- Operating results represent the 9th straight quarter of profitability for the Company
- Book value increased 49.3% to $10.51 per share over prior year
- Loan growth continues to exceed expectations
- Operating results continue to strengthen capital, and capital level is considered well capitalized by industry standards
- Credit quality continues to improve, as loan delinquencies remain low and substandard assets improved significantly over the prior year.
FENTON, Mich., Aug. 6, 2014 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCBB:FETM) reported after tax net income for the three months ended June 30, 2014 of $935,000 compared to $557,000 reported for the first quarter of 2014 and $722,000 reported for the three months ended June 30, 2013. On a pretax basis, the Company earned $1.4 million during the quarter ended June 30, 2014 compared to the $722,000 reported for the quarter ended June 30, 2013.
"I am pleased with the Company's continued strong performance. Initiatives to grow our balance sheet and strengthen earnings have produced solid operating results," stated President and CEO, Ronald L. Justice.
Balance Sheet
Total assets increased $5.2 million or 1.5% at June 30, 2014 compared to March 31, 2014, ending the quarter at $351.9 million. This increase was funded primarily by deposit growth and the improvement of capital from operating results. Loan balances increased $10.8 million or 3.9% during the same period. Loans increased from continued efforts to grow the Bank's client base. During the quarter, the Bank experienced growth in its consumer, mortgage and commercial loan portfolios. Loans totaled $284.6 million at June 30, 2014. For the six months ended June 30, 2014 loans increased $20.7 million or 7.8% compared to the $264.0 million reported at December 31, 2013.
Deposit totals of $298.1 million at June 30, 2014, represent an increase of $4.0 million or 1.4% from the $294.1 million reported at March 31, 2014. The increase during the quarter occurred in both core accounts and certificates of deposits, primarily as the Company continued efforts to grow it's client base. For the six months ended June 30, 2014 deposits increased $14.8 million or 5.2% compared to the $283.3 million reported at December 31, 2013.
Capital
As previously reported, Fentura Financial, Inc. and The State Bank, have achieved their goal to maintain capital in excess of levels considered well capitalized by regulatory agencies. The Bank's regulatory capital ratios are detailed in the table that follows and indicate continued strengthening of the Bank's Tier 1 Leverage Capital Ratio at June 30, 2014 associated with operating results compared to both December 31, 2013 and June 30, 2013.
| June 30, | December 31, | June 30, | Regulatory | |
| 2014 | 2013 | 2013 | Well Capitalized | |
| Tier 1 Leverage Capital Ratio | 9.70% | 9.49% | 9.02% | 5.00% |
| Tier 1 Risk-Based Capital Ratio | 11.67 | 11.15 | 11.74 | 6.00 |
| Total Risk-Based Capital Ratio | 12.92 | 12.41 | 13.00 | 10.00 |
Credit Quality
Throughout the second quarter of 2014, the Company continued to benefit from improvement in credit quality. At June 30, 2014 loan delinquencies to total loans were 0.42% compared to 0.58% reported at June 30, 2013. Substandard assets totaled $5.1 million at June 30, 2014, down from $8.0 million reported at June 30, 2013. The low level of loan delinquencies and the improved level of substandard assets both support the lack of need for additional provisions for the allowance for loan losses during the quarter and for the six months ended June 30, 2014.
Net Interest Income
Net interest income of $3.2 million for the quarter ended June 30, 2014 improved compared to the $3.1 million and the $2.7 million reported for both the first quarter of 2014 and the second quarter of 2013, respectively. The improvement in net interest income was primarily due to loan growth during the quarter. Interest expense increased modestly comparing the current period to the quarter ended March 31, 2014, primarily due to the increase in the amount of time deposits.
Noninterest Income
Noninterest income was $1.8 million for the quarter ended June 30, 2014 compared to $1.1 million and $1.3 million reported for the first quarter of 2014 and for the second quarter of 2013, respectively. Growth of revenue from Wealth Management services, gains from the sale of mortgage loans in the secondary market, and a one time gain on an investment held by the holding company were the primary contributors to the increases in non interest income in the current period.
