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Pelican Financial, Inc. Posts Record Net Income, Loss from Continuing Operations for 2003 Mortgage Company Spin-off Completed ANN ARBOR, Mich. and NAPLES, Fla., Feb. 26 /PRNewswire-FirstCall/ -- Pelican Financial, Inc. , the holding company for Pelican National Bank, posted record net income, but a loss from continuing operations for 2003, Charles C. Huffman, Chairman and CEO, reported today. Pelican National Bank, headquartered in Naples, Fla., is a full-service community bank serving the consumer and commercial sectors from branch offices in Fort Myers, San Carlos, and Bonita Springs, Florida. Pelican Financial, Inc. completed its previously announced spin-off of Washtenaw Mortgage Company into a separate, publicly held corporation, The Washtenaw Group, Inc., trading under the symbol TWH. The spin-off was effective at the close of business December 31, 2003. PFI shareholders received one share of TWH for each share of PFI held. Fourth-quarter results Fourth-quarter results from continuing operations were marred by margin compression from the low interest-rate environment and higher expenses from marketing and branch-expansion activities. The net loss for the quarter was $663,138, or $0.15 per diluted share, compared with the year earlier net income of $411,339, or $0.09 per diluted share. A major factor was higher noninterest expense, which rose 63% to $2,107,310, chiefly reflecting higher personnel count and related costs, marketing, and branch expansion activities. Full-year results The Company recorded a loss from continuing operations of $918,165, or $0.21 per share, for 2003, compared with income from continuing operations of $1,522,232 or $0.34 per share, for 2002. The 2003 results reflect lower gain on sales of loans and mortgage servicing rights and higher noninterest expense. Aided by accounting adjustments, the bank-holding company recorded net income for 2003 inclusive of discontinued operations. Net income rose 127% to $8,520,071, or $1.91 per diluted share, from net income of $3,742,104, or $0.84 per diluted share, for 2002. The results were aided appreciably from the operations of Washtenaw Mortgage Company, which contributed income of $9,438,236, equivalent to $2.12 per diluted share, from the discontinued mortgage subsidiary. With a new president at the helm, the Bank focused on strengthening its balance sheet, increasing core deposits and preparing for growth. The Bank launched a very successful money-market promotion to increase core deposits. This resulted in increases in core deposits of $60 million, or 97%. The Bank also reduced delinquent and nonperforming loans by 63% to one-half of one percent of loans. The loan-loss provision was, likewise, increased and it stood at a healthy 1.20% of total loans outstanding at the close of the year. Mr. Huffman said, "Pelican National Bank performed well despite the difficult interest-rate environment and rising costs as we grew our staff and prepared to open two new branches in 2004 in south Fort Meyers and Cape Coral. These are scheduled to open around midyear. We are optimistic about 2004 as we expand our franchise and build our customer base. The Bank opened one new branch in Bonita Springs, Fla. in 2003." Mr. Huffman said that the board of directors has suspended dividend payments so that future earnings can be invested in Company growth. Safe Harbor. This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to risks and uncertainties, which could cause actual results to differ materially from those described in the forward- looking statements. Among these risks are regional and national economic conditions, competitive and regulatory factors, legislative changes, mortgage- interest rates, cost and availability of borrowed funds, our ability to sell mortgages in the secondary market, and housing sales and values. These risks and uncertainties are contained in the Corporation's filings with the Securities and Exchange Commission, available via EDGAR. The Company assumes no obligation to update forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such forward-looking statements. PELICAN FINANCIAL, INC. Consolidated Balance Sheets December 31, 2003 and 2002 2003 2002 ASSETS Cash and cash equivalents Cash and due from banks $6,354,416 $10,410,554 Interest-bearing deposits 45,639,288 33,005,000 Federal funds sold 3,426,013 13,946,381 Total cash and cash equivalents 55,419,717 57,361,935 Accounts