Exhibit 99.1
Contact: Clarkston Financial Corp. - J. Grant Smith, President and COO, 248 922-6945
Marcotte Financial Relations - Mike Marcotte, 248 656-3873
| Clarkston Financial Corporation Reports Q3 & 9-Month Results | For Immediate Release |
CLARKSTON, Mich., Oct. 19, 2007 — Clarkston Financial Corporation(OTCBB: CKSB), the holding company forClarkston State Bank andHuron Valley State Bank, says its results for the third quarter and nine months ended September 30, 2007 were adversely affected by increased provisions for possible loan losses and lower net interest income.Edwin L. Adler, Board Chairman and CEO, andJ. Grant Smith, President and Chief Operating Officer, jointly announced today.
Third-quarter results
Total revenues — net interest income plus noninterest income — were $1,666,000, compared with total revenues of $1,935,000, for the year-earlier quarter. The 13.9% decline chiefly reflects a 16.3% slip in net interest income. The reduction in net interest income is attributable to margin compression, nonperforming loans and slowed loan growth. The provision for the quarter was $2,561,000, compared with $269,000 for the third quarter of 2006. The increase results from Michigan’s difficult economy, weak housing and real-estate markets, and an increase in nonperforming loans, especially real estate loans. The net loss for the quarter was $1,642,000, equivalent to $1.28 per diluted share. This contrasts with net income of $105,000, or $0.08 per diluted share, for Q3-2006.
Net charge-offs for the quarter totaled $1,529,000, a contrast to a recovery of $226,000 a year ago. Nonperforming loans were 3.7% of total loans at quarter’s end, compared with 1.5% at midyear, 2.1% at the end of Q1-2007 and 1.6% at the close of Q3-2006.
Nine-month results
For the first nine months of 2007, total revenues were $5,462,000, comparable to total revenues of $5,535,000 for the first nine months of 2006. Net interest income was off 3% from fractionally higher cost of funds. Aided by higher bank service charges and fees, non-interest income rose 10% to $823,000, from $747,000 for the year-earlier period. The net loss for the first nine months was $1,464,000, or $1.15 per diluted share. The net loss for the first nine months of 2006 was $447,000, or $0.35 per diluted share. The 2007 results include a provision for possible loan loss of $2,638,000, versus a provision of $1,635,000 a year ago.
Mr. Smith said: “We continue to work very hard to address the credit quality issues within the commercial lending department at Clarkston State Bank. However, the poor economic environment continues to put further pressure on our borrowers, which has resulted in more non-performing loans. In addition to working through some of our older problem credits, we are aggressively addressing challenges from the sharp downturn in the housing and real estate sectors. While we have no exposure to subprime mortgages, we are working through several stalled real estate projects. On a positive note, we are beginning to see improvement in loan demand at both Clarkston State Bank and Huron Valley State Bank. Huron Valley State Bank has moved to its new headquarters branch building in Milford and this has assisted in increased loan and deposit business.”
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Clarkston Financial Corp.
Q3 & 9-month 2007 results
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Mr. Adler added, “Our results are disappointing. We are facing strong headwinds. The feeble economy and abysmal real-estate sector are significantly impairing the market in Southeast Michigan. We have watched virtually all banks in Southeast Michigan report poor operating results in recent quarters. We have adjusted our organization to the realities of the marketplace. We have the right people and products. We’re well positioned in an otherwise strong market. We are hopeful that the business climate in the markets that we serve will improve in the months and year ahead. We have the resolve to persevere and we sincerely hope our shareholders share our belief and vision.”
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.
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; changes in the national and local economy; and other factors included in the Corporation’s filings with the Securities and Exchange Commission, available free online via EDGAR at SEC.GOV. The Corporation assumes no responsibility to update forward-looking statements.
