FOR IMMEDIATE RELEASE
February 20, 2006
Contact: Martin A. Thomson
Chief Executive Officer
First Federal of Northern Michigan Bancorp, Inc.
(989) 356-9041
First Federal of Northern Michigan Bancorp, Inc.
Fourth Quarter 2005 Earnings
ALPENA, Mich., Feb. 20 -- First Federal of Northern Michigan Bancorp, Inc.
(Nasdaq: FFNM) (the "Company") reported consolidated net earnings of $237,000,
or $.08 per share, for the quarter ended December 31, 2005, compared to net
earnings of $72,000, or $.02 per share, for the quarter ended December 31, 2004.
Earnings-per-share was calculated based on weighted average outstanding shares
of 3,112,414 and 3,065,667 for the periods ended December 31, 2005 and 2004,
respectively. The number of shares outstanding for the period ended December 31,
2004 for purposes of calculating per share earnings has been adjusted to give
retroactive recognition to the exchange ratio applied in the Company's stock
offering and related second-step conversion, which closed on April 1, 2005.
Interest income increased to $3.9 million for the three months ended
December 31, 2005 from $3.5 million for the same period ended December 31, 2004.
The increase in interest income was due primarily to an increase in average
balances of non-mortgage loans of $17.0 million from December 31, 2004 to
December 31, 2005, reflecting the Company's continued emphasis on commercial
lending, and an increase in yield on adjustable rate loans over the same period,
reflecting higher market interest rates.
Interest expense increased to $1.8 million for the three months ended
December 31, 2005 from $1.6 million for the three months ended December 31,
2004. This increase was due primarily to an increase in average interest-
bearing deposits of $17.1 million from December 31, 2004 to December 31, 2005,
as well as an increase of 18 basis points in the costs of those funds,
reflecting continued increasing upward market pressure on deposit rates.
Stockholders' equity increased to $36.6 million at December 31, 2005 from $
21.8 million at December 31, 2004, reflecting mainly the completion in the
quarter ended June 30, 2005 of the Company's second-step stock conversion, which
raised $16.0 million in new capital, net of related costs. The decrease in
equity of $100,000 in the quarter ended December 31, 2005 was the result of net
income of $237,000, offset by a dividend declaration of $156,000 and loss in
value of available-for-sale securities of $172,000. The loss in value of these
securities was due to changes in interest rates and was not considered by
management to be other than temporary.
Total assets of the Company at December 31, 2005 were $282.8 million, an
increase of $20.0 million, or 8.0%, over assets of $262.8 million at December
31, 2004. The asset quality of the Company remained strong, with reserves
allocated in an amount the Company believes to be adequate to absorb probable
losses. The ratio of total nonperforming assets to total assets was 1.57% at
December 31, 2005 compared to 0.66% at December 31, 2004.
Safe Harbor Statement
This news release and other releases and reports issued by the Company,
including reports to the Securities and Exchange Commission, may contain "
forward-looking statements." The Company cautions readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date
made. The Company is including this statement for purposes of taking advantage
of the safe-harbor provisions of the Private Securities Litigation Reform Act of
1995.
