UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 19, 2008
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FIRST FEDERAL OF NORTHERN MICHIGAN BANCORP, INC.
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(Exact name of Registrant as specified in its charter)
Maryland 0-31957 38-0135202
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 S. Second Ave., Alpena, Michigan 49707
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(Address of principal executive offices)
(989) 356-9041
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Registrant's telephone number, including area code
Not Applicable
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(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 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
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Audit Report or Completed Interim Review
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(a) On March 19, 2008, the Audit Committee of the Board of Directors of
First Federal of Northern Michigan Bancorp, Inc. (the "Company") determined that
the interim financial statements at and for the three months ended March 31,
2007, at and for the three and six months ended June 30, 2007, and at and for
the three and nine months ended September 30, 2007, as included in the Company's
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 2007, June 30,
2007 and September 30, 2007, respectively, should no longer be relied upon
because of an error in such financial statements related to the Company's
adoption in April 2007 of Statement of Financial Accounting Standards No. 159,
"The Fair Value Option for Financial Assets and Liabilities" ("SFAS No. 159").
The Company has determined to restate such financial statements to reverse the
adoption of SFAS 159.
The Company expects to file on March 26, 2008 amendments to its Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2007, June 30, 2007 and
September 30, 2007, which amendments will reflect such restatements. Details
concerning such restatements, including a reconciliation of previously reported
financial statements and the financial statements, as restated, will be
contained in such amendments.
As a result of such restatements, the Company's net income (1) for the
three months ended March 31, 2007 was adjusted from $24,000 to $22,000; (2) for
the six months ended June 30, 2007 was adjusted from $165,000 to a net loss of
$215,000; and (3) for the nine months ended September 30, 2007 was adjusted from
$67,000 to a net loss of $239,000. Also as a result of such restatements, the
Company's total stockholders' equity (1) at March 31, 2007 was adjusted from
$34.9 million to $35.1 million; (2) at June 30, 2007 was adjusted from $33.9
million to $33.8 million; and (3) at September 30, 2007 was unchanged.
In addition, the following tables summarize the effect of the restatement
adjustments on the Company's consolidated financial statements as of and for the
periods indicated:
Consolidated Balance Sheet (unaudited) As of March 31, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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Securities AFS $ 34,234 $ 4,756 $ 38,990
Securities at fair value 4,756 (4,756) 0
FHLB Advances and Note Payable 50,592 10,000 60,592
Borrowings at fair value 10,338 (10,338) 0
Accrued expenses and other liabilities 2,705 115 2,820
Total liabilities 236,987 (222) 236,765
Retained earnings, restricted 14,147 302 14,449
Accumulated other comprehensive loss (123) (79) (202)
Total stockholders' equity 34,881 222 35,103
Consolidated Statement of Income (unaudited) Three Months Ended March 31, 2007
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(Dollars in thousands, except per share amounts) As Reported Adjustment As Restated
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Interest and dividends on investments $ 510 $ (11) $ 499
Interest on mortgage-backed securities 47 (2) 45
Total interst income 4,143 (13) 4,130
Net interest income 1,909 (13) 1,896
Net interest income after provision for loan loss 1,823 (13) 1,810
Net loss on trading activities (10) 10 0
Income before income tax expense 12 (3) 9
income tax (benefit) expense (12) (1) (13)
Net income 24 (2) 22
Basic earnings per share 0.01 0.00 0.01
Diluted earnings per share 0.01 0.00 0.01
Consolidated Statement of Cash Flows (unaudited) Three Months Ended March 31, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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Cash flows from operating activities:
Net income $ 24 $ (2) 22
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in other assets (86) 44 (42)
Change in accrued expenses and other liabilities 500 (42) 458
Consolidated Balance Sheet (unaudited) As of June 30, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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FHLB Advances and Note Payable $ 48,688 $ 10,000 $ 58,688
Borrowings at fair value 9,889 (9,889) 0
Accrued expenses and other liabilities 1,794 (35) 1,759
Total liabilities 230,236 76 230,312
Retained earnings, restricted 14,144 (76) 14,068
Total stockholders' equity 33,882 (76) 33,806
Consolidated Statement of Income (unaudited) Three Months Ended June 30, 2007
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(Dollars in thousands, except per share amounts) As Reported Adjustment As Restated
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Interest and dividends on investments $ 437 $ (2) $ 435
Interest on mortgage-backed securities 22 (1) 21
