EXHIBIT 99.1
FOR IMMEDIATE RELEASE
April 26, 2006
Contact: Martin A. Thomson
Chief Executive Officer
FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC.
ANNOUNCES FIRST QUARTER 2006 EARNINGS
Alpena, Michigan - (April 26, 2006) First Federal of Northern Michigan Bancorp,
Inc. (Nasdaq: FFNM) (the "Company") reported consolidated net earnings of
$212,000, or $.07 per share, for the quarter ended March 31, 2006, compared to
net earnings of $142,000, or $.05 per share, for the quarter ended March 31,
2005. Earnings-per-share was calculated based on weighted average outstanding
shares of 3,116,745 and 3,066,221 for the periods ended March 31, 2006 and 2005,
respectively. The number of shares outstanding for the period ended March 31,
2005 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 $4.0 million for the three months ended March 31,
2006 from $3.5 million for the same period ended March 31, 2005. The increase in
interest income was due primarily to an increase in average balances of
non-mortgage loans of $11.0 million from March 31, 2005 to March 31, 2006,
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. Also contributing to higher interest income was
the increase in the average balance of available-for-sale securities of $13.8
million from March 31, 2005 to March 31, 2006, while the yield on those
securities increased 49 basis points period over period.
Interest expense increased to $1.9 million for the three months ended March 31,
2006 from $1.6 million for the three months ended March 31, 2005. This increase
was due primarily to an increase in average interest-bearing deposits of $8.4
million from March 31, 2005 to March 31, 2006, as well as an increase of 49
basis points in the costs of those funds, reflecting continued increasing upward
market pressure on deposit rates.
Stockholders' equity was $36.6 million at March 31, 2006, an increase of $38,000
from December 31, 2005. Net earnings for the quarter of $212,000 were offset by
a dividend declaration of $156,000 and loss in value of available-for-sale
securities of $40,000. 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 March 31, 2006 were $287.4 million, an increase
of $4.6 million, or 1.6%, over assets of $282.8 million at December 31, 2005.
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 1.11% at March 31, 2006
compared to 1.57% at December 31, 2005.
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 Balance Sheet
March 31, 2006 December 31, 2005
(Unaudited)
ASSETS
Cash and cash equivalents:
Cash on hand and due from banks......... $4,748,052 $4,497,629
Overnight deposits with FHLB............ 122,156 281,565
------------ ------------
Total cash and cash equivalents......... 4,870,208 4,779,194
Securities AFS.......................... 54,685,486 53,411,609
Securities HTM.......................... 1,775,000 1,775,000
Loans held for sale..................... 334,172 -
Loans receivable, net of allowance for
loan losses of $1,430,618 and
$1,415,764 as of March 31, 2006 and
December 31, 2005, respectively....... 204,502,872 201,183,076
Foreclosed real estate and other
repossessed assets.................... 525,269 434,823
Real estate held for investment......... 135,543 352,136
Federal Home Loan Bank stock, at cost... 4,765,000 4,765,000
Premises and equipment.................. 7,568,813 7,392,207
Accrued interest receivable............. 1,469,560 1,601,691
Intangible assets....................... 2,964,105 3,088,986
Goodwill................................ 1,349,854 1,349,854
Other assets............................ 2,418,454 2,641,195
------------ ------------
Total assets............................ $287,364,336 $282,774,771
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits................................ $185,621,906 $188,734,743
Advances from borrowers for taxes
and insurance......................... 234,889 27,709
Federal Home Loan Bank advances &
Note Payable.......................... 61,833,622 54,403,622
Accrued expenses and other liabilities.. 2,986,380 2,959,111
----------- -----------
Total liabilities....................... 250,676,797 246,125,185
----------- -----------
Commitments and contingencies........... - -
Stockholders' equity:
Common stock ($0.01 par value 20,000,000
shares authorized 3,120,342 and
3,115,510 shares issued and outstanding,
respectively)......................... 31,203 31,155
Additional paid-in capital.............. 23,558,106 23,560,462
Retained earnings, restricted........... - -
Retained earnings....................... 14,759,320 14,703,130
Unallocated ESOP........................ (1,163,083) (1,186,940)
Accumulated other comprehensive loss.... (498,007) (458,221)
------------ -------------
Total stockholders' equity.............. 36,687,539 36,649,586
------------ -------------
Total liabilities and stockholders'
equity................................ $287,364,336 $282,774,771
============ ============
First Federal of Northern Michigan Bancorp, Inc. and Subsidiaries
Consolidated Statement of Income
For the Three Months
Ended March 31,
2006 2005
(Unaudited)
Interest income:
Interest and fees on loans.............. $3,416,613 3,096,727
Interest and dividends on investments... 561,811 341,644
Interest on mortgage-backed securities.. 54,975 66,717
----------- ----------
Total interest income................... 4,033,399 3,505,088
----------- ----------
Interest expense:
Interest on deposits.................... 1,239,910 980,938
Interest on borrowings.................. 669,347 617,976
---------- ----------
Total interest expense.................. 1,909,257 1,598,914
---------- ----------
Net interest income..................... 2,124,141 1,906,174
Provision for loan losses............... 69,500 79,258
---------- ----------
Net interest income after provision
for loan losses........................ 2,054,641 1,826,916
---------- ----------
Non Interest income:
Service charges and other fees.......... 237,146 231,421
Mortgage banking activities............. 72,803 118,688
Gain on sale of available-for-sale
investments............................ - -
Net gain on sale of premises and
equipment, real estate owned and other
repossessed assets..................... 2,256 (4,907)
Other................................... 45,220 22,067
Insurance & Brokerage Commissions....... 768,654 732,054
---------- ----------
Total other income...................... 1,126,079 1,099,323
---------- ----------
Non interest expenses:
Compensation and employee benefits...... 1,544,900 1,564,284
SAIF Insurance Premiums................. 6,408 6,489
Advertising............................. 51,089 39,857
Occupancy............................... 369,281 315,000
Amortization of intangible assets....... 124,881 70,581
Service Bureau Charges.................. 86,281 89,963
Insurance & Brokerage Commission Expense 268,107 280,499
Professional Services................... 85,335 58,656
Donation to First Federal Community
Foundation............................. - -
Other................................... 324,860 286,853
---------- ----------
Other expenses.......................... 2,861,142 2,712,182
---------- ----------
Income before income tax expense........ 319,578 214,057
Income tax expense...................... 107,370 72,046
---------- ----------
Net income.............................. $212,208 $142,011
========== ==========
Per share data:
Basic earnings per share................ $0.07 $0.05
Weighted average number of shares
outstanding............................ 3,116,745 3,066,221
Diluted earnings per share.............. $0.07 $0.04
Weighted average number of shares
outstanding, including dilutive stock
options................................ 3,120,904 3,090,031
Dividends per common share.............. $0.050 $0.054