-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PjEwwwdRld7FTzSPIM0ZPSEGC5PDAQxEIXxKSgpSMWlcFiKgPMkSILYSmbnUwDxa aXWyI0iIM8GbPjtK7kuNKg== 0000943374-09-000441.txt : 20090310 0000943374-09-000441.hdr.sgml : 20090310 20090310124823 ACCESSION NUMBER: 0000943374-09-000441 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20090305 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090310 DATE AS OF CHANGE: 20090310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: First Federal of Northern Michigan Bancorp, Inc. CENTRAL INDEX KEY: 0001128227 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 383567362 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-31957 FILM NUMBER: 09668537 BUSINESS ADDRESS: STREET 1: 100 SOUTH SECOND AVENUE CITY: ALPNEA STATE: MI ZIP: 49707 BUSINESS PHONE: (989) 356-9041 MAIL ADDRESS: STREET 1: 100 SOUTH SECOND AVENUE CITY: ALPENA STATE: MI ZIP: 49707 FORMER COMPANY: FORMER CONFORMED NAME: ALPENA BANCSHARES INC DATE OF NAME CHANGE: 20001114 8-K 1 form8k_030909.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 5, 2009 FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Maryland 0-31957 38-0135202 - ---------------------------- ------------- -------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 100 S. Second Ave., Alpena, Michigan 49707 ------------------------------------------ (Address of principal executive offices) (989) 356-9041 -------------------------------------------------- Registrant's telephone number, including area code Not Applicable ------------------------------------------------------------- (Former Name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On March 5, 2009, First Federal of Northern Michigan Bancorp, Inc. (the "Company") issued a press release regarding its results of operations and financial condition at and for the three months and twelve months ended December 31, 2008. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release text is considered to be "furnished" under the Securities Exchange Act of 1934. The Company will include final financial statements and additional analyses at and for the three months and twelve months ended December 31, 2008, as part of its Form 10-K covering that period. Item 9.01 Financial Statements and Exhibits (a) Financial Statements of businesses acquired. Not Applicable. (b) Pro forma financial information. Not Applicable. (c) Shell Company Transactions. Not Applicable (d) Exhibits. The following Exhibit is attached as part of this report: 99.1 Press release dated March 5, 2009, announcing the Company's results of operations and financial condition at and for the three months and twelve months ended December, 2008. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC. Date: March 9, 2009 By: /s/ Amy E. Essex ---------------------------------- Amy E. Essex Chief Financial Officer (Duly Authorized Representative) EX-99.1 2 ex99-1_030909.txt FOR IMMEDIATE RELEASE March 5, 2009 Contact: Amy E. Essex Chief Financial Officer, Treasurer & Corporate Secretary First Federal of Northern Michigan Bancorp, Inc. (989) 356-9041 FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC. ANNOUNCES FOURTH QUARTER 2008 EARNINGS Alpena, Michigan - (March 5, 2009) First Federal of Northern Michigan Bancorp, Inc. (Nasdaq: FFNM) (the "Company") reported a consolidated net loss of $2,324,000, or $0.81 per basic and diluted share, for the quarter ended December 31, 2008, compared to a consolidated net loss of $1,361,000, or $0.47 per basic and diluted share, for the quarter ended December 31, 2007. The consolidated net loss for the twelve months ended December 31, 2008 was $3,241,000, or $1.12 per basic and diluted share, compared to $1,600,000, or $0.56 per basic and diluted share, for the twelve months ended December 31, 2007. The main factor driving the net losses for the three- and twelve-month periods ended December 31, 2008 was the provision for loan losses of $3.2 million and $4.4 million for the respective periods, which were driven by weak economic conditions in our market area. The Company took several steps in 2008 to reduce non-interest expenses, including closing an under-performing branch, and reducing compensation cost via staff reductions and benefit cuts. In early 2009, the Company sold the assets of its insurance subsidiary, which will further reduce non-interest expenses and allow the Company to focus on core banking operations. Michael W. Mahler, President and Chief Executive Officer of the Company, commented "Our major issue continues to be credit quality, which is driven by very weak economic conditions in our market area. However, while other banks continue to report losses in their investment portfolios and impairment of intangible assets and goodwill, these are issues not affecting us. We have been conservative in our investment decisions and that has paid off for us in the long run. We continue to look for ways to improve earnings. We recently completed the sale of the insurance operations of our insurance subsidiary, the InsuranCenter of Alpena. The sale of this business segment will result in improved earnings going forward. In the months to come, our focus will continue to be on improving asset quality, whether that means foreclosure, repossession and sale of non-performing assets; assisting troubled borrowers in refinancing with other financial institutions; or working with viable borrowers to help them make it through these troubled times. There is no one-size-fits-all answer to working with our troubled borrowers so credit-by-credit we are exploring all avenues to determine which is the best route to take to return the Company to profitability. Despite the significant provision expense which drove our loss for the year, the Company still remains well capitalized with significant cushion to withstand this difficult economic period." Selected Financial Ratios
