- Strong operating results allowed for payment of the 2nd consecutive quarterly dividend
- Book value increased 45.5% to $10.84 per share over prior year
- Loans grew 6.6% during the quarter and continue to exceed budgeted growth
- Operating results continue to strengthen capital, which is considered well capitalized by industry standards
- Credit quality continues to improve, as loan delinquencies remain low and substandard assets decline significantly over the prior year
FENTON, Mich., Oct. 30, 2014 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCBB:FETM) reported after tax net income for the three months ended September 30, 2014 of $807,000 compared to $935,000 reported for the second quarter of 2014 and $974,000 reported for the three months ended September 30, 2013. On a pretax basis, the Company earned $1.2 million during the quarter ended September 30, 2014 compared to the $974,000 reported for the quarter ended September 30, 2013. Net income for the nine months ended September 30, 2014 on a pretax basis was $3.5 million compared to the $2.6 million reported for the same time period in 2013. Improved net income in 2014 is primarily attributable to an increase in net interest income resulting from loan growth. On an after tax basis the Company is reporting net income of $2.3 million for the nine months ended September 30, 2014.
"I am pleased with the Company's third quarter and year to date operating results. Net income is again, ahead of our budget forecast largely based on increasing net interest income from initiatives to grow our balance sheet", stated President and CEO, Ronald L. Justice.
Balance Sheet
Total assets increased $23.4 million, or 6.7% at September 30, 2014 compared to June 30, 2014, ending the quarter at $375.4 million. This increase was funded primarily by deposit growth and the improvement of capital from operating results. Loan balances increased $18.8 million, or 6.6% 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 $303.4 million at September 30, 2014. For the nine months ended September 30, 2014 loans increased $39.4 million, or 14.9% compared to the $264.0 million reported at December 31, 2013.
Deposit totals of $320.3 million at September 30, 2014, represent an increase of $22.2 million, or 7.4% from the $298.1 million reported at June 30, 2014. The increase during the quarter occurred in both core accounts and certificates of deposits, as the Company continued efforts to grow deposits from both existing and new clients. For the nine months ended September 30, 2014 deposits increased $36.9 million, or 13.0% 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 September 30, 2014 associated with operating results compared to September 30, 2013. Capital ratios declined modestly at September 30, 2014 compared to December 31, 2013 as we have continued to leverage the Bank's capital to enhance future earnings.
|
Sept. 30, 2014 |
December 31, 2013 |
Sept. 30, 2013 |
Regulatory Well Capitalized |
|
| Tier 1 Leverage Capital Ratio | 9.45% | 10.00% | 9.21% | 5.00% |
| Tier 1 Risk-Based Capital Ratio | 11.24 | 11.83 | 11.56 | 6.00 |
| Total Risk-Based Capital Ratio | 12.50 | 13.09 | 12.82 | 10.00 |
Credit Quality
Throughout the third quarter of 2014, the Company continued to benefit from improvement in credit quality. At September 30, 2014 loan delinquencies to total loans were 0.14% compared to 0.46% reported at September 30, 2013. Substandard assets totaled $4.1 million at September 30, 2014, down from $6.2 million reported at September 30, 2013. The low level of loan delinquencies and the improved level of substandard assets eliminated the need for additional provision for loan losses during the quarter and for the nine months ended September 30, 2014.
Net Interest Income
Net interest income of $3.3 million for the quarter ended September 30, 2014 improved compared to the $3.2 million and the $2.8 million reported for both the second quarter of 2014 and the third quarter of 2013, respectively. The improvement in net interest income was primarily due to loan growth during the quarter. Interest expense increased modestly for the same periods, primarily due to the increase in the amount of time deposits as a percentage of total funding.
Noninterest Income
Noninterest income was $1.3 million for the quarter ended September 30, 2014 compared to $1.8 million and $1.6 million reported for the second quarter of 2014 and for the third quarter of 2013, respectively. Noninterest income for the quarter ended September 30, 2014 was down due to a decline in the gains from the sale of mortgage loans in the secondary market based on the volume of closed loans and the one time gain on an investment held by the holding company recognized during the second quarter of 2014.
