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First Federal of Northern Michigan Banco Reports Operating Results (10-Q)

November 16, 2009 | About:
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10qk

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First Federal of Northern Michigan Banco (FFNM) filed Quarterly Report for the period ended 2009-09-30.

Alpena Bancshares is the parent corporation for First Federal of Northern Michigan, a federally-chartered savings bank headquartered in Alpena, Michigan. Their deposits are insured by the Federal Deposit Insurance Corporation. They operate nine full-service offices in their market area of Northern Michigan. First Federal Of Northern Michigan Banco has a market cap of $4.33 million; its shares were traded at around $1.5 with and P/S ratio of 0.25.

Highlight of Business Operations:

Total assets decreased by $8.3 million, or 3.3%, to $239.4 million from December 31, 2008 to September 30, 2009. Investment securities available for sale increased by $7.2 million from December 31, 2008 to September 30, 2009. Net loans receivable decreased $13.5 million or 7.0% during that same time period. Total deposits decreased $9.4 million, or 5.7% from December 31, 2008 to September 30, 2009 and REPO Sweep accounts decreased by $2.6 million, or 27.3% during that same time period.. Federal Home Loan Bank advances decreased by $6.6 million from December 31, 2008 to September 30, 2009. Equity decreased by $3.5 million, or 11.8% during the nine-month period ended September 30, 2009.

ASSETS: Total assets decreased $8.3 million, or 3.4%, to $239.4 million at September 30, 2009 from $247.7 million at December 31, 2008. During that nine-month time period the following changes occurred: investment securities available for sale increased $7.2 million, or 28.1%, to $32.9 million; other real estate owned increased $1.9 million, or 115.9%, to $3.5 million; and net loans receivable decreased $13.5 million, or 7.0%, to $178.7 million. Total mortgage loans decreased by $9.2 million, consumer loans decreased by $3.3 million and total commercial loans decreased by $2.4 million as loan originations declined due to weaker economic conditions in our primary lending markets.

LIABILITIES: Deposits decreased $9.4 million, or 5.7%, to $156.4 million at September 30, 2009 from $165.8 million at December 31, 2008, a time period during which we were not a market-leader in deposit rates except in some longer-term maturities. Most of the decrease was in our certificates of deposit, as some of which were set to renew at lower rates and left the Bank. During this same time period, Repo sweep accounts decreased $2.6 million as several of our commercial customers reduced the amount on deposit with us due to timing of their expenses, but did not close accounts. FHLB advances increased $6.6 million, or 16.3%, to $46.8 million at September 30, 2009 from $40.2 million at December 31, 2008 as we replaced lost deposits with borrowings.

EQUITY: Stockholders equity decreased to $26.0 million at September 30, 2009 from $29.4 million at December 31, 2008, a decline of $3.5 million. The decrease in stockholders equity was mainly attributable to our net loss for the nine-month period of $3.7 million primarily as a result of a $3.0 million Provision for Loan Losses and a $2.0 million valuation allowance on our deferred tax assets for the nine-month period The unrealized gain on available for sale securities, net of tax, was $382,000 at September 30, 2009 as compared to $337,000 at December 31, 2008, an increase of $44,000.

General: Net income from continuing operations decreased by $3.2 million to a net loss of $3.8 million for the three months ended September 30, 2009 from a net loss of $610,000 for the same period ended September 30, 2008. This decrease was attributable to two main factors: an increase in provision for loan losses of $2.1 million to $3.0 million for the three months ended September 30, 2009 as compared to $875,000 for the same period in 2008 and a valuation allowance of $2.0 million on our deferred tax assets. Partially offsetting these negative factors period over period were an increase in net interest income of $176,000, an increase in non-interest income of $92,000 and a reduction in our non-interest expense of $81,000 period over period. These factors are all discussed in greater detail below.

Net Interest Income: Net interest income increased to $1.9 million for the three month period ended September 30, 2009 compared to $1.7 million for the same period in 2008. For the three months ended September 30, 2009, average interest-earning assets decreased $15.1 million, or 6.4%, to $222.3 million when compared to the same period in 2008. Average interest-bearing liabilities decreased $11.1 million, or 5.3%, to $197.9 million for the quarter ended September 30, 2009 from $209.0 million for the quarter ended September 30, 2008. The yield on average interest-earning assets decreased to 5.58% for the three month period ended September 30, 2009 from 5.92% for the same period ended in 2008 due mainly to decreases in the yields on our non-mortgage loans, partially as a result of loans placed on non-accrual status, and due to lower yields on the securities in our investment portfolio due to lower market interest rates. The cost of average interest-bearing liabilities decreased to 2.43% from 3.42% for the three month periods ended September 30, 2009 and September 30, 2008, respectively. The decrease in asset yields on interest earning assets, offset by a greater decrease in our cost of funds resulted in a increase in our net interest margin of 50 basis points to 3.41% for the three month period ended September 30, 2009 from 2.91% for same period in 2008.

Read the The complete Report

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