For the Twelve Months Ended December 31 ---------------------------------------------------- 2008 2007 ------------------------ ----------------------- Performance Ratios: Net interest margin 2.93% 3.14% Average interest rate spread 2.51% 2.67% Return on average assets -1.30% -0.60% Return on average equity -10.45% -4.64%
As of ---------------------------------------------------- December 31, 2008 December 31, 2007 ------------------------ ----------------------- Asset Quality Ratios: Non-performing assets to total assets 5.57% 4.15% Non-performing loans to total loans 6.14% 4.54% Allowance for loan losses to non-performing assets 40.90% 38.53% Allowance for loan losses to total loans 2.85% 1.95%
Financial Condition Total assets of the Company at December 31, 2008 were $247.7 million, a decrease of $3.2 million, or 1.26%, from assets of $250.8 million at December 31, 2007. The ratio of nonperforming assets to total assets was 5.57% at December 31, 2008 compared to 4.15% at December 31, 2007. Non-performing assets increased by $3,391,000 from December 31, 2007 to December 31, 2008.The increase in non-performing assets included a $2.0 million increase in non-performing commercial loans, most of which related to two large commercial relationships. The increase in non-performing assets also included a $1.0 million increase in non-performing residential mortgages, of which $857,000 related to one large residential mortgage. The Company has established an aggressive plan to reduce the level of non-performing assets in 2009 and beyond. Stockholders' equity decreased by $3.1 million from $32.5 million at December 31, 2007 to $29.4 million at December 31, 2008. The decrease in equity was attributable primarily to the net loss for the twelve month period of $3.2 million and dividends of $433,000. In an effort to preserve capital, in December 2008 the Company announced the suspension of its quarterly cash dividend. The Company intends to review this decision on a quarterly basis. First Federal of Northern Michigan's regulatory capital remains at levels in excess of regulatory requirements, as shown in the table below.
Capital Required to be Categorized as Well-Capitalized Under Actual Capital Capital Required for Capital Prompt Corrective at December 31, 2008 Adequacy Purposes Action Provisions ---------------------------------------------------------------------------------------- Amount Ratio Amount Ratio Amount Ratio ---------------------------------------------------------------------------------------- (Dollars in Thousands) December 31, 2008 Total capital (to risk- weighted assets) $27,079 15.75% $13,757 8.00% $17,197 10.00% Tier 1 capital (to risk- weighted assets) $24,887 14.47% $ 6,879 4.00% $10,318 6.00% Tangible capital (to tangible assets) $24,887 10.31% $ 3,620 1.50% $ 4,826 2.00%
Results of Operations Interest income decreased to $3.4 million for the three months ended December 31, 2008 from $3.9 million for the year earlier period. Interest income decreased by $2.2 million to $14.0 million for the twelve-month period ended December 31, 2008 from $16.2 million for the same period in 2007. The decreases in interest income were due primarily to two factors: a decrease in the average balance of our interest-earning assets due to reductions in the size of our loan portfolio and a decrease in the yield on interest-earning assets due in part to lower market interest rates. Interest expense decreased to $1.7 million for the three months ended December 31, 2008 from $2.0 million for the three months ended December 31, 2008. Interest expense for the twelve months ended December 31, 2008 decreased to $7.1 million from $8.4 million for the twelve months ended December 31, 2007. The decrease in interest expense for the three- and twelve-month periods was due primarily to decreases in the average balance of and interest rates on our Federal Home Loan Bank advances period over period as well as a decrease in the average balance of certificates of deposit and a decrease in the cost of funds related to higher-costing certificates of deposits which matured and re-priced lower. The Company's net interest margin decreased to 2.90% for the three-month period ended December 31, 2008 from 3.14% for the same period in 2007. During this time period, the average yield on interest-earning assets decreased 78 basis points to 5.70% from 6.48%, while the cost of funds decreased 63 basis points to 3.17% from 3.80%. For the twelve-month period ended December 31, 2008, the net interest margin decreased to 2.93% from 3.14% for the same period in 2007. During this time period, the average yield on interest-earning assets decreased 57 basis points to 5.96% from 6.53%, while the cost of funds decreased 41 basis points to 3.44% from 3.85%. The provision for loan losses for the three-month period ended December 31, 2008 