EXHIBIT 99.1
PRESS RELEASE
For Release: July 12, 2004
Nasdaq: NCFC
Contact: Investor Relations at (800) 200-7032
Website: www.northcountrybank.com
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NORTH COUNTRY FINANCIAL CORPORATION
REPORTS SECOND QUARTER
AND SIX MONTH 2004 RESULTS OF OPERATIONS
(Manistique, Michigan) -- North Country Financial Corporation (Nasdaq: NCFC),
the bank holding company for North Country Bank and Trust (the "Bank") recorded
a second quarter 2004 loss of $1.6 million, or $.23 per share, compared to a
loss of $2.7 million, or $.38 per share in the second quarter of 2003. For the
six-months ended June 30, 2004 the Corporation lost $3.3 million, or $.47 per
share, compared to a loss of $4.2 million, or $.59 per share in the first half
of 2003.
"This is the fourth consecutive quarter that losses have diminished," said C.
James Bess, president and chief executive of the Corporation and the Bank. North
Country Financial Corporation lost $1.7 million in the first quarter of 2004,
$2.5 million in 2003's fourth quarter and $3.0 million in last year's third
quarter. "Second quarter results are about what we expected and include the
negative impact of costs associated with branch closures and the loss from the
sale of two branch locations. We expect to realize future reductions in
operational costs from these branch closures. We also expect to realize
additional benefits from the premiums accompanying the pending sales of the
Munising, Escanaba, and Iron Mountain branches that are currently scheduled to
be completed by September 30, 2004." said Bess. "While continued losses are not
unexpected, the improving trend demonstrates that actions being taken to
rehabilitate the company are having the sought-after effect."
Total assets of the Corporation at June 30, 2004 are $345.0 million, down 28
percent from $475.9 at June 30, 2003. Assets declined 18 percent from the $422.5
million reported at December 31, 2003.
Total deposits of $235.6 million at June 30, 2004 were down 33 percent from
deposits of $353.4 million at mid-year 2003. Deposits declined 23 percent or
$70.2 million from December 31, 2003 deposits of $305.8 million. The Bank opted
not to renew approximately $10 million of brokered deposits that matured in the
second quarter.
Loans totaled $233.0 million at June 30, 2004 compared to $358.4 at June 30,
2003, or a 35 percent decline. Loans are down $64.8 million, or 22 percent from
December 31, 2003.
The declines in assets, deposits, and loans reflect, in part, the results of
management's efforts to downsize the Bank and the Corporation via strengthened
credit-granting policies and procedures, sale and workout of problem loans, and
the sale, consolidation, and closure of unprofitable branches.
The Bank sold over $25 million of non-accrual and undesirable loans in the first
quarter of 2004, and resolved a $13 million dollar non-accrual commercial loan
relationship in June 2004. In May 2004 the Bank sold its Alanson and Mancelona,
Michigan branches, consolidated its two offices in each of Traverse City and
Sault Ste. Marie, Michigan into one office in each city, and permanently closed
its branches in Boyne City, Cadillac, and Calumet, Michigan. Also during May
2004 the Bank entered into definitive agreements to sell its branches in
Escanaba, Iron Mountain, and Munising, Michigan. Subject to customary
conditions, these branch sales are expected to close in the third quarter of
2004.
In addition to the asset and deposit downsizing that has and will result from
branch sales, non-interest expense is expected to decline as a result of the
branch sales, consolidations, and closings. And, if the conditional settlement
of class action securities litigation announced June 23, 2004 comes to fruition,
legal fees are expected to decline significantly. Management continues to
explore other options for expense reductions.
North Country Financial Corporations shareholder's equity is $5.9 million at
June 30, 2004 compared to $16.3 million at June 30, 2003, or a decline of 64
percent. Shareholder's equity is down 45 percent from the $10.7 reported at
December 31, 2003.
With the exception of capital, management believes the Bank is in substantial
compliance with all provisions of the April 5, 2003 Cease and Desist Order. At
June 30, 2004 and at prior quarter-ends, the Bank did not meet the capital ratio
requirements of the Order.
"Achieving an adequate, regulatory-compliant capital position remains one of the
Bank's and the Corporation's most important challenges. In striving to meet the
capital challenge and other rehabilitative initiatives, we are continuing
diligent efforts to raise capital or sell control of the company," Bess
concluded.