First Federal of Northern Michigan Bancorp, Inc. and Subsidiaries
Consolidated Statement of Financial Condition
December 31, 2005 December 31, 2004
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash on hand and due from banks $4,497,629 $4,685,913
Overnight deposits with FHLB 281,565 52,646
Total cash and cash equivalents 4,779,194 4,738,559
Securities AFS 53,411,609 40,233,035
Securities HTM 1,775,000 1,800,000
Loans held for sale - 1,095,660
Loans receivable, net of allowance
for loan losses of $1,415,764 and
$1,213,938 as of December 31, 2005
and December 31, 2004, respectively 201,183,076 195,387,937
Foreclosed real estate and other
repossessed assets 434,823 28,907
Real estate held for investment 352,136 562,758
Federal Home Loan Bank stock, at cost 4,765,000 4,666,100
Premises and equipment 7,392,207 6,793,998
Accrued interest receivable 1,601,691 1,034,695
Intangible assets 3,088,986 2,855,568
Goodwill 1,349,854 1,049,854
Other assets 2,641,195 2,553,063
Total assets $282,774,771 $262,800,134
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $188,734,743 $182,489,148
Advances from borrowers for taxes and
insurance 27,709 44,590
Federal Home Loan Bank advances &
Note Payable 54,405,314 56,001,396
Accrued expenses and other liabilities 3,015,653 2,488,711
Total liabilities 246,183,419 241,023,845
Commitments and contingencies - -
Stockholders' equity:
Common stock ($0.01 par value 20,000,000
shares authorized and $1.00 par value
20,000,000 authorized, respectively;
3,111,176 and 1,659,480 shares issued
and outstanding, respectively). 31,155 1,659,480
Additional paid-in capital 23,502,228 5,356,782
Retained earnings, restricted - 5,152,000
Retained earnings 14,703,130 9,635,580
Unallocated ESOP (1,186,940) -
Accumulated other comprehensive loss (458,221) (27,553)
Total stockholders' equity 36,591,352 21,776,289
Total liabilities and stockholders'
equity $282,774,771 $262,800,134
First Federal of Northern Michigan Bancorp, Inc. and Subsidiaries
Consolidated Statement of Income
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Interest income:
Interest and fees on
loans $3,402,555 $3,066,071 $13,149,753 $11,513,400
Interest and dividends
on investments 488,357 345,377 1,678,220 1,530,336
Interest on mortgage-
backed securities 58,372 68,611 248,278 234,706
Total interest income 3,949,284 3,480,059 15,076,251 13,278,442
Interest expense:
Interest on deposits 1,203,962 995,960 4,338,631 3,616,443
Interest on borrowings 576,642 634,975 2,367,518 2,585,862
Total interest expense 1,780,604 1,630,935 6,706,149 6,202,305
Net interest income 2,168,680 1,849,124 8,370,102 7,076,137
Provision for loan losses 102,000 109,143 368,058 322,743
Net interest income after
provision for loan losses 2,066,680 1,739,981 8,002,044 6,753,394
Non Interest income:
Service charges and other
fees 282,596 262,974 1,030,159 1,011,632
Mortgage banking activities 98,395 118,872 481,893 579,563
Gain on sale of available-
for-sale investments - - 13,128 102,637
Net gain on sale of premises
and equipment, real estate
owned and other repossessed
assets (18,252) (27,435) (44,863) (47,134)
Other 6,691 24,188 37,403 97,464
Insurance & Brokerage
Commissions 735,117 733,580 2,940,641 2,967,187
Total other income 1,104,547 1,112,179 4,458,361 4,711,349
Non interest expenses:
Compensation and
employee benefits 1,609,622 1,568,498 6,315,060 6,028,645
SAIF Insurance Premiums 6,170 6,134 24,980 26,714
Advertising 63,274 62,282 196,693 239,667
Occupancy 340,370 297,320 1,307,862 1,264,188
Amortization of
intangible assets 94,529 63,027 330,564 293,136
Service Bureau Charges 87,879 88,180 349,943 338,515
Insurance & Brokerage
Commission Expense 280,817 293,535 1,169,281 1,263,824
Professional Services 52,400 46,184 233,161 201,611
Donation to First Federal
Community Foundation - - 679,940 -
Other 299,080 318,391 1,207,936 1,200,800
Other expenses 2,834,141 2,743,551 11,815,420 10,857,100
Income before income
tax expense 337,086 108,609 644,985 607,643
Income tax 100,266 36,493 203,116 203,553
Net income $236,820 $72,116 $441,869 $404,090
Per share data:
Basic earnings per share $0.08 $0.02 $0.14 $0.13
Weighted average number of
shares outstanding 3,112,414 3,065,667 3,094,960 3,065,129
Diluted earnings per share $0.08 $0.02 $0.14 $0.13
Weighted average number of
shares outstanding, including
dilutive stock options 3,116,537 3,087,906 3,104,690 3,088,735
Dividends per common share $0.050 $0.054 $0.204 $0.203