ALPENA, Mich., Aug. 6 /PRNewswire-FirstCall/ -- First Federal of
Northern Michigan Bancorp, Inc. (NASDAQ:FFNM) (the "Company")
reported consolidated net income from continuing operations of
$42,000, or $0.01 per basic and diluted share, for the quarter
ended June 30, 2009 compared to consolidated net loss from
continuing operations of $236,000, or $0.08 per basic and diluted
share, for the quarter ended June 30, 2008. Consolidated net income
from continuing operations for the six months ended June 30, 2009
was $189,000, or $0.07 per basic and diluted share, compared to
consolidated net loss from continuing operations of $250,000, or
$0.09 per basic and diluted share, for the six months ended June
30, 2008. The three- and six-month results reflected a substantial
increase in FDIC insurance premiums, including the FDIC special
assessment which was charged to all banks during the second quarter
of 2009 and which amounted to $108,000 for the Company. Michael W.
Mahler, President and Chief Executive Officer of the Company,
commented, "We are extremely pleased to post a profit again this
quarter. Another strong quarter of mortgage banking activities
income along with continued improvement in our net interest margin
were the primary drivers of our net income for the quarter. While
we have continued our efforts to reduce our non-interest expenses,
unfortunately, we were required to record in the second quarter the
FDIC special assessment of $108,000. We are encouraged by our
improving net interest margin along with the results of our steps
taken to reduce our level of non-performing assets. Our markets are
feeling the strain from the protracted economic downturn in the
state of Michigan that began in 2007 and has only deepened further
since. In spite of the challenges, the Bank is making progress on
reducing its level of non-performing assets, which fell by $1.9
million from December 31, 2008, and by $2.3 million from March 31,
2009, in spite of the fact that a large commercial loan
relationship was downgraded to non-performing status during the
quarter ended June 30, 2009." Selected Financial Ratios For the
Three Months For the Six Months Ended June 30 Ended June 30
---------------------- ----------------------- 2009 2008 2009 2008
----------- ---------- ----------- ----------- Performance Ratios:
Net interest margin 3.32% 2.93% 3.22% 2.96% Average interest rate
spread 2.98% 2.48% 2.87% 2.51% Return on average assets* 0.07%
-0.41% 0.23% -0.46% Return on average equity* 0.56% -3.07% 1.90%
-3.46% * Annualized As of
----------------------------------------------- June 30, 2009
December 31, 2008 June 30, 2008 ------------- -----------------
------------- Asset Quality Ratios Non-performing assets to total
assets 4.96% 5.57% 3.57% Non-performing loans to total loans 4.47%
6.14% 3.96% Allowance for loan losses to non- performing assets
21.92% 40.90% 32.35% Allowance for loan losses to total loans 1.41%
2.85% 1.45% Total non-performing loans $8,269 $12,169 $7,854 Total
non- performing assets $11,934 $13,807 $8,852 Financial Condition
Total assets of the Company at June 30, 2009 were $240.5 million, a
decrease of $7.2 million, or 2.9%, from assets of $247.7 million at
December 31, 2008. The ratio of total nonperforming assets to total
assets was 4.96% at June 30, 2009 compared to 5.57% at December 31,
2008. Non-performing assets decreased by $1.9 million from December
31, 2008 to June 30, 2009 due primarily to partial charge-offs of
several commercial and mortgage loans. The Company continues to
closely monitor non-performing assets and is actively pursuing
options to reduce the level thereof. Stockholders' equity was $29.6
million at June 30, 2009 as compared to $29.4 million at December
31, 2008. The increase was due primarily to net income for the
six-month period of $143,000. The decrease of $111,000 in the
unrealized gain on available-for-sale securities was offset by
changes in unallocated ESOP and unearned compensation related to
vesting of previously granted employee stock options and awards.