was $3.2 million, as compared to $2.1 million for the prior year period. For the twelve-month period ended December 31, 2008, the provision for loan losses was $4.4 million as compared to $2.4 million for the same period ended December 31, 2007. The increase in provision for both the three- and twelve-month periods related primarily to additional provisions for several commercial relationships that continued to deteriorate, and also a large provision on a residential mortgage loan related to one of the 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 other factors. Non-interest income decreased from $1.1 million for the three months ended December 31, 2007 to $690,000 for the three months ended December 31, 2008. Non-interest income decreased from $4.0 million for the twelve months ended December 31, 2007 to $3.1 million for the twelve months ended December 31, 2008. The decrease for the three-month period was primarily attributed to a decrease in insurance brokerage commissions due to the sale in April 2008 of the exclusive Blue Cross Blue Shield insurance contract as well as decreases in service charges and other fees and mortgage banking activities income period over period. For the twelve-month period, the decrease was also due to a decrease period over period related to insurance brokerage commissions, but this decrease was offset by a year-over-year increase in service charges and other fee income and mortgage banking activities income. Non-interest expense decreased from $3.0 million for the three months ended December 31, 2007 to $2.7 million for the three months ended December 31, 2008. Non-interest expense decreased from $11.9 million for the twelve months ended December 31, 2007 to $10.4 million for the twelve months ended December 31, 2008. The decreases period over period were mainly the result of prepayment penalties of $293,000 paid on FHLB advances during the twelve months ended December 31, 2007, reductions in compensation and benefit expenses due to the closure of an under-performing branch and other cost-cutting measures, as well as a reduction in insurance brokerage commission expense due to the sale in April 2008 of the exclusive Blue Cross Blue Shield insurance contract. 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 - ----------------------------------------------------------------------------------------------------------------------- December 31, 2008 December 31, 2007 ----------------- ----------------- (Unaudited) ASSETS Cash and cash equivalents: Cash on hand and due from banks .............................................. $ 3,097,788 $ 3,567,858 Overnight deposits with FHLB ................................................. 372,523 1,772,999 ----------------- ----------------- Total cash and cash equivalents .............................................. 3,470,311 5,340,857 Securities AFS .............................................................. 25,665,178 20,680,913 Securities HTM ............................................................... 4,022,235 2,770,000 Loans held for sale .......................................................... 107,000 - Loans receivable, net of allowance for loan losses of $5,647,055 and $4,013,454 as of December 31, 2008 and December 31, 2007, respectively...... 192,270,714 201,333,427 Foreclosed real estate and other repossessed assets .......................... 1,637,923 1,279,543 Federal Home Loan Bank stock, at cost ........................................ 4,196,900 4,196,900 Premises and equipment ....................................................... 7,089,746 7,619,016 Accrued interest receivable .................................................. 1,469,176 1,699,706 Intangible assets ............................................................ 1,394,983 2,093,735 Goodwill ..................................................................... 1,408,604 1,396,854 Other assets ................................................................. 4,939,523 2,420,340 ----------------- ----------------- Total assets ................................................................. $ 247,672,293 $ 250,831,292 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits ..................................................................... $ 165,778,598 $ 157,832,584 Advances from borrowers for taxes and insurance .............................. 104,475 729 Federal Home Loan Bank Advances .............................................. 40,200,000 51,700,000 Note Payable ................................................................. 768,651 983,795 REPO Sweep Accounts .......................................................... 9,447,415 6,637,089 Accrued expenses and other liabilities ....................................... 1,954,392 1,173,550 ----------------- ----------------- Total liabilities ............................................................ 218,253,531 218,327,747 ----------------- ----------------- 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 ................................................... 24,302,102 24,327,466 Retained earnings ........................................................... 8,762,412 12,416,364 Treasury stock at cost (307,750 shares)....................................... (2,963,918) (2,963,918) Unallocated ESOP ............................................................. (764,861) (958,651) Unearned compensation ........................................................ (286,324) (414,549) Accumulated other comprehensive income........................................ 337,431 64,913 ----------------- ----------------- Total stockholders' equity ................................................... 29,418,762 32,503,545 ----------------- ----------------- Total liabilities and stockholders' equity ................................... $ 247,672,293 $ 250,831,292 ================= =================