Noninterest Expense
The Company recorded $3.4 million of noninterest expense in the quarter ended September 30, 2014, a 6.9% decrease from the $3.6 million reported in the second quarter of the year and about the same as the $3.4 million reported for the third quarter of 2013. Current quarter noninterest expense improvements are primarily due to the nonrecurring expense items reported last quarter.
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. | |||||
| Sep-14 | Jun-14 | Mar-14 | Dec-13 | Sep-13 | |
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| Balance Sheet Highlights | |||||
| Cash and due from banks | 14,887 | 11,276 | 16,061 | 12,856 | 23,647 |
| Investment securities | 34,702 | 33,768 | 35,478 | 36,574 | 38,147 |
| Commercial loans | 192,819 | 186,884 | 180,675 | 176,796 | 167,204 |
| Consumer loans | 27,308 | 26,399 | 25,470 | 25,336 | 24,907 |
| Mortgage loans | 83,305 | 71,348 | 67,696 | 61,846 | 49,554 |
| Gross loans | 303,432 | 284,631 | 273,841 | 263,978 | 241,665 |
| ALLL | (4,782) | (4,830) | (4,916) | (4,900) | (4,790) |
| Other assets | 27,113 | 27,062 | 26,224 | 26,717 | 19,816 |
| Total assets | 375,352 | 351,907 | 346,688 | 335,225 | 318,485 |
| Non-interest deposits | 85,573 | 84,604 | 83,378 | 82,585 | 81,195 |
| Interest bearing non-maturity deposits | 162,972 | 149,092 | 154,814 | 154,838 | 154,675 |
| Time deposits | 71,711 | 64,396 | 55,870 | 45,918 | 47,383 |
| Total deposits | 320,256 | 298,092 | 294,062 | 283,341 | 283,253 |
| Borrowings | 24,817 | 24,817 | 24,855 | 24,855 | 14,855 |
| Other liabilities | 3,209 | 2,786 | 2,265 | 2,267 | 1,958 |
| Equity | 27,070 | 26,212 | 25,506 | 24,762 | 18,419 |
| 375,352 | 351,907 | 346,688 | 335,225 | 318,485 | |
| BALANCE SHEET RATIOS (unaudited) | |||||
| Gross Loans to Deposits | 94.75% | 95.48% | 93.12% | 93.17% | 85.32% |
| Earning Assets to Total Assets | 90.08% | 90.48% | 89.22% | 89.66% | 87.86% |
| Securities and Cash to Assets | 13.21% | 12.80% | 14.87% | 14.75% | 19.40% |
| Deposits to Assets | 85.32% | 84.71% | 84.82% | 84.52% | 88.94% |
| Loan Loss Reserve to Gross Loans | 1.58% | 1.70% | 1.80% | 1.86% | 1.99% |
| Net Charge-Offs to Gross Loans | 0.02% | 0.03% | -0.01% | -0.04% | -0.04% |
| Leverage Ratio - The State Bank | 9.45% | 9.71% | 9.76% | 10.00% | 9.21% |
| Book Value per Share | $ 10.84 | $ 10.51 | $ 10.25 | $ 9.97 | $ 7.45 |
| Income Statement Highlights - QTD | Sep-14 | Jun-14 | Mar-14 | Dec-13 | Sep-13 |
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Interest income | 3,709 | 3,556 | 3,439 | 3,298 | 3,214 |
| Interest expense | 436 | 397 | 367 | 348 | 373 |
| Net interest income | 3,273 | 3,159 | 3,072 | 2,950 | 2,841 |
| Provision for loan loss | -- | -- | -- | -- | -- |
| Service charges on deposit accounts | 232 | 212 | 205 | 230 | 231 |
| Gain on sale of mortgage loans | 285 | 410 | 114 | 186 | 419 |
| Wealth management income | 359 | 316 | 263 | 274 | 275 |
