OAK Financial Achieves Record Assets

January 22, 2008
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BYRONCENTER — OAK Financial Corp., the holding company for Byron Bank, reported 2007 net income of $6.7 million, down 4 percent from the record $7 million in net income posted for 2006. Basic and diluted earnings per share also declined 4 percent for the full-year period.

According to the company, the decline in 2007 net income was the result of a significant increase in the provision for loan losses, loan collection costs primarily with one commercial borrower and employee health care costs. However, by year end OAK reached a new record for total assets, which exceeded $743 million, up $74 million, or 11 percent, from the year before.

Fourth quarter net income was down 22 percent to $1.47 million, compared with $1.8 million in 2006’s fourth quarter. Basic and diluted earnings per share in the just passed quarter were 55 cents, marking a decline of 21 percent form the 70 cents reported for the prior year’s fourth quarter.  The company indicated that earnings were impacted by an increased in the provision for loan losses, the reversal of previously-accrued interest on loans placed on non-accrual and unusually high employee health care costs.

The provision for loan losses was $442,000 higher in the fourth quarter than the year-ago quarter as a result of the continued weakness in the residential real estate construction market, continued overall weakness in the Michigan economy and strong loan growth in the last quarter, according to OAK.

Total loans in fiscal 2007 increased $68 million, or 13 percent, and total deposits declined $2 million, or less than 1 percent. The decline in deposits, the company said, reflects and intentional shift from brokered certificates of deposits to lower costing Federal Home Loan Bank advances, repurchase agreements and federal funds purchased.

“Despite unprecedented challenges to the Michigan economy, our 2007 earnings represented near-record performance,” said President and CEO Patrick Gill. “In fact, net income was the second-best in the long history of our company. Our exceptional team remains committed to helping our customers and shareholders achieve prosperity in all economic environments.”     

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