EXHIBIT 99
PRESS RELEASE
For Release: October 18, 2004
Nasdaq: NCFC
Contact: Investor Relations at (800) 200-7032
Website: www.northcountrybank.com
NORTH COUNTRY FINANCIAL CORPORATION
REPORTS THIRD QUARTER
AND NINE 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 third quarter 2004 loss of $761 thousand, or $.10 per share, compared to a
loss of $3.0 million, or $.42 per share in the third quarter of 2003. For the
nine-months ended September 30, 2004 the Corporation lost $4.0 million, or $.57
per share, compared to a loss of $7.1 million, or $1.01 per share in the first
nine months of 2003.
"This is the fifth 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 $ 1.6 million in the second quarter, $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. "Third quarter results are about what
we expected and include the positive impact of gains associated with the sales
of three branch offices in September. We expect to realize future reductions in
operational costs from these branch sales along with savings resulting from the
sale of two branch offices and closures of five offices in May 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 September 30, 2004 were $332.2 million, down
27 percent from $453.7 at September 30, 2003. Assets declined 21 percent from
the $422.5 million reported at December 31, 2003.
Total deposits of $223.1 million at September 30, 2004 were down 33 percent from
deposits of $334.8 million at September 30, 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 $221.6 million at September 30, 2004 compared to $325.6 at
September 30, 2003, or a 32 percent decline. Loans are down $76.3 million, or 26
percent from December 31, 2003, loans at $297.8 million
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. In September 2004
the Bank sold its branches in Escanaba, Iron Mountain, and Munising, Michigan.
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 was $6.5 million at
September 30, 2004 compared to $16.3 million at June 30, 2003, or a decline of
64 percent. Shareholder's equity is down 40 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
September 30, 2004 and at prior quarter-ends, the Bank did not meet the capital
ratio requirements of the Order.
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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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30, December 31,
2004 2003
------------- ------------
(Unaudited)
ASSETS
Cash and due from banks $ 8,210 $ 7,433
Federal funds sold 12,318 15,600
--------- ---------
Cash and cash equivalents 20,528 23,033
Interest-bearing deposits in other financial institutions 6,126 6,048
Securities available for sale 67,502 84,774
Federal Home Loan Bank stock 4,704 4,544
Total loans 221,595 297,846
Allowance for loan losses (10,720) (22,005)
--------- ---------
Net Loans 210,875 275,841
Premises and equipment 10,927 13,747
Other real estate held for sale 4,650 4,356
Other assets 6,840 10,196
--------- ---------
Total assets $ 332,152 $ 422,539
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Non-interest-bearing deposits $ 23,036 $ 26,179
Interest-bearing deposits 200,074 279,615
--------- ---------
Total deposits 223,110 305,794
Borrowings: 85,595 87,026
Subordinated debentures 12,450 12,450
Other liabilities 4,526 6,569
--------- ---------
Total liabilities 325,681 411,839
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 (10,530) (6,502)
Accumulated other comprehensive income (loss) 826 1,027
--------- ---------
Total shareholders' equity 6,471 10,700
--------- ---------
Total liabilities and shareholders' equity $ 332,152 $ 422,539
========= =========
NORTH COUNTRY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except per Share Data)
(Undiluted)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
----------- ---------- ---------- ---------
Interest income:
Interest and fees on loans:
Taxable $ 3,341 $ 4,387 $ 11,206 $ 15,099
Tax-exempt 276 328 919 1,179
Interest on securities:
Taxable 612 387 1,884 1,599
Tax-exempt 42 55 128 187
Other interest income 137 161 400 473
-------- -------- -------- --------
Total interest income 4,408 5,318 14,537 18,537
-------- -------- -------- --------
Interest expense:
Deposits 1,246 2,101 4,289 6,779
Borrowings 1,302 1,198 3,554 3,610
Subordinated debentures -- 123 356 368
-------- -------- -------- --------
Total interest expense 2,548 3,422 8,199 10,757
-------- -------- -------- --------
Net interest income 1,860 1,896 6,338 7,780
Provision for loan losses -- -- -- --
-------- -------- -------- --------
Net interest income after provision for loan losses 1,860 1,896 6,338 7,780
-------- -------- -------- --------
Other income:
Service fees 225 362 805 1,205
Loan and lease fee income 4 17 13 55
Net security gains -- 44 -- 235
Net gains on sale of loans 11 20 31 126
Gain (loss) on sale of property and equipment (132) (305) (47) (269)
Other 116 109 487 878
-------- -------- -------- --------
Total other income 224 247 1,289 2,230
-------- -------- -------- --------
Other expenses:
Salaries and employee benefits 1,302 1,442 4,155 4,475
Furniture and equipment expense 247 337 819 1,058
Occupancy expense 193 325 740 1,075
Data processing 282 370 985 1,157
Accounting, legal, and consulting fees 419 722 1,397 2,388
Loan and deposit expense 296 560 1,389 1,468
Telephone 83 352 315 1,049
Advertising 9 29 52 173
Other 14 318 1,803 1,962
-------- -------- -------- --------
Total other expenses 2,845 4,455 11,655 14,805
-------- -------- -------- --------
Loss before provision for income taxes 761 2,312 4,028 4,795
Provision for income taxes -- 650 -- 2,329
-------- -------- -------- --------
Net loss $ (761) $ (2,962) $ (4,028) $ (7,124)
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Loss per common share:
Basic $ (.10) $ (.42) $ (.57) $ (1.01)
======== ======== ======== ========
Diluted $ (.10) $ (.42) $ (.57) $ (1.01)
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