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First Federal of Northern Michigan Bancorp, Inc. Announces Third Quarter 2009 Results.

Article Excerpt
ALPENA, Mich., Nov. 9 /PRNewswire-FirstCall/ -- First Federal of Northern Michigan Bancorp, Inc. (the "Company") reported a consolidated net loss from continuing operations of $3.8 million, or $1.32 per basic and diluted share, for the quarter ended September 30, 2009 compared to a consolidated net loss from continuing operations of $610,000, or $0.21 per basic and diluted share, for the quarter ended September 30, 2008.

Consolidated net loss from continuing operations for the nine months ended September 30, 2009 was $3.6 million, or $1.26 per basic and diluted share, compared to consolidated net loss from continuing operations of $860,000, or $0.30 per basic and diluted share, for the nine months ended September 30, 2008.

The three- and nine-month results reflected a substantial provision for loan losses which related primarily to two large commercial loan relationships and a non-cash valuation allowance related to the Company's deferred tax asset.

Michael W. Mahler, President and Chief Executive Officer of the Company, commented, "Our results from core banking activities have steadily improved. We have successfully implemented strategies to reduce the costs of our deposits and to incorporate floors on variable rate loans, both of which have contributed to our significant increase in net interest margin. In addition, we have aggressively moved to reduce our manageable non-interest expenses. These strategies, coupled with strong levels of mortgage banking activities, have resulted in a marked improvement in pre-tax, pre-provision core operating earnings. Unfortunately, continued credit quality issues and declines in commercial and residential real-estate markets have had a detrimental impact on our net results."

Mahler continued, "We are very disappointed with the results of the quarter and their impact on our year-to-date performance. Improvements made to the baseline profitability of the Bank were not enough to counter the impact that the continued deterioration within real estate markets had on our loan loss provision. Additionally, our recent losses impacted the value of the Company's deferred tax assets, requiring a $2.0 million valuation allowance to be established as required by Generally Accepted Accounting Principles (GAAP). The valuation allowance is an estimate that is based on many subjective factors. Future evaluation of those factors could result in additional reserves or income recovery."

Selected Financial Ratios For the Three For the Nine Months Ended Months...

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