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FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Words such as
"anticipates," "believes," "estimates," "expects," intends," "should," "will,"
and variations of such words and similar expressions are intended to identify
forward-looking statements. These statements reflect management's current
beliefs as to 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 interest 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, branch closings and other sources may not be fully realized at
all or within specified time frames. These and other factors may cause decisions
and actual results to differ materially from current expectations. North Country
Bank Financial Corporation undertakes no obligation to revise, update, or
clarify forward-looking statements to reflect events or conditions after the
date of this release.
NORTH COUNTRY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
2004 2003
---------------- ----------------
(Unaudited)
ASSETS
Cash and due from banks $ 5,707 $ 7,433
Federal funds sold 9,333 15,600
---------------- ----------------
Cash and cash equivalents 15,040 23,033
Interest-bearing deposits in other financial institutions 15,726 6,048
Securities available for sale 64,552 84,774
Federal Home Loan Bank stock 4,652 4,544
Total loans 233,032 297,846
Allowance for loan losses (10,850) (22,005)
---------------- ----------------
Net loans 222,182 275,841
Premises and equipment 12,430 13,747
Other real estate held for sale 3,557 4,356
Other assets 6,903 10,196
---------------- ----------------
Total assets $ 345,042 $ 422,539
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 21,477 $ 26,179
Interest-bearing deposits 214,169 279,615
---------------- ----------------
Total deposits 235,646 305,794
Borrowings 86,637 87,026
Subordinated debentures 12,450 12,450
Other liabilities 4,424 6,569
---------------- ----------------
Total liabilities 339,157 411,839
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
Accumulated deficit (9,769) (6,502)
Accumulated other comprehensive income (521) 1,027
---------------- ----------------
Total shareholders' equity 5,885 10,700
---------------- ----------------
Total liabilities and shareholders' equity $ 345,042 $ 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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Interest income:
Interest and fees on loans:
Taxable $ 4,069 $ 5,071 $ 7,865 $ 10,712
Tax-exempt 324 429 643 851
Interest on securities:
Taxable 574 520 1,272 1,212
Tax-exempt 43 66 86 132
Other interest income 143 160 263 312
-------- -------- -------- --------
Total interest income 5,153 6,246 10,129 13,219
-------- -------- -------- --------
Interest expense:
Deposits 1,378 2,133 3,043 4,678
Borrowings 1,189 1,213 2,370 2,412
Subordinated debentures 119 123 238 245
-------- -------- -------- --------
Total interest expense 2,686 3,469 5,651 7,335
-------- -------- -------- --------
Net interest income 2,467 2,777 4,478 5,884
Provision for loan losses -0- -0- -0- -0-
-------- -------- -------- --------
Net interest income after provision for loan losses 2,467 2,777 4,478 5,884
-------- -------- -------- --------
Other income:
Service fees 287 413 580 843
Net security gains -0- 214 -0- 191
Other loan and lease income 4 11 9 38
Net gains on sale of loans 8 51 20 106
Gain on sale of property and equipment 37 94 85 113
Other operating income 18 356 371 769
-------- -------- -------- --------
Total other income 354 1,139 1,065 2,060
-------- -------- -------- --------
Other expenses:
Salaries, commissions, and related benefits 1,354 1,356 2,853 3,033
Furniture and equipment expense 235 355 493 721
Occupancy expense 279 351 626 750
Data processing 348 380 703 787
Accounting, legal, and consulting fees 572 836 978 1,666
Loan and deposit expense 600 334 1,093 908
Telephone 19 364 232 697
Advertising Expense 26 95 43 144
Other 988 1,143 1,789 1,721
-------- -------- -------- --------
Total other expenses 4,421 5,214 8,810 10,427
-------- -------- -------- --------
Loss before provision for income taxes (1,600) (1,298) (3,267) (2,483)
Provision for income taxes -0- 1,359 -0- 1,679
-------- -------- -------- --------
Net loss $ (1,600) $ (2,657) $ (3,267) $ (4,162)
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Loss per common share:
Basic $ (.23) $ (.38) $ (.47) $ (.59)
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Diluted $ (.23) $ (.38) $ (.47) $ (.59)
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