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First Federal of Northern Michigan Bancorp, Inc. Announces Fourth Quarter 2008 Earnings.

Article Excerpt
ALPENA, Mich., March 5 /PRNewswire-FirstCall/ -- First Federal of Northern Michigan Bancorp, Inc. (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...