Noninterest Expense
The Company recorded $3.6 million of noninterest expense in the quarter ended June 30, 2014, a 9.1% increase from the $3.3 million reported in the first quarter of the year and a 11.2% increase from the $3.2 million reported for the second quarter of 2013. Current period noninterest expense increases are primarily due to an increase in salary and benefit expense based on an accrual for a formal bonus program, a modest amount of losses from debit card fraud, and an accrual for interest refunds in connection with certain adjustable rate mortgages.
Fentura Financial, Inc. is a bank holding company headquartered in Fenton, Michigan. Its subsidiary bank, The State Bank, is also headquartered in Fenton with offices serving Fenton, Linden, Holly, Grand Blanc and Brighton. The Bank offers comprehensive financial services including commercial, consumer, mortgage, trust and financial planning services, and deposit products. The Bank proudly provides services from its community offices in Genesee, Oakland and Livingston Counties and through on-line and mobile banking services. More information about The State Bank is available at www.thestatebank.com.
CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in earning assets and net income. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
| Fentura Financial Inc. | |||||
| Jun-14 | Mar-14 | Dec-13 | Sep-13 | Jun-13 | |
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| Balance Sheet Highlights | |||||
| Cash and due from banks | 11,276 | 16,061 | 12,856 | 23,647 | 21,109 |
| Fed funds sold | -- | -- | -- | -- | -- |
| Investment securities | 33,768 | 35,478 | 36,574 | 38,147 | 41,379 |
| Commercial loans | 186,884 | 180,675 | 176,796 | 167,204 | 160,720 |
| Consumer loans | 26,399 | 25,470 | 25,336 | 24,907 | 24,462 |
| Mortgage loans | 71,348 | 67,696 | 61,846 | 49,554 | 43,182 |
| Gross loans | 284,631 | 273,841 | 263,978 | 241,665 | 228,364 |
| ALLL | (4,830) | (4,916) | (4,900) | (4,790) | (4,699) |
| Other assets | 27,061 | 26,224 | 26,717 | 19,816 | 20,817 |
| Total assets | 351,906 | 346,688 | 335,225 | 318,485 | 306,970 |
| Non-interest deposits | 84,604 | 83,378 | 82,585 | 81,195 | 84,366 |
| Interest bearing non-maturity deposits | 149,092 | 154,814 | 154,838 | 154,675 | 139,584 |
| Time deposits | 64,396 | 55,870 | 45,918 | 47,383 | 46,822 |
| Total deposits | 298,092 | 294,062 | 283,341 | 283,253 | 270,772 |
| Fed funds purchased | -- | -- | -- | -- | -- |
| Borrowings | 24,817 | 24,855 | 24,855 | 14,855 | 14,855 |
| Other liabilities | 2,786 | 2,265 | 2,267 | 1,958 | 3,994 |
| Equity | 26,211 | 25,506 | 24,762 | 18,419 | 17,349 |
| 351,906 | 346,688 | 335,225 | 318,485 | 306,970 | |
| BALANCE SHEET RATIOS (unaudited) | |||||
| Gross Loans to Deposits | 95.48% | 93.12% | 93.17% | 85.32% | 84.34% |
| Earning Assets to Total Assets | 90.48% | 89.22% | 89.66% | 87.86% | 87.87% |
| Securities and Cash to Assets | 12.80% | 14.87% | 14.75% | 19.40% | 20.36% |
| Deposits to Assets | 84.71% | 84.82% | 84.52% | 88.94% | 88.21% |
| Loan Loss Reserve to Gross Loans | 1.70% | 1.80% | 1.86% | 1.99% | 2.07% |
| Net Charge-Offs to Gross Loans | 0.03% | -0.01% | -0.04% | -0.04% | -0.01% |
| Leverage Ratio - The State Bank | 9.70% | 9.76% | 9.49% | 9.21% | 9.02% |
| Book Value per Share | $ 10.51 | $ 10.25 | $ 9.97 | $ 7.45 | $ 7.04 |
| Income Statement Highlights - QTD | Jun-14 | Mar-14 | Dec-13 | Sep-13 | Jun-13 |
