Source: Sherman Publications

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Good quarter for Clarkston bank

May 04, 2011

Clarkston State Bank posted a net loss of $38,000 the first quarter of 2011, compared to a net loss of $267,000 this time last year, according to its holding company, Clarkston Financial Corporation

There's more good news, said J. Grant Smith, Clarkston Financial Corporation president and chief executive officer.

"Although the corporation posted a small loss for the first quarter, I am proud to announce that we have successfully raised approximately $8,000,000 in new equity," Smith said.

Local private investors and the bank's board of directors raised the capital, he said.

"All are committed to and are confident in the future of the bank and the corporation," he said. "Our team has worked long and hard to get back to well-capitalized status."

During the first quarter, about $7.2 million of the money was infused into the bank, he said.

"We have executed our plan with precision and cooperation from our primary regulator," he said. "It is now time to complete the turnaround of the bank and return the bank to profitability. We are very excited about our future."

The corporation's net interest income was $1,025,000 for the first quarter, compared to $900,000 last year, an increase of $125,000 or 13.88 percent. The net interest margin of the bank increased from 3.53 percent in last year's first quarter to 4.60 percent this year.

The rise in net interest margin reflects stronger core deposits, and more favorable deposit pricing, Smith said.

First-quarter total assets are also up, with $110,510,000 this year, compared to $109,974,000 in 2010, an increase of $536,000 or 0.49 percent.

Total loans decreased $6,024,000 from $87,051,000 at March 31, 2010, to $81,027,000 this year, a decline of 6.92 percent.

Total deposits also shrank to $100,272,000, March 31, 2011, from $103,841,000 in 2010, a decline of $3,569,000 or 3.44 percent. Both the decline in loans and deposits were a direct function of management's efforts to reduce the balance sheet and preserve capital.

Total stockholders' equity increased from $1,690,000 last year to $5,451,000 as of March 31, 2011, an increase of $7,141,000 or 422.54 percent. This increase is due to the completion of the capital raise at the corporation.

The bank also has 38.55 percent less in non-performing loans, decreasing to $3,315,000 at March 31, 2011 compared to $5,395,000 in 2010, a decline of $2,080,000.

The allowance for possible loan losses decreased to 3.16 percent of total loans as of March 31, 2011, compared to 4.21 percent for the same period 2010.

The decline represents a strengthening of the loan portfolio in the first quarter. The improved loan portfolio is a direct result of stronger controls over loan underwriting and an increased focus on credit administration, Smith said.