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Pelican Financial, Inc. Reports Q3 Profit Assets and Core Deposits Rise. Six Branches Now Open. ANN ARBOR, Mich. and NAPLES, Fla., Nov. 3 /PRNewswire-FirstCall/ -- Pelican Financial, Inc. (AMEX:PFI), the holding company for Pelican National Bank, posted improved results for the third quarter and nine months ended September 30, 2004, Charles C. Huffman, President and CEO, announced today. Pelican National Bank, headquartered in Naples, Fla., is a full-service community bank serving the consumer and commercial segments from six branch offices in Naples, Bonita Springs, Cape Coral, Fort Myers, Fort Myers Beach, and San Carlos. Pelican Financial, Inc. has 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. Third-quarter results. The Corporation posted net income of $155,814, or $0.03 per share, for the third quarter of 2004, compared with a year-earlier net loss from continuing operations of $370,278, or $0.08 per share. Net interest income was off marginally, from a 5% reduction in loans, and margin compression from the low interest-rate environment. Noninterest income was up 22 fold, chiefly reflecting higher bank service charges and fees, and gains from the sale of securities, as the Bank repositions assets to improve yield and enhance liquidity. Results also included a credit of $300,000 to the loan-loss reserve, due to improved loan quality. Deposits rose 35% from the year-earlier period, from the push to increase core deposits and the opening of three new branch offices. Nine-month results. The Corporation recorded a net loss of $75,827, or $0.02 per share, compared with a net loss from continuing operations of $255,027, or $0.06 per share, for the first three quarters of 2003. Net interest income was off 10%. A modest rise in total interest income was offset by a 35% increase in total interest expense, chiefly from higher deposits. Noninterest income rose 48%, principally from gains from the sales of securities. Noninterest expense rose about 9%, mainly from new-branch and personnel increases. PNB currently has 75 employees, up 25% from 60 employees at the close of Q3-2003, and six branches, compared with three a year ago. Results for the nine-months were aided by a credit of $225,000 to the loan- loss reserve, as noted above. The balance sheet saw growth. For the year, total assets were up 17% to $258,883,869; loans receivable stood at $105,701,195, off 5%, due to loan- refinancing run-off; and deposits jumped 20% to $229,917,791. Mr. Huffman said, "We have made considerable progress for the year, despite our operating numbers and weather conditions in Florida. "We have opened four new branches in the past year and half. The new branches are performing well and increasing market presence, name recognition, and franchise value. "We are building core deposits. This has marginally increased deposit costs, but positions us to fund expected loan growth. "Operating results at the Bank were generally positive. Both total interest income and total noninterest income were up. Our noninterest expense rose from the planned growth of our branch network. "We are adding quality loans and generating substantial loan production. However, much of the new-loan growth has been offset by loan refinancing run- off, which will subside with rising interest rates. The recent rate hikes by the Federal Reserve are expected to benefit our net interest margin on many of our commercial loans. "Additionally, Howard B. Montgomery joined us as our new president at the start of the fourth quarter. Mr. Montgomery has two decades of banking experience and is a former member of the Federal Reserve Bank's 5th District Operations Advisory Committee. Mr. Montgomery replaces Michael N. Clemens who retired September 30, 2004. "Overall, we remain optimistic about the markets that we are in and about our future in those markets." 