Results of Operations Interest income decreased to $3.2 million for
the three months ended June 30, 2009 from $3.5 million for the year
earlier period. Interest income decreased by $600,000 to $6.5
million for the six-month period ended June 30, 2009 from $7.1
million for the same period in 2008. The decreases in interest
income were due to two factors: a decrease in the average balance
of our interest-earning assets due mostly to reductions in the size
of our mortgage loan portfolio and a decrease in the yield on
interest-earning assets due in part to lower market interest rates
and in part to the impact of loans placed on non-accrual status
during the quarter. Interest expense decreased to $1.3 million for
the three months ended June 30, 2009 from $1.8 million for the
three months ended June 30, 2008. Interest expense for the six
months ended June 30, 2009 decreased to $2.8 million from $3.7
million for the six months ended June 30, 2008. The decrease in
interest expense for the three- and six-month periods was due in
part to a decrease in both the average balance and cost of our FHLB
borrowings, which we were able to pay down because of asset
shrinkage and in part due to a decrease in the cost of certificates
of deposits, many of which matured and re-priced lower. The
Company's net interest margin increased to 3.32% for the
three-month period ended June 30, 2009 from 2.93% for the same
period in 2008. During this time period, the average yield on
interest-earning assets decreased 38 basis points to 5.62% from
6.00%, while the cost of funds decreased 87 basis points to 2.64%
from 3.51%. For the six-month period ended June 30, 2009, the
Company's net interest margin increased to 3.22% from 2.96% for the
same period in 2008. During this time period, the average yield on
interest-earning assets decreased 45 basis points to 5.65% from
6.10%, while the cost of funds decreased 80 basis points to 2.79%
from 3.59%. The provision for loan losses for the three-month
period ended June 30, 2009 was $252,000, as compared to $342,000
for the prior year period. One large commercial relationship was
placed on non-accrual status, along with smaller credits, in both
the three-month period ended June 30 2009 and 2008. However, the
large relationship placed on non-accrual status in 2008 had a
bigger impact on the provision expense, resulting in a
comparatively lower provision for this period in 2009. For the
six-month period ended June 30, 2009, the provision for loan losses
was $516,000 as compared to $367,000 for the same period ended June
30, 2008. The increase for the six-month period related to
increases in provision on several commercial credits. The provision
was based on management's review of the components of the overall
loan portfolio, the status of non-performing loans and various
subjective factors. Non interest income increased from $459,000 for
the three months ended June 30, 2008 to $764,000 for the three
months ended June 30, 2009. Non interest income increased from
$871,000 for the six months ended June 30, 2008 to $1.6 million for
the six months ended June 30, 2009. The increases for both the
three- and six-month periods were primarily attributed to an
increase in mortgage banking activities income. Many homeowners in
our markets took the opportunity to refinance due to lower market
interest rates during the first six months of 2009 as compared to
the same period in 2008, and we sold the majority of those loans
into the secondary market. Non interest expense increased from $2.2
million for the three months ended June 30, 2008 to $2.3 million
for the three months ended June 30, 2009. Non interest expense
increased from $4.3 million for the six months ended June 30, 2008
to $4.5 million for the six months ended June 30, 2009. The
increases were mainly the result of an increase in our general FDIC
assessment, plus the FDIC special assessment of $108,000 which we
were required to expense as of the quarter ended June 30, 2009.
During the three- and six-month periods ended June 30, 2009 we were
able to reduce many of our expenses period over period, including
compensation and employee benefits, occupancy and amortization of
intangible assets. However, during those same periods we
experienced an increase in professional services fees related to
expenses for strategic planning, additional audit fees and
increased OTS assessments and an increase in other expenses which
were mainly related to delinquent loans and repossessed properties,
including the payment of approximately $125,000 in property taxes
totaling approximately $125,000 on one large commercial credit of
which the assets were repossessed during the quarter. 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
--------------------------------------------------------------------------
June 30, 2009 December 31, 2008 --------------------
-------------------- (Unaudited) ASSETS Cash and cash equivalents:
Cash on hand and due from banks $3,062,708 $3,097,788 Overnight
deposits with FHLB 610,004 372,523 --------------------
-------------------- Total cash and cash equivalents 3,672,712
3,470,311 Securities AFS 27,605,970 25,665,178 Securities HTM
4,017,701 4,022,235 Loans held for sale 211,400 107,000 Loans
receivable, net of allowance for loan losses of $2,616,242 and
$5,647,055 as of June 30, 2009 and December 31, 2008, respectively
182,315,510 192,270,714 Foreclosed real estate and other
repossessed assets 3,664,925 1,637,923 Federal Home Loan Bank
