EXHIBIT 99.1
PRESS RELEASE
For Release: April 9, 2004
Nasdaq: NCFC
Contact: Investor Relations at (800) 200-7032
Website: www.northcountrybank.com
NORTH COUNTRY FINANCIAL CORPORATION
REPORTS FIRST QUARTER 2004 RESULTS
(Manistique, Michigan) - North Country Financial Corporation (Nasdaq: NCFC), the
bank holding company for North Country Bank and Trust (the "Bank") today
announced a first quarter 2004 loss of $1.7 million or $.24 per share compared
to a loss of $1.5 million or $.21 per share for the first quarter of 2003.
"This is the third consecutive quarter that losses have diminished," said C.
James Bess, president and chief executive officer. North Country lost $2.5
million in 2003's fourth quarter and $3.0 million in last year's third quarter.
"The first quarter ended about as we expected with the 32 percent improvement
over fourth quarter 2003 results," said Bess. "Continuing losses are
disappointing, but the improving trend shows that actions being taken to
rehabilitate the company are working."
Total assets of the Corporation at March 31, 2004 were $400.4 million, down 23.3
percent from the $521.8 million in total assets reported at March 31, 2003.
First quarter-end total assets were down 5.2 percent from the $422.5 million of
total assets at year-end 2003.
Total deposits of $287.1 million at March 31, 2004 were down 27.4 percent from
deposits of $395.2 million on March 31, 2003. Deposits were down 6.1 percent
from year-end 2003 deposits of $305.8 million.
Total loans at March 31, 2004 were $255.0 million, down from $391.6 million at
March 31, 2003 or a 34.9 percent reduction. Total loans at the end of the first
quarter of 2004 declined 14.4 percent from year-end 2003 total loans of $297.8
million.
The decline in assets, deposits, and loans reflects, in part, the results of
management's efforts to shrink the Corporation and the "Bank" via strengthened
credit-granting policies and procedures, sale and workout of problem loans, and
the sale, consolidation, and closure of unprofitable branches.
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In late March 2004, the "Bank" sold over $25.0 million of non-accrual and
undesirable loans for about $18.0 million without any additional provisions to
the allowance for loans and lease losses or significant charges to income. The
sale included approximately $18.0 million of non-accrual loans primarily
concentrated in the hospitality/traveler accommodation industry. The sale
reduced non-accrual loans from $38.7 million at year-end 2003 to $18.3 million
at March 31, 2004. Actions are also currently being taken that could reduce a
troubled $13.0 million commercial loan relationship. By dollar volume, that
relationship represents about 70% of the bank's remaining non-accrual loans.
Proceeds of the loan sale will be re-invested in interest-earning assets and
remain available to fund further size contractions.
In addition to the previously announced sale of the "Bank's" Alanson and
Mancelona branches, management is negotiating for the sale of other branches.
Processes are also ongoing to consolidate branches in Traverse City and Sault
Ste. Marie, and to close branches in Boyne City, Cadillac, and Calumet by June
2004. Another branch may be closed by August 2004. In addition to the asset and
deposit shrinkage that will result from branch sales, non-interest expense is
expected to decline as a result of branch sales, consolidations, and closings.
As well, management continues to explore other opportunities for expense
reductions, and believes non-interest expenses will be down in future quarters.
North Country Financial Corporation's total shareholders' equity of $9.4 million
at March 31, 2004 was down 50.3 percent or $9.5 million from the $18.9 million
in shareholders' equity at March 31, 2003. 2004's first quarter-end
stockholders' equity was down 12.1 percent from $10.7 million of shareholders'
equity at year-end 2003.
"Capital remains a difficult challenge for the "Bank" and the company," Bess
concluded. "Management continues to seek a capital injection or to consummate a
sale of control of North Country to a supportive acquirer." Management believes
the "Bank" is in substantial compliance with all provisions of the April 5, 2003
Cease and Desist Order (the "Order") with the exception of capital. At March 31,
2004 and at prior quarter-ends, the "Bank" did not meet the capital ratio
requirements of the "Order."
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements. Words such as "anticipates,"
"believes," "estimates," "expects," "intends," "should," "will," variations of
such words and similar expressions are intended to identify forward-looking
statements. These statements reflect management's current beliefs as to the
expected outcomes of future events and are not guarantees of future performance.