Total interest income 4,060 (3) 4,057
Net interest income 1,945 (3) 1,942
Net interest income after provision for loan loss 1,832 (3) 1,829
Gain (loss) on sale of AFS securities 0 (97) (97)
Net gain (loss) on trading activities 176 (176) 0
Total other income 1,156 (273) 883
Other expense 328 293 621
Total other expenses 2,811 293 3,104
Income before income tax expense 177 (569) (392)
Income tax (benefit) expense 35 (190) (155)
Net income 142 (378) (236)
Basic earnings per share 0.05 (0.13) (0.08)
Diluted earnings per share 0.05 (0.13) (0.08)
Consolidated Statement of Income (unaudited) Six Months Ended June 30, 2007
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(Dollars in thousands, except per share amounts) As Reported Adjustment As Restated
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Interest and dividends on investments $ 946 $ (12) $ 934
Interest on mortgage-backed securities 69 (3) 66
Total interest income 8,203 (15) 8,188
Net interest income 3,854 (15) 3,839
Net interest income after provision for loan loss 3,655 (15) 3,640
Gain (loss) on sale of AFS securities 0 (97) (97)
Net gain (loss) on trading activities 167 (167) 0
Total other income 2,134 (263) 1,871
Other expense 613 293 906
Total other expenses 5,601 293 5,894
Income before income tax expense 189 (572) (383)
Income tax (benefit) expense 23 (191) (168)
Net income 165 (380) (215)
Basic earnings per share 0.06 (0.13) (0.07)
Diluted earnings per share 0.06 (0.13) (0.07)
Consolidated Statement of Cash Flows (unaudited) Six Months Ended June 30, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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Cash flows from operating activities:
Net income $ 165 $ (380) $ (215)
Adjustments to reconcile net income to net cash
provided by operating activities:
Net loss (gain) from trading activities (167) 167 0
Gain on sale of securities 0 (28) (28)
Change in other assets 321 (17) 304
Change in accrued expenses and other liabilities (567) (35) (602)
Net cash provided by operating activities 882 (293) 589
Cash flows from investing activities:
Repayments of FHLB advances and notes payable (30,146) 293 (29,853)
Net cash provided by (used in) financing activities (16,531) 293 (16,238)
Consolidated Balance Sheet (unaudited) As of September 30, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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Accrued expenses and other liabilities $ 1,945 $ 2 $ 1,947
Total liabilities 228,696 2 228,698
Retained earnings 13,901 (2) 13,899
Total stockholders' equity 33,827 (2) 33,825
Consolidated Statement of Income (unaudited) Three Months Ended September 30, 2007
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(Dollars in thousands, except per share amounts) As Reported Adjustment As Restated
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Net gain (loss) on trading activities $ (282) $ 282 $ 0
Total other income 740 282 1,022
Other expense 336 171 507
Total other expenses 2,853 171 3,024
Income before income tax expense (184) 111 (73)
Income tax (benefit) expense (86) 37 (49)
Net income (99) 74 (25)
Basic earnings per share (0.03) 0.02 (0.01)
Diluted earnings per share (0.03) 0.02 (0.01)
Consolidated Statement of Income (unaudited) Nine Months Ended September 30, 2007
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(Dollars in thousands, except per share amounts) As Reported Adjustment As Restated
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Interest and dividends on investments $ 1,363 $ (12) $ 1,351
Interest on mortgage-backed securities 83 (3) 80
Total interest income 12,343 (15) 12,328
Net interest income 5,894 (15) 5,879
Net interest income after provision for loan loss 5,584 (15) 5,569
Gain (loss) on sale of AFS securities 0 (97) (97)
Net gain (loss) on trading activities (116) 116 0
Total other income 2,874 19 2,893
Other expense 949 464 1,413
Total other expenses 8,454 464 8,918
Income before income tax expense 4 (460) (456)
Income tax (benefit) expense (63) (154) (217)
Net income 67 (306) (239)
Basic earnings per share 0.02 (0.10) (0.08)
Diluted earnings per share 0.02 (0.10) (0.08)
Consolidated Statement of Cash Flows (unaudited) Nine Months Ended September 30, 2007
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(Dollars in thousands) As Reported Adjustment As Restated
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Cash flows from operating activities:
Net income $ 67 $ (306) $ (239)
Adjustments to reconcile net income to net cash
provided by operating activities:
Net loss (gain) from trading activities 116 (116) 0
Loss on sale of securities 0 97 97
Change in other assets 163 3 166
Change in accrued expenses and other liabilities (416) 2 (414)
Net cash provided by operating activities 1,477 (320) 1,157
Cash flows from investing activities:
Repayments of FHLB advances and notes payable (36,938) 320 (36,618)
Net cash prvoided by (used in) financing activities (18,628) 320 (18,308)
The Audit Committee has discussed with the Company's independent registered
public accounting firm the matters disclosed in this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired: None
(b) Pro Forma Financial Information: None
(c) Shell company transactions: None
(d) Exhibits: None
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 25, 2008 By: /s/ Michael W. Mahler
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Michael W. Mahler
President and Chief Operating Officer
(Duly Authorized Representative)