON FINANCIAL CORPORATION
LOAN INFORMATION
           
  (unaudited)       (unaudited)
CATEGORY 9/30/2015   12/31/2014   9/30/2014
           
Commercial Loans $   12,529     $   13,737     $   12,182  
Real Estate Mortgage Loans:          
Commercial     99,476         91,496         90,782  
1-4 Residential     4,334         5,086         5,585  
Construction and other     1,389         4,136         3,565  
Total mortgage loans on real estate     105,199         100,718         99,932  
Consumer     4,659         225         200  
Total Loans     122,387         114,680         112,314  
Less:  Allowance for loan losses     (1,801 )       (1,873 )       (1,853 )
Net Loans $   120,586     $   112,807     $   110,461  
           
           
  (unaudited)       (unaudited)
ASSET QUALITY 9/30/2015   12/31/2014   9/30/2014
           
Total nonaccrual loans $   –      $   144     $   144  
Total loans past due 90 days or more and still accruing     –          –          –   
Total nonperforming loans     –          144         144  
Other real estate owned     1,396         1,396         1,396  
Total nonperforming assets $   1,396     $   1,540     $   1,540  

 

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