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Clarkston Financial Corporation Reports 2018 Q2 Results

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CLARKSTON, Mich., July 25, 2018 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation ("Corporation") (OTC:CKFC) (News), the holding company for Clarkston State Bank ("Bank"), today reported net income of $613,000 or $0.19 per share for the three months ended June 30, 2018, compared to net income of $765,000 or $0.24 per share for the three months ended June 30, 2017.

J. Grant Smith, CEO, said, "Another great quarter for the Corporation. Our discipline with expense control combined with the excellent profitability is greatly contributing to the growth in our regulatory capital. In addition, we are continuing with our efforts to lower our concentration in investor real estate which is now at 282%. We continue to work diligently to maintain our excellent balance sheet fundamentals through disciplined lending. Moreover, our loan pipeline is robust and is made up of both conventional and SBA loans. Our expectation is for our profitability to be very good the remainder of the year."     

Operating Results

The Corporation's net interest income before provision, increased slightly to $1,789,000 for the quarter ended June 30, 2018, compared to $1,754,000 for the same period ended June 30, 2017.  This represents an increase of $35,000 or 2.00% quarter over quarter.  The net interest margin of the Bank has decreased to 3.81% as of June 30, 2018, compared to 4.01% for June 30, 2017. Management is actively working to improve interest rates on its loan portfolio with new business as well as loan renewals.

Noninterest income decreased during the second quarter of 2018 when compared to the second quarter of 2017. The Corporation posted $252,000 for the quarter compared to $290,000 for the quarter ended June 30, 2017, a decrease of $38,000 or 13.10%.  The decrease is mostly attributable to gains realized in 2017 on the sale of SBA loans. However, management does have a good pipeline of SBA loans that are expected to close in the third and fourth quarter of 2018. Noninterest expense increased, ending the second quarter at $1,274,000 compared to $1,217,000 for the same period ended June 30, 2017, an increase of $57,000 or 4.68%.   

Balance Sheet

Total assets at June 30, 2018, were $202,446,000 compared to $191,533,000 at June 30, 2017, an increase of $10,913,000 or 5.70%.  The increase is mainly due to an increase in loans and deposits.

Gross loans increased $13,947,000 from $167,816,000 at June 30, 2017, to $181,763,000 at June 30, 2018, an increase of 8.31%.  Total deposits increased $14,680,000 or 8.86%, ending at $180,387,000 for June 30, 2018, up from $165,707,000 for June 30, 2017.  Total stockholders' equity increased slightly from $16,412,000 at June 30, 2017 to $16,441,000 at June 30, 2018, an increase of $29,000 or 0.18%. 

Asset Quality

There were no non-performing loans at June 30, 2018. There remains one non-performing asset at $706,000 as of the second 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 June 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)
    6/30/2018   12/31/2017   6/30/2017
Assets            
             
Cash and due from banks   $   7,717     $   7,718     $   7,653  
Federal funds sold     0       0       0  
Total cash and cash equivalents     7,717       7,718       7,653  
             
Securities – Available for sale     7,133       6,889       7,795  
Federal Home Loan Bank stock, at cost     232       232       232  
             
Loans     181,763       172,586       167,816  
Allowance for possible loan losses     (2,058 )     (2,052 )     (1,957 )
Net loans     179,705       170,533       165,859  
             
Banking premises and equipment     3,609       3,611       3,645  
Deferred tax asset     2,686       2,939       4,976  
Other real estate owned     706       721       721  
Accrued interest receivable and other assets     658       667       653  
Total assets   $   202,446     $   193,311     $   191,533  
             
Liabilities and Stockholders' Equity            
Liabilities            
Deposits            
Noninterest-bearing demand deposits     82,558       77,065       76,165  
Interest-bearing     97,829       94,515       89,542  
Total deposits     180,387       171,580       165,707  
             
Other Liabilities            
Federal Home Loan Bank advances     0       0       0  
Other borrowings     5,109       5,711       9,014  
Accrued interest payable and other liabilities     510       604       400  
Total liabilities     186,006       177,895       175,121  
             
Stockholders' Equity            
Common stock     11,923       11,923       11,923  
Paid-in capital     11,804       11,804       11,804  
Restricted stock - Unearned compensation     35       0       0  
Accumulated deficit     (7,108 )     (8,205 )     (7,262 )
Accumulated other comprehensive income (loss)     (212 )     (105 )     (52 )
             
