Clarkston Financial Corporation Reports 2018 Q3 Results

CLARKSTON, Mich., Oct. 25, 2018 (GLOBE NEWSWIRE) — Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC) – News – the holding company for Clarkston State Bank (“Bank”), today reported net income of $604,000 or $0.18 per share for the three months ended September 30, 2018, compared to net income of $407,000 or $0.13 per share for the three months ended September 30, 2017.

J. Grant Smith, CEO, said, “We continue to produce very good profitability quarter over quarter. Our net interest margin continues to be very good driven by a robust deposit portfolio and an improving spread due to rising interest rates. It’s noteworthy to mention, in past quarters we have sold the guaranteed portion of our newly originated SBA7a loans, however, the secondary market pricing for these loans has softened which has impacted our fee income. We are closely monitoring the secondary market as we have a pipeline of loans we can sell in the fourth quarter. However, it may be more prudent to retain these loans on our books if the secondary market pricing doesn’t firm up. Regardless, the Bank’s fundamentals are very good; excellent asset quality (0.00% delinquency, $0.00 non-performing loans), superior deposit portfolio stratification (46.0% demand deposit accounts to total deposits) and low overhead (62.0% efficiency ratio). We expect our performance to continue given the sound fundamentals.     

Operating Results

The Corporation’s net interest income before provision, increased to $1,856,000 for the quarter ended September 30, 2018, compared to $1,769,000 for the same period ended September 30, 2017.  This represents an increase of $87,000 or 4.92% quarter over quarter.  The net interest margin of the Bank has increased to 3.90% as of September 30, 2018, compared to 3.88% for September 30, 2017. The Bank’s net interest spread has improved slightly as interest rates have increased on both new loan originations and renewals.     

Noninterest income increased during the third quarter of 2018 when compared to the third quarter of 2017. The Corporation posted $173,000 for the quarter compared to $125,000 for the quarter ended September 30, 2017, an increase of $48,000 or 3.84%.  The increase is mostly attributable to gains realized in 2018 on the sale of SBA loans. Noninterest expense increased slightly, ending the third quarter at $1,259,000 compared to $1,230,000 for the same period ended September 30, 2017, an increase of $29,000 or 2.36%.   

Balance Sheet

Total assets at September 30, 2018, were $208,271,000 compared to $203,763,000 at September 30, 2017, an increase of $4,508,000 or 2.21%.  The increase is mainly due to an increase in loans and deposits.

Gross loans increased $11,353,000 from $171,649,000 at September 30, 2017, to $183,002,000 at September 30, 2018, an increase of 6.61%.  Total deposits increased $4,335,000 or 2.39%, ending at $185,658,000 for September 30, 2018, up from $181,323,000 for September 30, 2017.  Total stockholders’ equity increased slightly from $16,814,000 at September 30, 2017 to $17,043,000 at September 30, 2018, an increase of $229,000 or 1.36%. 

Asset Quality

There were no non-performing loans at September 30, 2018. There remains one non-performing asset at $706,000 as of the third quarter of 2018. The non-performing asset is under contract to be sold in the fourth quarter of 2018. The allowance for loan loss slightly decreased to 1.13% of total loans as of September 30, 2018 compared to 1.17% for the same period 2017.  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)       (unaudited)
    9/30/2018   12/31/2017   9/30/2017
Assets            
             
Cash and due from banks   $ 12,724     $ 7,718     $ 16,717  
Securities – Available for sale     6,709       6,889       7,337  
Federal Home Loan Bank stock, at cost     232       232       232  
             
Loans     183,002       172,586       171,649  
Allowance for possible loan losses     (2,061 )     (2,052 )     (2,004 )
Net loans     180,941       170,533       169,644  
             
Banking premises and equipment     3,632       3,611       3,620  
Deferred tax asset     2,526       2,939       4,783  
Other real estate owned     706       721       721  
Accrued interest receivable and other assets     801       667       708  
Total assets   $ 208,271     $ 193,311     $ 203,763  
             
Liabilities and Stockholders’ Equity            
Liabilities            
Deposits            
Noninterest-bearing demand deposits     85,676       77,065       79,981  
Interest-bearing     99,982       94,515       101,343  
Total deposits     185,658       171,580       181,323  
             
Other Liabilities            
Federal Home Loan Bank advances     0       0       0  
Other borrowings     5,058       5,711       5,263  
Accrued interest payable and other liabilities     512       604       364  
Total liabilities     191,227       177,895       186,949  
             
