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	%