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(financial schedules follow)
CLARKSTON FINANCIAL CORPORATION
Historical Balance Sheet Data
000's omitted
| Unaudited | Unaudited | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 2007 | Jun 2007 | Dec 2006 | Sep 2006 | |||||||||||
| Total Assets | $ | 203,703 | $ | 206,767 | $ | 220,378 | $ | 218,878 | ||||||
| Loans HFS | 645 | 348 | 120 | 577 | ||||||||||
| Total Portfolio Loans | 148,483 | 150,683 | 157,715 | 152,195 | ||||||||||
| Loan Loss Reserve | (2,766 | ) | (1,733 | ) | (2,750 | ) | (2,055 | ) | ||||||
| Non-accrual Loans | 5,352 | 2,216 | 2,431 | 1,676 | ||||||||||
| Loans 90 days + Still Accruing | 199 | 113 | 855 | 718 | ||||||||||
| Total Non-performing Loans | 5,551 | 2,329 | 3,286 | 2,394 | ||||||||||
| Repossessed Assets | 555 | 584 | 3 | 16 | ||||||||||
| Total Securities | 37,372 | 38,879 | 43,864 | 47,324 | ||||||||||
| Premises/Furniture & Fixtures | 7,227 | 6,505 | 4,730 | 4,764 | ||||||||||
| Noninterest-bearing Deposits | 24,401 | 24,085 | 23,922 | 22,554 | ||||||||||
| Interest bearing Deposits | 147,041 | 145,249 | 158,119 | 159,746 | ||||||||||
| Total Deposits | 171,442 | 169,334 | 182,041 | 182,300 | ||||||||||
| CD's>$100K | 46,247 | 45,884 | 51,961 | 53,538 | ||||||||||
| Trust Preferred | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||
| Advances from FHLB | 10,700 | 12,200 | 15,200 | 10,200 | ||||||||||
| Common Equity | 13,553 | 14,749 | 14,766 | 14,573 | ||||||||||
| Common Shares Outstanding at End of Period | 1,274 | 1,274 | 1,262 | 1,246 | ||||||||||
| Goodwill/Intangibles | 0 | 0 | 0 | 0 | ||||||||||
CLARKSTON FINANCIAL CORPORATION
Historical Income Statement Data
000's omitted
| Unaudited | Unaudited | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended Sep 2007 | Three Months Ended Jun 2007 | Three Months Ended Sep 2006 | Nine Months Ended Sep 2007 | Nine Months Ended Sep 2006 | |||||||||||||
| Total Interest Income | $ | 3,211 | $ | 3,446 | $ | 3,465 | $ | 10,182 | $ | 9,701 | |||||||
| Interest Expense | 1,805 | 1,833 | 1,786 | 5,543 | 4,913 | ||||||||||||
| Net Interest Income | 1,406 | 1,613 | 1,679 | 4,639 | 4,788 | ||||||||||||
| Provision for Loan Losses | 2,561 | 60 | 269 | 2,638 | 1,635 | ||||||||||||
| Security Gains/(Losses) | 0 | 0 | 0 | (2 | ) | 3 | |||||||||||
| Gain on loan sales | 50 | 84 | 82 | 196 | 200 | ||||||||||||
| Service fees on loan and deposit accounts | 198 | 195 | 183 | 600 | 557 | ||||||||||||
| Other Income | 12 | 10 | (9 | ) | 29 | (13 | ) | ||||||||||
| Total Other Income | 260 | 289 | 256 | 823 | 747 | ||||||||||||
| Salary & Benefit Expense | 783 | 1,004 | 808 | 2,754 | 2,438 | ||||||||||||
| Occupancy Expense | 212 | 233 | 259 | 658 | 793 | ||||||||||||
| Other Expense | 680 | 574 | 474 | 1,857 | 1,505 | ||||||||||||
| Total Other Expense | 1,675 | 1,811 | 1,541 | 5,269 | 4,734 | ||||||||||||
| EBIT | (2,570 | ) | 31 | 125 | (2,445 | ) | (834 | ) | |||||||||
| Tax | (873 | ) | 51 | 86 | (785 | ) | (194 | ) | |||||||||
| Minority Interest | (55 | ) | (67 | ) | (66 | ) | (196 | ) | (193 | ) | |||||||
| Net Income | $ | (1,642 | ) | $ | 47 | $ | 105 | $ | (1,464 | ) | $ | (447 | ) | ||||
| Reported EPS (diluted) | $ | (1.28 | ) | $ | 0.04 | $ | 0.08 | $ | (1.15 | ) | $ | (0.35 | ) | ||||
| Dividends Per Share | 0 | 0 | 0 | 0 | 0 | ||||||||||||
| Selected Financial Ratios: | |||||||||||||||||
| Total Risk Based Capital | 12.06 | % | 12.72 | % | 12.38 | % | 12.06 | % | 12.38 | % | |||||||
| Return on Average Assets | -3.16 | % | 0.09 | % | 0.21 | % | -0.93 | % | -0.29 | % | |||||||
| Return on Average Equity | -43.87 | % | 1.26 | % | 2.84 | % | -13.18 | % | -4.07 | % | |||||||
| Non Interest Margin | 2.87 | % | 3.21 | % | 3.26 | % | 3.08 | % | 3.24 | % | |||||||
| Average Assets | 206,139 | 211,227 | 203,546 | 211,455 | 205,306 | ||||||||||||
| Net charge-offs ($) | 1,529 | 920 | (226 | ) | 2,622 | 1,510 | |||||||||||
| Gross charge-offs ($) | 1,542 | 965 | 17 | 3,034 | 1,783 | ||||||||||||