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Clarkston Financial Corporation Reports 2018 Q4 Results

CLARKSTON, Mich., Feb. 13, 2019 (GLOBE NEWSWIRE) -- Clarkston Financial Corporation (“Corporation”) (OTCBB:CKFC - News), the holding company for Clarkston State Bank (“Bank”), today reported net income of $645,000 or $0.19 per share for the three months ended December 31, 2018, compared to net loss of ($1,367,000) or ($0.42) per share for the three months ended December 31, 2017. The net loss in the fourth quarter of 2017 was directly attributable to the change in tax law passed by Congress.

J. Grant Smith, CEO, said, "Another year of consistent financial performance. Our balance sheet fundamentals are very good, net interest margin has improved nicely and our hallmark of great expense control has resulted in another great year of performance. We strive to be consistent and perform above our peer group. Once again, we accomplished our goal during 2018. We are cautiously optimistic for 2019. We expect to continue with our growth trajectory while staying disciplined as we continue with our efforts to grow our regulatory capital. The Bank’s fundamentals remain very strong and we expect our very good operating performance to continue in 2019.

Operating Results

The Corporation’s net interest income before provision, increased to $1,928,000 for the quarter ended December 31, 2018, compared to $1,820,000 for the same period ended December 31, 2017.  This represents an increase of $108,000 or 5.93% quarter over quarter.  The net interest margin of the Bank increased to 3.96% as of December 31, 2018, compared to 3.85% for December 31, 2017. The Bank’s net interest spread has improved as interest rates have increased on both new loan originations and renewals.

Noninterest income increased during the fourth quarter of 2018 when compared to the fourth quarter of 2017. The Corporation posted $127,000 for the quarter compared to $59,000 for the quarter ended December 31, 2017, an increase of $68,000 or 115.25%.  The increase is mostly attributable to increases in deposit account fees. Noninterest expense decreased, ending the fourth quarter at $1,252,000 compared to $1,324,000 for the same period ended December 31, 2017, a decrease of $72,000 or 5.44%.

Balance Sheet

Total assets at December 31, 2018, were $211,630,000 compared to $193,311,000 at December 31, 2017, an increase of $18,319,000 or 9.48%.  The increase is mainly due to an increase in loans and deposits.

Gross loans increased $19,489,000 from $172,586,000 at December 31, 2017, to $192,075,000 at December 31, 2018, an increase of 11.29%.  Total deposits increased $6,554,000 or 3.82%, ending at $178,134,000 for December 31, 2018, up from $171,580,000 for December 31, 2017.  Total stockholders’ equity increased from $15,416,000 at December 31, 2017 to $17,786,000 at December 31, 2018, an increase of $2,370,000 or 15.37%.

Asset Quality

There were no non-performing loans at December 31, 2018. There remains one non-performing asset at $706,000 as of the fourth quarter of 2018. The allowance for loan loss slightly decreased to 1.07% of total loans as of December 31, 2018 compared to 1.19% 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)        
    (audited)   (audited)
    12/31/2018   12/31/2017
Assets        
         
Cash and due from banks   $7,422     $7,718  
Securities – Available for sale     6,440       6,889  
Federal Home Loan Bank stock, at cost     232       232  
         
Loans     192,075       172,586  
Allowance for possible loan losses     (2,064)       (2,052)  
Net loans     190,011       170,533  
         
Banking premises and equipment     3,581       3,611  
Deferred tax asset     2,352       2,939  
Other real estate owned     706       721  
Accrued interest receivable and other assets     886       667  
Total assets   $211,630     $193,311  
         
Liabilities and Stockholders' Equity        
Liabilities        
Deposits        
Noninterest-bearing demand deposits     80,127       77,065  
Interest-bearing     98,007       94,515  
Total deposits     178,134       171,580  
         
Other Liabilities        
Federal Home Loan Bank advances     0       0  
Other borrowings     15,056       5,711  
Accrued interest payable and other liabilities     654       604  
Total liabilities     193,844       177,895  
         
