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August 15, 2003North Country loss risesBank lost $2.6M in 2nd quarterByRecord-Eagle staff writer TRAVERSE CITY - North Country Financial Corp., parent company of troubled North Country Bank and Trust, continued to hemorrhage cash in the quarter ending June 30, reporting a loss of over $2.6 million. The Manistique-based company lost $4.1 million in the first six months this year. The new losses were reported Wednesday to the federal Securities and Exchange Commission as the company continues to fail to meet minimal capital requirements that federal and state regulators imposed in April. Failing to boost capital, "may impact the ability of the corporation and the bank to remain as ongoing operating entities," North Country said in the report. Capital-raising options include selling off some of the bank's loans, finding new investors or selling more stock to existing shareholders. Chief executive officer James Bess said Thursday he couldn't say how much the bank needs to raise. Three shareholder lawsuits filed in federal court in June and July also dim the company's outlook. Shareholders allege that North Country Financial, former chairman Ron Ford, former chief executive officer Sherry Littlejohn and others misled investors by failing to disclose the corporation's true financial condition. North Country Financial said in its SEC filing Wednesday the corporation will face major expenses in dealing with the suits, regardless of outcome. The bank, designated as "troubled" and operating under strict controls by state and federal regulators, continues to shrink in terms of assets, deposits, net loans and branches. Assets, the standard measure of the size of a bank, dropped by $89.4 million - 15.8 percent - in the first six months of this year to $475.9 million. Deposits fell $85 million - 19.4 percent - to $353.4 million in the first six months. Net loans declined $73.7 million - 17.9 percent - to $336.4 million in the first six months. As of June 30, the bank reported $44.4 million worth of its outstanding loans were "impaired," meaning they were not being paid off according to terms. That compared to a total of $51.6 million as of Dec. 31, 2002. The company said four of the bank's branches, including one in Glen Arbor, will be closed soon, eliminating approximately $8 million in deposits. "We're going to try really hard to get it back in the black but to make any kind of specific prediction about when, I can't do that," Bess said. In a related SEC filing, the corporation disclosed that Bess will be paid $30,000 a month under a two-year contract that went into effect Aug. 1. Also, Bess will receive the use of a company car, get six weeks of vacation a year, and got a $10,000 "retention bonus" when he started work. He will also get a bonus of a year's pay if he succeeds in getting a cease-and-desist order lifted and keeps the corporation out of further trouble with regulators.
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