These statements involve certain risks, uncertainties and assumptions that are
difficult to predict with regard to timing, extent, likelihood and degree of
occurrence. Therefore, actual results and outcomes may materially differ from
what may be expressed or forecasted in such forward-looking statements. Factors
that could cause a difference include, among others: changes in the national and
local economies or market conditions; changes in interests rates and banking
regulations; the impact of competition from traditional or new sources; and the
possibility that anticipated cost savings and revenue enhancements from mergers
and acquisitions, bank consolidations, and other sources may not be fully
realized at all or within the expected time frames. These and other factors that
may emerge could cause decisions and actual results to differ materially from
current expectations. North Country undertakes no obligation to revise, update,
or clarify forward-looking statements to reflect events or conditions after the
date of this release.
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NORTH COUNTRY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(UNAUDITED)
March 31, December 31,
2004 2003
---- ----
ASSETS
Cash and due from banks $ 5,421 $ 7,433
Federal funds sold 40,698 15,600
----------- -----------
Cash and cash equivalents 46,119 23,033
Interest-bearing deposits in other financial institutions 12,695 6,048
Securities available for sale 65,305 84,774
Federal Home Loan Bank stock 4,601 4,544
Total loans 255,021 297,846
Allowance for loan losses (12,730) (22,005)
----------- -----------
Net loans 242,291 275,841
Premises and equipment 13,222 13,747
Other real estate held for sale 3,861 4,356
Other assets 12,335 10,196
----------- -----------
TOTAL ASSETS $ 400,429 $ 422,539
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 24,378 $ 26,179
Interest-bearing deposits 262,694 279,615
----------- -----------
Total deposits 287,072 305,794
Borrowings 87,026 87,026
Subordinated debentures 12,450 12,450
Other liabilities 4,510 6,569
----------- -----------
TOTAL LIABILITIES 391,058 411,839
Shareholders' equity:
Preferred stock - No par value:
Authorized 500,000 shares, no shares outstanding -0- -0-
Common stock - No par value:
Authorized - 18,000,000 shares
Issued and outstanding - 7,019,152 16,175 16,175
Retained earnings (8,169) (6,502)
Accumulated other comprehensive income 1,365 1,027
----------- -----------
Total shareholders' equity 9,371 10,700
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 400,429 $ 422,539
=========== ===========
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NORTH COUNTRY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except per Share Data)
(UNAUDITED)
Three Months Ended
---------March 31,---------
2004 2003
---- ----
Interest income:
Interest and fees on loans:
Taxable $ 3,796 $ 5,641
Tax-exempt 319 422
Interest on securities:
Taxable 698 692
Tax-exempt 43 66
Other interest income 120 152
----------- -----------
Total interest income 4,976 6,973
----------- -----------
Interest expense:
Deposits 1,665 2,545
Borrowings 1,181 1,199
Subordinated debentures 119 122
----------- -----------
Total interest expense 2,965 3,866
----------- -----------
Net interest income 2,011 3,107
Provision for loan losses -0- -0-
----------- -----------
Net interest income after provision for loan losses 2,011 3,107
----------- -----------
Other income:
Service fees 293 430
Loss on sale of securities -0- (23)
Gain on sale of loans 12 55
Gain (loss) on sale of property and equipment 48 (58)
Other loan and lease income 5 27
Other operating income 95 413
----------- -----------
Total other income 453 844
----------- -----------
Other expenses:
Salaries, commissions, and related benefits 1,499 1,677
Occupancy expense 347 399
Furniture and equipment expense 258 366
Data processing 355 407
Accounting, legal, and consulting fees 406 830
Loan and deposit expense 493 574
Telephone 213 333
Advertising expense 17 49
Amortization and impairment of acquisition intangibles 88 128
Other 455 373
----------- -----------
Total other expenses 4,131 5,136
----------- -----------
Income (loss) before provision for income taxes (1,667) (1,185)
Provision for income taxes -0- 320
----------- -----------
Net income (loss) $ (1,667) $ (1,505)
=========== ===========
Earnings (loss) per common share:
Basic $ (0.24) $ (0.21)
=========== ===========
Diluted $ (0.24) $ (0.21)
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