Stockholders’ Equity            
Common stock     11,923       11,923       11,923  
Paid-in capital     11,804       11,804       11,804  
Restricted stock – Unearned compensation     61       0       0  
Accumulated deficit     (6,505 )     (8,205 )     (6,855 )
Accumulated other comprehensive income (loss)     (239 )     (105 )     (57 )
             
Total stockholders’ equity     17,043       15,416       16,814  
             
Total liabilities and stockholders’ equity   $ 208,271     $ 193,311     $ 203,763  

CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
               
(Dollars, in thousands)              
  (unaudited)   (unaudited)
  Three Months Ended   Nine Months Ended
  9/30/2018   9/30/2017   9/30/2018   9/30/2017
Interest Income              
Interest and fees on loans $ 2,139     $ 1,926   $ 6,066     $ 5,569  
Interest on investment securities:   39       34     124       119  
Interest on federal funds sold   16       17     63       31  
Total interest income   2,194       1,978     6,254       5,718  
               
Interest Expense              
Deposits   272       160     663       347  
Borrowings   65       49     187       182  
Total interest expense   338       209     849       529  
               
Net Interest Income   1,856       1,769     5,405       5,190  
               
Provision for Possible Loan Losses   0       45     0       (265 )
               
Net Interest Income after provision for possible loan losses              
  1,856     1,724     5,405     5,455  
               
Noninterest Income              
Service fees on loan and deposit accounts   119       115     365       355  
Loss on sale of other real estate owned   0       0     0       4  
Other   55       11     198       227  
Total noninterest income   173       125     563       586  
               
Noninterest Expense              
Salaries and employee benefits   758       742     2,289       2,204  
Occupancy   128       127     367       370  
Advertising   45       40     135       110  
Outside processing   124       126     398       367  
Professional fees   53       50     157       129  
FDIC insurance   21       13     63       60  
Defaulted loan expense   (7 )     5     (7 )     16  
Other   136       127     416       422  
Total noninterest expense   1,259       1,230     3,818       3,678  
               
Income/(Loss) before income taxes   771       620     2,150       2,362  
               
Income Tax Expense     167         213       449         821  
               
Net Income/(Loss) $ 604     $ 407   $ 1,701     $ 1,541  

CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
             
(Dollars in thousands, except share and per share data)   Quarter Ended
             
    09/30/18 06/30/18 03/31/18 12/31/17 09/30/17
MARKET DATA            
Book value per share   $5.15   $4.97   $4.78   $4.74   $5.17  
Market value per share   $7.50   $8.01   $8.00   $8.10   $6.90  
Earnings per share – basic & diluted   $0.18   $0.19   $0.15   ($0.42 ) $0.13  
Period end common shares     3,309,156     3,309,156     3,309,156     3,249,156     3,249,156  
             
PERFORMANCE RATIOS            
Return on average assets     1.17 %   1.23 %   0.97 %   1.10 %   0.82 %
Return on average equity     11.51 %   12.04 %   9.75 %   10.45 %   7.90 %
Net interest margin     3.90 %   3.81 %   3.90 %   3.85 %   3.88 %
Efficiency ratio     62.02 %   62.39 %   67.79 %   70.48 %   64.91 %
Texas ratio     3.21 %   3.32 %   3.52 %   4.35 %   4.44 %
             
CAPITAL & LIQUIDITY            
Tier 1 Leverage     9.77 %   9.68 %   9.36 %   9.08 %   9.30 %
Common Equity Tier 1 Capital     10.63 %   10.32 %   10.19 %   10.12 %   10.07 %
Tier 1 Risk Based Capital     10.63 %   10.32 %   10.19 %   10.12 %   10.07 %
Total Risk Based Capital     11.73 %   11.43 %   11.33 %   11.26 %   11.19 %
Loan to deposit ratio     98.57 %   100.76 %   98.26 %   100.59 %   94.66 %
             
ASSET QUALITY            
Gross loan charge-offs   $0   $0   $0   $0   $1  
Net loan charge-offs (recoveries)   ($3 ) ($4 ) ($2 ) ($3 ) ($2 )
Allowance for loan and lease losses to total loans     1.13 %   1.13 %   1.16 %   1.19 %   1.17 %
Nonperforming loans to total loans     0.00 %   0.00 %   0.00 %   0.09 %   0.10 %
Nonperforming assets to total assets     0.34 %   0.35 %   0.36 %   0.45 %   0.44 %

 

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