Total stockholders' equity     16,441       15,416       16,412  
             
Total liabilities and stockholders' equity   $   202,446     $   193,311     $   191,533  


 
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
               
(Dollars, in thousands)              
  (unaudited)   (unaudited)
  Three Months Ended   Six Months Ended
  6/30/2018   6/30/2017   6/30/2018   6/30/2017
Interest Income              
Interest and fees on loans $ 2,001   $ 1,891     $ 3,928     $ 3,643  
Interest on investment securities:   43     41       85       84  
Interest on federal funds sold   20     7       48       13  
Total interest income   2,064     1,939       4,060       3,740  
               
Interest Expense              
Deposits   211     114       390       187  
Borrowings   63     71       122       133  
Total interest expense   274     185       512       320  
               
Net Interest Income   1,789     1,754       3,549       3,420  
               
Provision for Possible Loan Losses   0     (355 )     0       (310 )
               
Net Interest Income after provision for possible loan losses   1,789     2,109       3,549       3,730  
               
Noninterest Income              
Service fees on loan and deposit accounts   119     118       246       240  
Loss on sale of other real estate owned   0     0       0       4  
Other   133     172       144       217  
Total noninterest income   252     290       390       460  
               
Noninterest Expense              
Salaries and employee benefits   766     715       1,531       1,462  
Occupancy   119     121       239       243  
Advertising   45     35       89       70  
Outside processing   128     122       274       241  
Professional fees   55     36       105       79  
FDIC insurance   21     24       42       47  
Defaulted loan expense   1     2       (0 )     11  
Other   140     161       280       295  
Total noninterest expense   1,274     1,217       2,560       2,449  
               
Income/(Loss) before income taxes   768     1,182       1,379       1,742  
               
Income Tax Expense     155       418         282         608  
               
Net Income/(Loss) $ 613   $ 765     $ 1,097     $ 1,134  


 
CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
             
(Dollars in thousands, except share and per share data)   Quarter Ended
             
    06/30/18 03/31/18 12/31/17 09/30/17 06/30/17
MARKET DATA            
Book value per share   $   4.97   $   4.78   $   4.74   $   5.17   $   5.05  
Market value per share   $   8.01   $   8.00   $   8.10   $   6.90   $   6.30  
Earnings per share - basic & diluted   $   0.19   $   0.15   $   (0.42 ) $   0.13   $   0.24  
Period end common shares     3,309,156     3,309,156     3,249,156     3,249,156     3,249,156  
             
PERFORMANCE RATIOS            
Return on average assets     1.23 %   0.97 %   1.10 %   0.82 %   1.62 %
Return on average equity     12.04 %   9.75 %   10.45 %   7.90 %   15.14 %
Net interest margin - CSB     3.81 %   3.90 %   3.85 %   3.88 %   4.01 %
Efficiency ratio     62.39 %   67.79 %   70.48 %   64.91 %   59.52 %
Texas ratio     3.32 %   3.52 %   4.35 %   4.44 %   3.37 %
             
CAPITAL & LIQUIDITY            
Tier 1 Leverage - CSB     9.68 %   9.36 %   9.08 %   9.30 %   9.53 %
Common Equity Tier 1 Capital - CSB     10.32 %   10.19 %   10.12 %   10.07 %   9.95 %
Tier 1 Risk Based Capital - CSB     10.32 %   10.19 %   10.12 %   10.07 %   9.95 %
Total Risk Based Capital - CSB     11.43 %   11.33 %   11.26 %   11.19 %   11.06 %
Loan to deposit ratio     100.76 %   98.26 %   100.59 %   94.66 %   101.27 %
             
ASSET QUALITY            
Gross loan charge-offs   $   0   $   0   $   0   $   1   $   0  
Net loan charge-offs (recoveries)   $   (4 ) $   (2 ) $   (3 ) $   (2 ) $   (495 )
Allowance for loan and lease losses to total loans     1.13 %   1.16 %   1.19 %   1.17 %   1.17 %
Nonperforming loans to total loans     0.00 %   0.00 %   0.09 %   0.10 %   0.00 %
Nonperforming assets to total assets     0.35 %   0.36 %   0.45 %   0.44 %   0.38 %

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