First Federal of Northern Michigan Bancorp, Inc. and Subsidiaries Consolidated Statement of Income For the Three Months For the Twelve Months Ended December 31, Ended December 31, --------------------------- --------------------------- 2008 2007 2008 2007 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) Interest income: Interest and fees on loans ........................................ $ 3,012,497 $ 3,559,399 $12,587,844 $14,456,297 Interest and dividends on investments ............................. 193,721 300,591 958,351 1,651,268 Interest on mortgage-backed securities ............................ 155,175 12,760 420,968 92,682 ----------- ----------- ----------- ----------- Total interest income ............................................. 3,361,393 3,872,749 13,967,163 16,200,247 ----------- ----------- ----------- ----------- Interest expense: Interest on deposits .............................................. 1,085,239 1,332,039 4,897,194 5,532,959 Interest on borrowings ............................................ 579,698 665,861 2,233,276 2,913,595 ----------- ----------- ----------- ----------- Total interest expense ............................................ 1,664,937 1,997,901 7,130,470 8,446,554 ----------- ----------- ----------- ----------- Net interest income ............................................... 1,696,456 1,874,848 6,836,694 7,753,693 Provision for loan losses ......................................... 3,177,994 2,067,443 4,420,659 2,377,380 ----------- ----------- ----------- ----------- Net interest (expense) income after provision for loan losses ..... (1,481,538) (192,595) 2,416,035 5,376,313 ----------- ----------- ----------- ----------- Non-interest income: Service charges and other fees .................................... 233,668 261,252 942,115 911,096 Mortgage banking activities ....................................... 115,369 140,901 431,752 418,005 (Loss) gain on sale of available-for-sale investments ............. (9,990) 46 6,062 (96,609) Net gain (loss) on sale of premises and equipment, real estate owned and other repossessed assets .................. (6,696) (21,316) 21,801 (40,425) Other ............................................................. 29,113 25,792 96,471 63,886 Insurance & Brokerage Commissions ................................. 328,864 682,817 1,644,119 2,726,335 ----------- ----------- ----------- ----------- Total non-interest income ......................................... 690,328 1,089,492 3,142,319 3,982,288 ----------- ----------- ----------- ----------- Non-interest expenses: Compensation and employee benefits ................................ 1,377,288 1,585,607 5,698,370 6,236,874 SAIF Insurance Premiums ........................................... 36,681 4,901 121,919 20,837 Advertising ....................................................... 55,798 39,773 184,658 200,396 Occupancy ......................................................... 341,364 403,227 1,395,134 1,505,220 Amortization of intangible assets ................................. 100,162 125,002 425,489 495,728 Service Bureau Charges ............................................ 79,673 80,721 320,191 317,899 Insurance & Brokerage Commission Expense .......................... - 228,704 309,874 948,095 Professional Services ............................................. 100,278 77,764 414,067 325,207 Prepayment penalty on FHLB advances ............................... - - - 464,240 Other ............................................................ 611,313 411,004 1,561,918 1,359,957 ----------- ----------- ----------- ----------- Total non-interest expenses ....................................... 2,702,556 2,956,703 10,431,619 11,874,451 ----------- ----------- ----------- ----------- Loss before income tax benefit .................................... (3,493,766) (2,059,806) (4,873,265) (2,515,850) Income tax benefit ................................................ (1,170,115) (699,140) (1,632,232) (915,893) ----------- ----------- ----------- ----------- Net loss .......................................................... $(2,323,651) $(1,360,666) $(3,241,033) $(1,599,957) =========== =========== =========== =========== Per share data: Basic loss per share .............................................. $ (0.81) $ (0.47) $ (1.12) $ (0.56) Weighted average number of shares outstanding ..................... 2,884,249 2,884,249 2,884,249 2,884,249 Diluted loss per share ............................................ $ (0.81) $ (0.47) $ (1.12) $ (0.56) Weighted average number of shares outstanding, including dilutive stock options ................................ 2,884,249 2,884,249 2,884,249 2,884,249 Dividends per common share ........................................ $ - $ 0.05 $ 0.15 $ 0.20
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