Contacts:
| • | Clarkston Financial Corporation — Grant Smith, President & COO – P:248 922-6945 |
| • | Marcotte Financial Relations — Mike Marcotte – P:248 656-3873 |
| Clarkston Financial Corp. Reports Q2/ 6-Month Results | For Immediate Release |
CLARKSTON, Mich., July 27, 2006 — Clarkston Financial Corporation (OTCBB: CKSB), the holding company forClarkston State Bank andHuron Valley State Bank, reported higher assets, loans and deposits, but a net loss for the second quarter and first half of 2006, chiefly from higher loan-loss provisioning at Clarkston State Bank and operating costs at start-up subsidiary Huron Valley State Bank, Edwin L. Adler, Board Chairman, and J. Grant Smith, President and COO, jointly announced today.
Clarkston Financial Corporation is the holding company forClarkston State Bank and Huron Valley State Bank. Clarkston State Bank opened in January 1999 and operates five branches and one loan center in Clarkston, Waterford, and Independence Township.Huron Valley State Bank opened in August 2005. Clarkston Financial Corporation owns 55% of the 820,000 common shares outstanding, with Milford-area investors owning the balance.
Operating Results
The net loss for the second quarter of 2006 was $198,000, equivalent to $0.16 per diluted share. The net loss for the first half of 2006 was $552,000, equivalent to $0.44 per diluted share. A year ago, the Corporation reported net income of $116,000, or $0.11 per diluted share, for the second quarter, and net income of $295,000, or $0.27 per diluted share, for the first half. The loan-loss provision for 2006‘s second quarter was $534,000 and $1,366,000 for the first half. These provisions were $260,000 and $355,000, respectively, for the second quarter and first half of 2005.
“We have nearly completed a comprehensive review of our loan portfolios. We are still working-out a small number of commercial loans. However, we are working hard to address our credit quality issues and credit policy procedures and controls. We still have some more work to do on our credit-administration-restructuring plan, but we expect to have it fully implemented by the end of the third quarter. I’m confident that, with the changes we have made, we now have the appropriate people and systems in place. Going forward, we are principally focused on executing our business plan and returning the company to profitability. We expect results for the third quarter and second half to be aided by loan recoveries,” Mr. Smith said.
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Clarkston Financial Corp.
Q2/6-month 2006 Results
Page 2
Mr. Adler added, “We believe in our people and their ability to return CSB to profitability and to restore shareholder confidence.”
Safe Harbor. This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which 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 regulation; 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; changes in the national and local economy; and other factors included in the Corporation’s filings with the Securities and Exchange Commission, available via EDGAR. The Corporation assumes no responsibility to update forward-looking statements.
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CLARKSTON FINANCIAL CORP
Historical Income Stmt Data Unaduited
000's Omitted
| Three Months Ended 06/30/06 | Three Months Ended 03/31/06 | Three Months Ended 12/31/05 | Three Months Ended 09/30/05 | Three Months Ended 06/30/05 | Six Months Ended 06/30/06 | Six Months Ended 06/30/05 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Interest Income | $ | 3,320 | $ | 3,016 | $ | 2,985 | $ | 2,830 | $ | 2,699 | $ | 6,336 | $ | 5,199 | |||||||||