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Interest income | 3,556 | 3,439 | 3,298 | 3,214 | 3,017 |
| Interest expense | 397 | 367 | 348 | 373 | 361 |
| Net interest income | 3,159 | 3,072 | 2,950 | 2,841 | 2,656 |
| Provision for loan loss | -- | -- | -- | -- | -- |
| Service charges on deposit accounts | 212 | 205 | 230 | 231 | 215 |
| Gain on sale of mortgage loans | 410 | 114 | 186 | 419 | 433 |
| Wealth management income | 316 | 263 | 274 | 275 | 217 |
| Other non-interest income | 911 | 495 | 566 | 638 | 445 |
| Salaries and benefits | 2,007 | 1,863 | 1,745 | 1,788 | 1,736 |
| Occupancy and equipment | 542 | 547 | 527 | 561 | 531 |
| Loan and collection | 110 | 139 | 112 | 217 | 186 |
| Other operating expenses | 947 | 755 | 1,004 | 864 | 791 |
| Net Income before tax | 1,402 | 845 | 818 | 974 | 722 |
| Income Taxes | 467 | 288 | (5,118) | -- | -- |
| Net Income | 935 | 557 | 5,936 | 974 | 722 |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.38 | $ 0.22 | $ 2.40 | $ 0.40 | $ 0.29 |
| Pre-tax pre-provision earnings | 1,402 | 845 | 818 | 974 | 722 |
| Net Charge offs | 86 | (16) | (108) | (92) | (17) |
| Return on Equity (ROE) | 14.27% | 10.04% | 123.38% | 21.92% | 16.43% |
| Return on Assets (ROA) | 1.08% | 0.67% | 7.43% | 1.24% | 0.94% |
| Efficiency Ratio | 72.00% | 79.63% | 80.55% | 77.88% | 81.80% |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
| Average Earning Asset Yield | 4.56% | 4.61% | 4.60% | 4.69% | 4.70% |
| Average Cost of Funds | 0.68% | 0.64% | 0.64% | 0.71% | 0.71% |
| Spread | 3.88% | 3.96% | 3.96% | 3.99% | 3.99% |
| Net impact of free funds | 0.17% | 0.16% | 0.16% | 0.17% | 0.15% |
| Net Interest Margin | 4.05% | 4.12% | 4.12% | 4.15% | 4.14% |
| Income Statement Highlights - YTD | Jun-14 | Jun-13 | Dec-13 | Dec-12 | |
| Unaudited | Unaudited | ||||
| Interest income | 6,995 | 5,970 | 12,481 | 12,193 | |
| Interest expense | 764 | 732 | 1,454 | 1,945 | |
| Net interest income | 6,231 | 5,238 | 11,027 | 10,248 | |
| Provision for loan loss | -- | 7 | 7 | (508) | |
| Service charges on deposit accounts | 418 | 436 | 897 | 1,030 | |
| Gain on sale of mortgage loans | 523 | 1,009 | 1,613 | 961 | |
| Wealth management income | 580 | 448 | 996 | 1,071 | |
| Other non-interest income | 1,405 | 871 | 2,077 | 1,775 | |
| Salaries and benefits | 3,869 | 3,392 | 6,925 | 6,775 | |
| Occupancy and equipment | 1,089 | 1,064 | 2,152 | 2,155 | |
| Loan and collection | 250 | 359 | 688 | 944 | |
| Other operating expenses | 1,702 | 1,603 | 3,470 | 4,382 | |
| Net Income before tax | 2,247 | 1,577 | 3,368 | 1,337 | |
| Income Taxes | 755 | -- | (5,118) | 73 | |
| Net Income from continuing operations | 1,492 | 1,577 | 8,486 | 1,264 | |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.60 | $ 0.64 | $ 3.44 | $ 0.52 | |
| Pre-tax pre-provision earnings | 2,247 | 1,584 | 3,375 | 829 | |
| Net Charge offs | 69 | 268 | 69 | 2,694 | |
| Return on Equity (ROE) | 12.43% | 17.89% | 46.78% | 7.26% | |
| Return on Assets (ROA) | 0.88% | 1.03% | 2.71% | 0.42% | |
| Efficiency Ratio | 76.58% | 81.32% | 80.83% | 94.64% | |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | |
| Average Earning Asset Yield | 4.58% | 4.78% | 4.71% | 4.75% | |
| Average Cost of Funds | 0.66% | 0.71% | 0.69% | 0.92% | |
| Spread | 3.92% | 4.06% | 4.02% | 3.83% | |
| Net impact of free funds | 0.16% | 0.13% | 0.15% | 0.17% | |
| Net Interest Margin | 4.09% | 4.19% | 4.16% | 4.00% | |