Michigan Heritage Bancorp, Inc. Reports Q1 2008 Results

FARMINGTON HILLS, Mich., May 2 /PRNewswire-FirstCall/ -- Michigan Heritage Bancorp, Inc. (BULLETIN BOARD: MHBC) , the holding company for Michigan Heritage Bank, posted a net loss of $173,000, or $0.11 per diluted share, for the first quarter of 2008, compared to net income of $156,000, or $0.10 per diluted share for the same quarter of 2006. Total assets at the close of first quarter 2008 were $188,488,000, up $1,709,000, or 0.91%, from December 2007.

Raymond A. Biggs, Bank President and CEO said, "During the first quarter of 2008 we remained diligent and focused on improving the Bank's balance sheet. As we continue to operate in difficult economic times in Southeast Michigan, we are working with customers who have felt the economic impact the hardest to assist them in bringing their loans current and back into an accruing status. The Bank has streamlined its operations and made them more efficient to better service its customers.

"On April 21, 2008, the Bank announced that it will consolidate the accounts and business activities from its Livonia branch office with its nearby branch offices in Farmington Hills, and Novi, Michigan. As mentioned in the announcement, the Livonia branch office lacked a drive-thru window and ATM. Therefore, we felt we could not properly serve our customers at that location. However, the Bank remains committed to the community of Livonia and its residents and in making the consolidation for our Customers as smooth and seamless as possible.

"Looking forward, the Bank's focus is to be a financial partner with the communities and businesses in our market and is working daily to be the Bank of choice by developing creative solutions to business and customer financial needs."

FINANCIAL DATA

Total assets as of March 31, 2008 were $188,488,000, compared to
$186,779,000 at December 31, 2007, an increase of $1,709,000, or 0.91%.

Total net loans as of March 31, 2008 were $144,908,000, compared to
$149,919,000, at December 31, 2007 a decrease of $5,011,000, or 3.34%.

Total deposits were $159,090,000 as of March 31, 2008 compared to
$146,386,000 from a December 31, 2007 an increase of $12,704,000, or
8.68%.

Michigan Heritage Bank is a state chartered, full-service commercial bank and wholly owned subsidiary of Michigan Heritage Bancorp, Inc. A member of both the Federal Reserve System and the Federal Home Loan Bank, deposits are FDIC insured. Michigan Heritage operates from branch offices in Farmington Hills, Novi, Troy and Wixom. Michigan Heritage Bancorp stock trades on the over-the-counter (OTC) market and quotations are reported on the OTC Bulletin Board under the symbol "MHBC".

Safe Harbor. This press release contains "forward looking statements" within the meaning of the federal securities law regarding proposed developments and operations of the Company. These statements represent the Company's expectations of beliefs concerning future events. Statements containing expressions such as "believes", "anticipates" or "expects" are intended to identify such forward-looking statements. All forward-looking statements involve risks and uncertainties. Although the Company believes its expectations are based upon reasonable assumptions with the bounds of its knowledge of its business and operations, there can be no assurance with the bounds of its knowledge of its business and operations that actual results will not materially differ from expected results. The Company cautions that these and similar statements are further qualified by important factors that could cause actual results to differ materially from those in the forward- looking statements, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statements, to reflect occurrences or unanticipated events of circumstances after the date of such statements.

(financial schedules follow)

Michigan Heritage Bancorp, Inc.
Consolidated Statement of Earnings
'000

Three Months Ended December 31,
2008 2007
Operating income: (Unaudited)
Interest income $3,306 $3,520
Interest expense 1,841 1,819
Net interest income 1,465 1,701

Provision for credit losses 120 60

Net interest income after provision
for credit losses 1,345 1,641

Noninterest income:
Gain / loss on sale of securities held
available for sale 17 - Gain on sale of loans and other assets 16 129
Other income 86 97
Total noninterest income 119 226

Noninterest expense:
Salaries and employee benefits 724 841
Occupancy expense 179 189
Other expense 723 524
Total noninterest expense 1,626 1,554

Income before income taxes and
minority interest (162) 313

Minority interest 99 124
Income taxes (88) 33

Net income $(173) $156

Net income per share:
Basic earnings per share $(0.11) $0.10
Diluted earnings per share $(0.11) $0.10

Michigan Heritage Bancorp, Inc.
Condensed Balance Sheet
'000

March 31, December 31, March 31,
2008 2007 2007
Assets (Unaudited) (Audited) (Unaudited)

Cash and cash equivalents $3,248 $2,448 $4,535
Investments 33,018 28,047 29,086
Loans: less deferred fees ($115, $111,
$86) 147,873 153,357 143,666
Allowance for loan / lease losses (2,965) (3,438) (1,637)
Other assets 7,314 6,365 5,448

Total assets $188,488 $186,779 $181,098

Liabilities and stockholders' equity

Deposits $159,090 $146,386 $155,624
Other borrowed funds 13,000 23,600 5,000
Other liabilities 1,073 1,415 3,056
Stockholders' equity 15,325 15,378 17,418

Total liabilities and stockholders'
equity $188,488 $186,779 $181,098

Supplementary data

Total loan loss reserve ratio 2.00% 2.24% 1.14%
Total loans to asset ratio 79% 82% 79%
Net charge-off to total loans ratio 0.40% 0.45% 0.06%
Tier 1 leverage ratio 7.50% 8.03% 9.31%
Net interest margin 3.26% 3.36% 3.95%
Book value per share $10.15 $10.18 $11.24

First Call Analyst:
FCMN Contact:

Source: Michigan Heritage Bancorp, Inc.

CONTACT: Perry Driggs, Chairman, +1-248-538-2582, or Ray Biggs,
President, +1-248-538-2527, both of Michigan Heritage Bancorp, Inc.; or Mike
Marcotte of Marcotte Financial Relations, +1-248-656-3873

2008-05-02 17:38:59 0351831 PRNEWSWIRE