| Interest Expense | 1,660 | 1,467 | 1,347 | 1,302 | 1,170 | 3,127 | 2,189 | ||||||||||||||||
| Net Interest Income | 1,660 | 1,549 | 1,638 | 1,528 | 1,529 | 3,209 | 3,010 | ||||||||||||||||
| Provision for Loan Losses | 534 | 832 | 104 | 908 | 260 | 1,366 | 355 | ||||||||||||||||
| Security Gains | 0 | 3 | -2 | 0 | 0 | 3 | 1 | ||||||||||||||||
| Gain on loan sales | 12 | 22 | 8 | 34 | 28 | 34 | 75 | ||||||||||||||||
| Service fees on loan and deposit accounts | 154 | 200 | 157 | 175 | 221 | 354 | 412 | ||||||||||||||||
| Other Income | 0 | 2 | -24 | 1 | 4 | 2 | 9 | ||||||||||||||||
| Total Other Income | 166 | 227 | 139 | 210 | 253 | 393 | 496 | ||||||||||||||||
| Salary & Benefit Expense | 839 | 791 | 728 | 692 | 783 | 1,630 | 1,527 | ||||||||||||||||
| Occupancy Expense | 280 | 254 | 256 | 209 | 201 | 534 | 384 | ||||||||||||||||
| Other Expense | 543 | 488 | 558 | 648 | 412 | 1,031 | 836 | ||||||||||||||||
| Total Other Expense | 1,662 | 1,533 | 1,542 | 1,549 | 1,396 | 3,195 | 2,747 | ||||||||||||||||
| EBIT | -370 | -589 | 132 | -719 | 126 | -959 | 405 | ||||||||||||||||
| Tax | -113 | -167 | 113 | -242 | 10 | -280 | 110 | ||||||||||||||||
| Minority Interest | 59 | 68 | 140 | 0 | 0 | 127 | 0 | ||||||||||||||||
| Net Income | -198 | -354 | 159 | -477 | 116 | -552 | 295 | ||||||||||||||||
| Reported EPS (diluted) | -$ | 0.16 | -$ | 0.28 | $ | 0.09 | -$ | 0.38 | $ | 0.11 | -$ | 0.44 | $ | 0.27 | |||||||||
| Dividends Per Share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||
| Selected Financial Ratios: | |||||||||||||||||||||||
| Total Risk Based Capital | 13.09 | % | 14.28 | % | 14.82 | % | 15.19 | % | 12.82 | % | 13.09 | % | 12.82 | % | |||||||||
| Return on Average Assets | -0.40 | % | -0.72 | % | 0.33 | % | -1.02 | % | 0.27 | % | -1.09 | % | 0.67 | % | |||||||||
| Return on Average Equity | -5.28 | % | -9.35 | % | 4.18 | % | -12.44 | % | 3.78 | % | -14.89 | % | 9.58 | % | |||||||||
| Net Interest Margin | 3.46 | % | 3.27 | % | 3.55 | % | 3.36 | % | 3.66 | % | 3.30 | % | 3.56 | % | |||||||||
| Average Assets | 199,429 | 197,071 | 191,921 | 186,933 | 173,133 | 201,786 | 175,932 | ||||||||||||||||
| Net charge-offs ($) | 1,092 | 644 | 53 | 535 | 117 | 1,736 | 129 | ||||||||||||||||
| Gross charge-offs ($) | 1,115 | 651 | 55 | 535 | 117 | 1,766 | 130 | ||||||||||||||||
CLARKSTON FINANCIAL CORP
Historical Financial Data Unaudited
000's Omitted
| 6/30/06 | 3/31/06 | 12/31/05 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Assets | $ | 211,221 | $ | 201,887 | $ | 195,576 | |||||
| Total Loans, Net of Unearn. Disc | 140,601 | 139,319 | 133,544 | ||||||||
| Loans HFS | 217 | 294 | 314 | ||||||||
| Loan Loss Reserve | 1,560 | 2,118 | 1,930 | ||||||||
| Non-accrual Loans | 916 | 1,142 | 1,066 | ||||||||
| Renegotiated Loans | 0 | 0 | 0 | ||||||||
| Loans 90 days + Still Accruing | 491 | 2,978 | 1,413 | ||||||||
| Total Non-performing Loans | 1,407 | 4,120 | 2,479 | ||||||||
| Total Securities | 48,009 | 49,948 | 48,982 | ||||||||
| Premises/Furniture & Fixtures | 4,824 | 4,882 | 3,911 | ||||||||
| Repossessed Assets | 182 | 186 | 205 | ||||||||
| Noninterest-bearing Deposits | 25,656 | 22,491 | 23,633 | ||||||||
| Interest bearing Deposits | 151,891 | 141,305 | 137,699 | ||||||||
| Total Deposits | 177,547 | 163,796 | 161,332 | ||||||||
| CD's>$100K | 48,230 | 40,006 | 37,668 | ||||||||
| Trust Preferred | 4,000 | 4,000 | 4,000 | ||||||||
| Common Equity | 13,984 | 14,667 | 15,131 | ||||||||
| Common Shares Outstanding at End of Period | 1,246 | 1,246 | 1,246 | ||||||||
| Goodwill/Intangibles | 0 | 0 | 0 | ||||||||
| Total borrowings | 10,200 | 10,200 | 10,200 | ||||||||