Stockholders' Equity        
Common stock     11,923       11,923  
Paid-in capital     12,099       11,804  
Restricted stock - Unearned compensation     (197)       0  
Accumulated deficit     (5,860)       (8,205)  
Accumulated other comprehensive income (loss)     (179)       (105)  
         
Total stockholders' equity     17,786       15,416  
         
Total liabilities and stockholders' equity   $211,630     $193,311  


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
               
(Dollars, in thousands)              
  (audited)   (audited)
  Three Months Ended   Twelve Months Ended
  12/31/2018   12/31/2017   12/31/2018   12/31/2017
Interest Income              
Interest and fees on loans $2,204   $2,008     $8,270     $7,516  
Interest on investment securities:   39     34       163       153  
Interest on federal funds sold   32     27       95       58  
Total interest income   2,274     2,070       8,528       7,727  
               
Interest Expense              
Deposits   287     176       949       523  
Borrowings   60     74       247       256  
Total interest expense   346     250       1,196       779  
               
Net Interest Income   1,928     1,820       7,332       6,948  
               
Provision for Possible Loan Losses   0     45       0       (220)  
               
Net Interest Income after provision for possible loan losses              
  1,928   1,775       7,332     7,168  
               
Noninterest Income              
Loan and deposit service fees   117     49       482       465  
Loss on sale of other real estate owned   0     0       0       4  
Other   11     11       209       238  
Total noninterest income   127     59       691       706  
               
Noninterest Expense              
Salaries and employee benefits   750     808       3,039       3,011  
Occupancy   124     90       492       460  
Advertising   42     71       176       182  
Outside processing   110     127       508       494  
Professional fees   53     7       210       136  
FDIC insurance   24     23       87       83  
Defaulted loan expense   6     14       (1 )     30  
Other   144     184       560       606  
Total noninterest expense   1,252     1,324       5,071       5,002  
               
Income/(Loss) before income taxes   803     510       2,953       2,871  
               
Income Tax Expense     158       1,877         607         2,698  
               
Net Income/(Loss) $645     $(1,367 )   $2,345     $174  


CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
             
(Dollars in thousands, except share and per share data)   Quarter Ended
             
    12/31/18 09/30/18 06/30/18 03/31/18 12/31/17
MARKET DATA            
Book value per share   $5.37   $5.15   $4.97   $4.78   $4.74  
Market value per share   $7.20   $7.50   $8.01   $8.00   $8.10  
Earnings per share - basic & diluted   $0.19   $0.18   $0.19   $0.15     ($0.42)  
Period end common shares     3,309,156     3,309,156     3,309,156     3,309,156     3,249,156  
             
PERFORMANCE RATIOS            
Return on average assets     1.22%     1.17%     1.23%     0.97%     1.10%  
Return on average equity     11.97%     11.51%     12.04%     9.75%     10.45%  
Net interest margin     3.96%     3.90%     3.81%     3.90%     3.85%  
Efficiency ratio     60.93%     62.02%     62.39%     67.79%     70.48%  
Texas ratio     3.07%     3.21%     3.32%     3.52%     4.35%  
             
CAPITAL & LIQUIDITY            
Tier 1 Leverage     10.05%     9.77%     9.68%     9.36%     9.08%  
Common Equity Tier 1 Capital     10.65%     10.63%     10.32%     10.19%     10.12%  
Tier 1 Risk Based Capital     10.65%     10.63%     10.32%     10.19%     10.12%  
Total Risk Based Capital     11.70%     11.73%     11.43%     11.33%     11.26%  
Loan to deposit ratio     107.83%     98.57%     100.76%     98.26%     100.59%  
             
ASSET QUALITY            
Gross loan charge-offs   $0   $0   $0   $0   $0  
Net loan charge-offs (recoveries)     ($3)     ($3)     ($4)     ($2)     ($3)  
Allowance for loan and lease losses to total loans     1.07%     1.13%     1.13%     1.16%     1.19%  
Nonperforming loans to total loans     0.00%     0.00%     0.00%     0.00%     0.09%  
Nonperforming assets to total assets     0.34%     0.34%     0.35%     0.36%     0.45%