receivable, net 179,488 348,136 Securities available for sale 49,729,994 2,560,305 Federal Reserve & Federal Home Loan Bank Stock 949,000 1,330,000 Loans held for sale 141,200 18,689,918 Loans receivable, net of allowance of $1,330,112 and $1,062,109 109,798,257 104,082,175 Mortgage servicing rights, net 29,368 69,888 Other real estate owned 332,857 75,782 Premises and equipment, net 2,658,018 1,195,139 Other assets 2,277,736 1,880,406 Assets of discontinued operations - 198,657,086 $221,515,635 $386,250,770 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits Noninterest-bearing $74,004,969 $87,404,821 Interest-bearing 117,907,62566,428,958 Total deposits 191,912,594 153,833,779 Due to bank - - Notes payable 291,665 791,667 Repurchase agreements - - Federal Home Loan Bank borrowings 12,000,000 18,000,000 Other liabilities 421,088 847,610 Liabilities of discontinued operations - 180,947,056 Total liabilities 204,625,347 354,420,112 Commitments and contingencies Shareholders' equity Preferred stock, 200,000 shares authorized; none outstanding - - Common stock, $.01 par value 10,000,000 shares authorized; 4,448,351 and 4,440,241 outstanding at December 31, 2003 and 2002 44,884 44,402 Additional paid in capital 15,568,593 15,345,573 Retained earnings 1,183,546 16,426,842 Accumulated other comprehensive income, net of tax 93,265 13,841 Total shareholders' equity 16,890,288 31,830,658 $221,515,635 $386,250,770 PELICAN FINANCIAL, INC. Consolidated Statements of Income Years ended December 31, 2003, 2002 and 2001 2003 2002 2001 Interest income Loans, including fees $9,148,444 $10,028,618 $9,357,437 Investment securities, taxable 430,257 473,410 411,616 Federal funds sold and overnight accounts 563,084 322,980 219,848 Total interest income 10,141,785 10,825,008 9,988,901 Interest expense Deposits 2,474,514 3,240,473 3,900,481 Other borrowings 997,915 1,064,314 1,008,241 Total interest expense 3,472,429 4,304,787 4,908,722 Net interest income 6,669,356 6,520,221 5,080,179 Provision for loan losses 1,058,000 300,000 562,000 Net interest income after provision for loan losses 5,611,356 6,220,221 4,518,179 Noninterest income Gain (loss) on sale of securities, net (29,015) 162,776 - Service charges on deposit accounts 179,146 155,609 118,240 Servicing income 17,521 11,101 32,880 Gain on sales of mortgage servicing rights and loans, net 94,054 369,781 163,581 Other income (30,256) 72,645 2,916 Total noninterest income 231,450 771,912 317,617 Noninterest expense Compensation and employee benefits 3,617,106 2,233,588 1,830,396 Occupancy and equipment 1,008,652 760,547 660,847 Telephone 96,921 57,799 63,090 Postage 30,634 42,923 46,499 Amortization of mortgage servicing rights 40,521 12,952 8,000 Other noninterest expense 2,439,833 1,575,444 1,622,732 Total noninterest expense 7,233,667 4,683,253 4,231,564 Income (loss) from continuing operations before income taxes and cumulative effect of change in accounting principle (1,390,861) 2,308,880 604,232 Provision for income taxes (472,696) 786,648 208,458 Income (loss) from continuing operations before cumulative effect of change in accounting principle (918,165) 1,522,232 395,774 Discontinued operations: Income from operations of discontinued mortgage subsidiary 14,278,682 2,762,924 10,673,598 Income (loss) on disposition - - - Income tax (benefit) 4,840,446 956,501 3,646,167 Income (loss) on discontinued operations 9,438,236 1,806,423 7,027,431 Income (loss) before cumulative effect of change in accounting principle 8,520,071 3,328,655 7,423,205 Cumulative effect of change in accounting principle - 413,449 (420,495) Net income $8,520,071 $3,742,104 $7,002,710 Basic earnings per share from continuing operations before cumulative effect of change in accounting principle $(0.21) $0.34 $0.09 Diluted earnings per share from continuing operations before cumulative effect of change in accounting principle $(0.21) $0.34 $0.09 Per share effect of discontinued operations $2.12 $0.41 $1.60 Basics earnings per share cumulative effect of change in accounting principle $- $0.10 $(0.10) Diluted earnings per share cumulative effect of change in accounting principle $- $0.09 $(0.10) Basics earnings per share $1.91 $0.85 $1.59 Diluted earnings per share $1.91 $0.84 $1.59 DATASOURCE: Pelican Financial, Inc. CONTACT: Howard Nathan of Pelican Financial, Inc., +1-800-765-5562; or Mike Marcotte of Marcotte Financial Relations, +1-248-656-3873

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