stock, at cost 4,196,900 4,196,900 Premises and equipment 6,911,216
7,089,746 Accrued interest receivable 1,216,577 1,469,176
Intangible assets 1,065,982 1,192,853 Other assets 5,626,898
4,939,523 Assets of discontinued operation - 1,610,734
-------------------- -------------------- Total assets $240,505,791
$247,672,293 ==================== ==================== LIABILITIES
AND STOCKHOLDERS' EQUITY Liabilities: Deposits $162,254,027
$165,778,598 Advances from borrowers for taxes and insurance
414,553 104,475 Federal Home Loan Bank Advances 39,950,000
40,200,000 Note Payable 630,927 768,651 REPO Sweep Accounts
5,491,573 9,447,415 Accrued expenses and other liabilities
2,200,522 1,877,600 Liabilities of discontinued operations - 76,792
-------------------- -------------------- Total liabilities
210,941,603 218,253,531 -------------------- --------------------
Commitments and contingencies - - --------------------
-------------------- Stockholders' equity: Common stock ($0.01 par
value 20,000,000 shares authorized 3,191,999 shares issued) 31,920
31,920 Additional paid-in capital 24,299,106 24,302,102 Retained
earnings 8,905,368 8,762,412 Treasury stock at cost (307,750
shares) (2,963,918) (2,963,918) Unallocated ESOP (710,861)
(764,861) Unearned compensation (224,001) (286,324) Accumulated
other comprehensive income 226,574 337,431 --------------------
-------------------- Total stockholders' equity 29,564,188
29,418,762 -------------------- -------------------- Total
liabilities and stockholders' equity $240,505,791 $247,672,293
==================== ==================== First Federal of Northern
Michigan Bancorp, Inc. and Subsidiaries Consolidated Statement of
Income For the Three Months For the Six Months Ended June 30, Ended
June 30, ----------------------- ----------------------- 2009 2008
2009 2008 ----------- ----------- ----------- -----------
(Unaudited) (Unaudited) Interest income: Interest and fees on loans
$2,865,276 $3,143,876 $5,807,615 $6,418,423 Interest and dividends
on investments 175,670 239,668 373,068 516,245 Interest on
mortgage- backed securities 143,925 107,892 294,751 146,292
----------- ----------- ----------- ----------- Total interest
income 3,184,871 3,491,436 6,475,434 7,080,960 -----------
----------- ----------- ----------- Interest expense: Interest on
deposits 880,890 1,241,813 1,941,176 2,536,265 Interest on
borrowings 427,973 548,412 856,532 1,121,331 -----------
----------- ----------- ----------- Total interest expense
1,308,863 1,790,225 2,797,708 3,657,596 ----------- -----------
----------- ----------- Net interest income 1,876,007 1,701,211
3,677,726 3,423,364 Provision for loan losses 251,839 342,264
516,069 367,234 ----------- ----------- ----------- ----------- Net
interest income after provision for loan losses 1,624,168 1,358,947
3,161,657 3,056,130 ----------- ----------- ----------- -----------
Non Interest income: Service charges and other fees 229,457 237,110
444,329 463,285 Mortgage banking activities 473,871 125,912 923,076
230,718 Gain on sale of available-for-sale investments 1,227 -
1,227 16,052 Net gain (loss) on sale of premises and equipment,
real estate owned and other repossessed assets (44,064) 25,894
27,478 23,093 Other 18,765 25,001 51,360 48,031 Insurance &
brokerage commissions 84,618 45,000 114,640 90,000 -----------
----------- ----------- ----------- Total non interest income
763,874 458,916 1,562,110 871,178 ----------- -----------
----------- ----------- Non interest expenses: Compensation and
employee benefits 1,171,455 1,224,234 2,319,257 2,451,094 FDIC
insurance premiums 191,044 32,607 270,608 51,795 Advertising 44,321
28,656 61,871 58,796 Occupancy 300,069 343,818 602,487 651,336
Amortization of intangible assets 37,754 77,122 126,871 154,244
Service bureau charges 86,551 85,716 178,511 168,085 Professional
services 163,219 107,518 266,123 197,174 Other 350,984 273,155
657,484 570,518 ----------- ----------- ----------- -----------
Total non interest expenses 2,345,398 2,172,826 4,483,212 4,303,042
----------- ----------- ----------- ----------- Income (loss) from
continuing operations before income tax benefit 42,644 (354,963)
240,555 (375,733) Income tax expense (benefit) from continuing
operations 328 (118,763) 51,740 (125,571) ----------- -----------
----------- ----------- Net income (loss) from continuing
operations 42,316 (236,199) 188,815 (250,162) Discontinued
Operations: Loss from discontinued operations. Net of income tax
benefit of $0, $7,619, $43,209, and $16,733 - (14,790) (83,875)
(32,483) Gain on sale of discontinued operations, net of income tax
expense of $0, $0, $19,565 and $0 - - 38,017 - -----------
----------- ----------- ----------- Net Income (Loss) 42,316
(250,989) 142,957 (282,645) =========== =========== ===========
=========== Per share data: Income (loss) per share from continuing
operations Basic $0.01 $(0.08) $0.07 $(0.09) Diluted $0.01 $(0.08)
$0.07 $(0.09) Loss per share from discontinued operations Basic $-
$(0.01) $(0.02) $(0.01) Diluted $- $(0.01) $(0.02) $(0.01) Net
income (loss) per share Basic $0.01 $(0.09) $0.05 $(0.10) Diluted
$0.01 $(0.09) $0.05 $(0.10) Dividends per common share $- $0.05 $-
$0.10 DATASOURCE: First Federal of Northern Michigan Bancorp, Inc.
CONTACT: Amy E. Essex, Chief Financial Officer, Treasurer &
Corporate Secretary of First Federal of Northern Michigan Bancorp,
Inc., +1-989-356-9041 Web Site: http://www.first-federal.com/
Copyright