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 September 30, December 31, 2004 2003 (Unaudited) ASSETS Cash and cash equivalents Cash and due from banks $7,814,919 $6,354,416 Interest-bearing deposits - 45,639,288 Federal funds sold 80,879,303 3,426,013 Total cash and cash equivalents 88,694,222 55,419,717 Securities available for sale 58,246,626 49,729,994 Federal Reserve & Federal Home Loan Bank Stock 1,192,200 949,000 Loans held for sale - 141,200 Loans receivable, net 104,763,310 109,798,257 Other real estate owned - 332,857 Premises and equipment, net 3,648,170 2,658,018 Other assets 2,339,341 2,486,592 $258,883,869 $221,515,635 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits Noninterest-bearing $66,003,472 $74,004,969 Interest-bearing 163,914,319 117,907,625 Total deposits 229,917,791 191,912,594 Note payable - 291,665 Federal Home Loan Bank borrowings 12,000,000 12,000,000 Other liabilities 328,918 421,088 Total liabilities 242,246,709 204,625,347 Shareholders' equity Preferred stock, 200,000 shares authorized; none outstanding - - Common stock, $.01 par value 10,000,000 shares authorized; 4,490,158 and 4,488,351 outstanding at September 30, 2004 and December 31, 2003 44,902 44,884 Additional paid in capital 15,574,809 15,568,593 Retained earnings 1,107,719 1,183,546 Accumulated other comprehensive income (loss), net of tax (90,270) 93,265 Total shareholders' equity 16,637,160 16,890,288 $258,883,869 $221,515,635 PELICAN FINANCIAL, INC. Consolidated Statements of Income and Comprehensive Income (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Interest income Loans, including fees $1,810,314 $2,192,205 $5,712,140 $7,077,306 Investment securities, taxable 853,184 80,333 2,124,366 284,594 Federal funds sold and overnight accounts 82,480 152,285 254,308 397,302 Total interest income 2,745,978 2,424,823 8,090,814 7,759,202 Interest expense Deposits 1,016,584 574,782 2,883,814 1,707,516 Other borrowings 164,603 267,825 490,459 800,869 Total interest expense 1,181,187 842,607 3,374,273 2,508,385 Net interest income 1,564,791 1,582,216 4,716,541 5,250,817 Provision for loan losses (300,000) 518,000 (225,000) 888,000 Net interest income after provision for loan losses 1,864,791 1,064,216 4,941,541 4,362,817 Noninterest income Gain on sales of securities, net 310,456 - 313,315 129,360 Service charges on deposit accounts 52,303 40,950 118,793 141,159 Gain on sale of loans, net 4,587 21,240 24,345 92,044 Net gain (loss) on foreclosed assets and other income 36,262 (43,968) 105,657 16,554 Total noninterest income 403,608 18,222 562,110 379,117 Noninterest expense Compensation and employee benefits 1,032,321 834,957 2,899,231 2,718,447 Occupancy and equipment 352,557 254,809 939,756 730,574 Legal 67,886 86,368 175,336 288,727 Accounting and auditing 52,620 51,234 143,770 116,178 Data processing 69,669 30,511 161,301 88,178 Marketing and advertising 22,652 27,266 80,257 118,123 Loan and other real estate owned 70,590 53,861 272,229 360,360 Other noninterest expense 363,442 303,885 944,801 705,770 Total noninterest expense 2,031,737 1,642,891 5,616,681 5,126,357 Income (loss) from continuing operations before income taxes 236,662 (560,453) (113,030) (384,423) Income tax expense (benefit) 80,848 (190,175) (37,203) (129,396) Income (loss) from continuing operations $155,814 $(370,278) $(75,827) $(255,027) Discontinued operations: Income from operations of discontinued mortgage subsidiary - 5,660,786 - 14,900,192 Income tax - 1,916,412 - 5,082,920 Income from discontinued operations - 3,744,374 - 9,817,272 Net income (loss) $155,814 $3,374,096 $(75,827) $9,562,245 Basic earnings (loss) per share from continuing operations $0.03 $(0.08) $(0.02) $(0.06) Basic earnings per share from discontinued operations - 0.84 - 2.21 Basic earnings (loss) per share $0.03 $0.76 $(0.02) $2.15 Diluted earnings (loss) per share from continuing operations $0.03 $(0.08) $(0.02) $(0.06) Diluted earnings per share from discontinued operations - 0.83 - 2.19 Diluted earnings (loss) per share $0.03 $0.75 $(0.02) $2.13 Comprehensive income (loss) $685,552 $3,203,071 $(259,362) $9,372,055 DATASOURCE: Pelican Financial, Inc. CONTACT: Howard Nathan, CFO of Pelican Financial, Inc., +1-734-662-9733; or Mike Marcotte of Marcotte Financial Relations, +1-248-656-3873, for Pelican Financial, Inc.

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