| Other non-interest income | 429 | 911 | 495 | 566 | 638 |
| Salaries and benefits | 1,921 | 2,007 | 1,863 | 1,745 | 1,788 |
| Occupancy and equipment | 539 | 542 | 547 | 527 | 561 |
| Loan and collection | 135 | 110 | 139 | 112 | 217 |
| Other operating expenses | 762 | 947 | 755 | 1,004 | 864 |
| Net Income before tax | 1,221 | 1,402 | 845 | 818 | 974 |
| Income Taxes | 414 | 467 | 288 | (5,118) | -- |
| Net Income | 807 | 935 | 557 | 5,936 | 974 |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.32 | $ 0.38 | $ 0.22 | $ 2.40 | $ 0.40 |
| Pre-tax pre-provision earnings | 1,221 | 1,402 | 845 | 818 | 974 |
| Net Charge offs | 48 | 86 | (16) | (108) | (92) |
| Return on Equity (ROE) | 12.00% | 14.27% | 10.04% | 123.38% | 21.92% |
| Return on Assets (ROA) | 0.88% | 1.08% | 0.67% | 7.43% | 1.24% |
| Efficiency Ratio | 73.33% | 72.00% | 79.63% | 80.55% | 77.88% |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
| Average Earning Asset Yield | 4.52% | 4.56% | 4.61% | 4.60% | 4.69% |
| Average Cost of Funds | 0.69% | 0.68% | 0.64% | 0.64% | 0.71% |
| Spread | 3.83% | 3.88% | 3.96% | 3.96% | 3.99% |
| Net impact of free funds | 0.17% | 0.17% | 0.16% | 0.16% | 0.17% |
| Net Interest Margin | 3.99% | 4.05% | 4.12% | 4.12% | 4.15% |
| Income Statement Highlights - YTD | Sep-14 | Sep-13 | Dec-13 | Dec-12 | |
| Unaudited | Unaudited | ||||
| Interest income | 10,704 | 9,184 | 12,481 | 12,193 | |
| Interest expense | 1,200 | 1,106 | 1,454 | 1,945 | |
| Net interest income | 9,504 | 8,078 | 11,027 | 10,248 | |
| Provision for loan loss | -- | 7 | 7 | (508) | |
| Service charges on deposit accounts | 650 | 666 | 897 | 1,030 | |
| Gain on sale of mortgage loans | 808 | 1,428 | 1,613 | 961 | |
| Wealth management income | 939 | 723 | 996 | 1,071 | |
| Other non-interest income | 1,834 | 1,510 | 2,077 | 1,775 | |
| Salaries and benefits | 5,790 | 5,180 | 6,925 | 6,775 | |
| Occupancy and equipment | 1,628 | 1,624 | 2,152 | 2,155 | |
| Loan and collection | 385 | 576 | 688 | 944 | |
| Other operating expenses | 2,464 | 2,467 | 3,471 | 4,381 | |
| Net Income before tax | 3,468 | 2,551 | 3,367 | 1,338 | |
| Income Taxes | 1,169 | -- | (5,118) | 73 | |
| Net Income from continuing operations | 2,299 | 2,551 | 8,485 | 1,265 | |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.92 | $ 1.03 | $ 3.44 | $ 0.52 | |
| Pre-tax pre-provision earnings | 3,468 | 2,558 | 3,374 | 830 | |
| Net Charge offs | 117 | 176 | 68 | 2,694 | |
| Return on Equity (ROE) | 12.25% | 19.19% | 46.78% | 7.26% | |
| Return on Assets (ROA) | 0.88% | 1.10% | 2.71% | 0.42% | |
| Efficiency Ratio | 74.75% | 79.38% | 79.69% | 94.50% | |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | |
| Average Earning Asset Yield | 4.56% | 4.75% | 4.71% | 4.75% | |
| Average Cost of Funds | 0.67% | 0.71% | 0.69% | 0.92% | |
| Spread | 3.89% | 4.04% | 4.02% | 3.83% | |
| Net impact of free funds | 0.16% | 0.14% | 0.15% | 0.17% | |
| Net Interest Margin | 4.05% | 4.18% | 4.16% | 4.00% | |