OREANDA-NEWS. Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC), the holding company for Clarkston State Bank (“Bank”), today reported a net income of $315,000 or $0.10 per share for the three months ended June 30, 2016, compared to net income of $216,000 or $.07 per share for the three months ended June 30, 2015. For the six months ended June 30, 2016, the corporation reported net income of $510,000 or $0.18 per share compared to net income of $467,000 or $0.15 per share for the same period in 2015.

J. Grant Smith, CEO, said, "We are very pleased with the bank’s financial performance and I expect the earnings momentum to be even better throughout the second half of the year. Our lending team has been very busy as we continue to see good opportunities for additional loan growth. When you combine the loan growth with a very sound and stable deposit funding mix it provides for a very good net interest margin which we continue to post quarter over quarter. It is also noteworthy to mention, the bank’s asset quality continues to be excellent. I expect our operating expenses to decline which will further enhance the bank’s operating performance as we move forward.”  

Operating Results

The Corporation’s net interest income increased significantly to $1,620,000 for the quarter ended June 30, 2016 compared to $1,353,000 for the same period ended June 30, 2015.  This represents an increase of $267,000 or 19.73% quarter over quarter.  The net interest margin of the Bank remains well above its peer group average ending at 4.15% for the quarter ended June 30, 2016. The strength of the net interest margin is the result of a strong core deposit funding base and discipline within the pricing of its commercial loans.

Noninterest income decreased during the second quarter of 2016 when compared to the second quarter 2015.  The Corporation posted $159,000 for the quarter compared to $184,000 for the quarter ended June 30, 2015, a decrease of $25,000 or 13.59%.  The decrease is mostly attributable to a small loss on the disposition of a parcel of other real estate owned.  Noninterest expense increased, ending the second quarter at $1,275,000 compared to $1,214,000 for the same period ended June 30, 2015, an increase of $61,000 or 5.02%.  The increase is primarily attributable to an increase in defaulted loan expense associated with preparing parcels of other real estate owned for sale.     

Balance Sheet

Total assets at June 30, 2016 were $176,881,000 compared to $146,833,000 at June 30, 2015, an increase of $30,048,000 or 20.46%.  The increase in assets is largely due to increases in noninterest-bearing demand deposits.

Gross loans increased $19,527,000 from $119,898,000 at June 30, 2015 to $139,425,000 at June 30, 2016, an increase of 16.29%.  Total deposits increased $29,090,000 or 22.84%, ending at $156,466,000 for June 30, 2016, up from $127,376,000 at June 30, 2015.  Total stockholders’ equity increased from $13,338,000 at June 30, 2015 to $14,465,000 at June 30, 2016, an increase of $1,127,000 or 8.45%. 

Asset Quality

There were no non-performing loans at June 30, 2016 compared to $200,000 from the same period 2015.  The allowance for loan loss decreased to 1.12% of total loans as of June 30, 2016, compared to 1.49% for the same period 2015.  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.

 

CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
             
(Dollars, in thousands)            
    (unaudited)       (unaudited)
    6/30/2016   12/31/2015   6/30/2015
Assets            
             
Cash and due from banks   $   17,191     $   24,264     $   8,393  
Securities – Available for sale     9,921       9,649       7,084  
Federal Home Loan Bank stock, at cost     232       232       232  
             
Loans     139,425       127,028       119,898  
Allowance for possible loan losses     (1,558 )     (1,529 )     (1,785 )
Net loans     137,867       125,499       118,113  
             
Banking premises and equipment     3,759       3,915       4,425  
Deferred tax asset     5,989       6,276       6,572  
Other real estate owned     1,221       1,581       1,396  
Accrued interest receivable and other assets     701       886       618  
Total assets   $   176,881     $   172,302     $   146,833  
             
Liabilities and Stockholders' Equity            
Liabilities            
Deposits            
Noninterest-bearing demand deposits     84,356       82,408       53,121  
Interest-bearing     72,110       69,959       74,255  
Total deposits     156,466       152,367       127,376  
Other Liabilities            
Other borrowings     5,519       5,621       5,724  
Accrued interest payable and other liabilities     431       422       395  
Total liabilities     162,416       158,410       133,495  
             
Stockholders' Equity            
Common stock     11,945       11,945       11,945  
Paid-in capital     11,826       11,826       11,826  
Restricted stock - Unearned compensation     (40 )     (45 )     (51 )
Accumulated deficit     (9,279 )     (9,789 )     (10,351 )
Accumulated other comprehensive income (loss)     13       (45 )     (31 )
Total stockholders' equity     14,465       13,892       13,338  
Total liabilities and stockholders' equity   $   176,881     $   172,302     $   146,833  
CLARKSTON FINANCIAL CORPORATION  
CONSOLIDATED STATEMENT OF OPERATIONS  
               
(Dollars, in thousands) (unaudited)    (unaudited) 
  Three Months Ended   Six Months Ended 
  6/30/2016   6/30/2015   6/30/2016   6/30/2015
Interest Income              
Interest and fees on loans $   1,656     $   1,445     $   3,258     $   2,878  
Interest on investment securities:   48       32       105       69  
Interest on federal funds sold   21       5       29       9  
Total interest income   1,725       1,482       3,392       2,956  
               
Interest Expense              
Deposits   42       56       87       108  
Borrowings   63       73       134       164  
Total interest expense   105       129       221       272  
Net Interest Income   1,620       1,353       3,171       2,684  
               
Provision for Possible Loan Losses     -       -         -       -  
               
Net Interest Income after provision for possible loan losses              
  1,620     1,353       3,171     2,684  
Noninterest Income              
Service fees on loan and deposit accounts   129       123       244       237  
Gain on sale of securities     -       34         -       34  
Loss on sale of other real estate owned   (14 )     -       (14 )     -  
Other   44       27       68       363  
Total noninterest income   159       184       298       634  
               
Noninterest Expense              
Salaries and employee benefits   727       694       1,574       1,522  
Occupancy   123       147       250       297  
Advertising   35       31       70       59  
Outside processing   118       113       240       230  
Professional fees   54       41       98       95  
FDIC insurance   27       23       53       46  
Defaulted loan expense   69       33       103       86  
Other   122       132       255       279  
Total noninterest expense   1,275       1,214       2,643       2,614  
Income before income taxes   504       323       826       704  
Income Tax Expense     189         107         316         237  
Net Income $   315     $   216     $   510     $   467