- Operating results represent the 8 th straight quarter of profitability for the Company
- Book value increased 48.1% to $10.25 per share over prior year
- Loan growth exceeded expectations for the quarter
- Operating results continue to strengthen capital, and our Bank's 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., April 23, 2014 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCBB: FETM ) reported net income for the three months ended March 31, 2014 of $558,000 compared to $5.9 million for the fourth quarter of 2013. Pre-tax net income for the period was $846,000, compared to the $818,000 reported for the prior quarter.
Ronald L. Justice, President and CEO said, "I am pleased with the Company's quarterly performance. We continue to identify opportunities to grow our business and to produce solid operating results."
Balance Sheet
Total assets increased $11.5 million or 3.4% at March 31, 2014 compared to December 31, 2013, ending the quarter at $346.7 million. Cash and due from banks increased 24.8%, to $16.1 million at March 31, 2014 compared to the $12.9 million reported at December 31, 2013. This increase was funded primarily by deposit growth and the improvement of capital from operating results. Loan balances increased $9.8 million or 3.7% 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 $273.8 million at March 31, 2014.
Deposit totals of $294.1 million at March 31, 2014, represent an increase of $10.8 million or 3.8% from the $283.3 million reported at December 31, 2013. The increase during the quarter occurred in both non-interest bearing and certificates of deposit primarily as the Company continued efforts to grow its client base.
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 strengthening of the Bank's Tier 1 Leverage Capital Ratio at March 31, 2014 compared to March 31, 2013 associated with strong operating results.
| March 31, | December 31, | March 31, | Regulatory | |
| 2014 | 2013 | 2013 | Well Capitalized | |
| Tier 1 Leverage Capital Ratio | 9.34% | 9.49% | 8.70% | 5.00% |
| Tier 1 Risk-Based Capital Ratio | 11.32 | 11.15 | 11.89 | 6.00 |
| Total Risk-Based Capital Ratio | 12.59 | 12.41 | 13.15 | 10.00 |
Credit Quality
Throughout the first quarter of 2014, the Company continued to benefit from improvement in credit quality. At March 31, 2014 loan delinquencies to total loans were 0.60% compared to 1.14% reported at March 31, 2013. Substandard assets totaled $6.0 million at March 31, 2014, down from $9.1 million reported at March 31, 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.
Net Interest Income
Net interest income of $3.1 million for the quarter ended March 31, 2014 improved compared to the $3.0 million and the $2.6 million reported for both the fourth and first quarters of 2013, respectively. The improvement in interest income was primarily due to loan growth during the quarter and the year respectively. Interest expense increased modestly comparing the current quarter to the quarter ended December 31, 2013 due to the increase in the amount of time deposits.
Noninterest Income
Noninterest income was $1.1 million for the quarter ended March 31, 2014 compared to $1.3 million and $1.5 million for the fourth and first quarters of 2013, respectively. The decline in the volume of mortgage loans sold in the secondary market and accordingly, the gain on sale recognized from those loan sales was the primary contributor to the decline in the current period.
Noninterest Expense
The Company recorded $3.3 million of noninterest expense in the quarter ended March 31, 2014, a modest decline from the $3.4 million reported in the fourth quarter of 2013. Compared to the quarter ended March 31, 2013, current period noninterest expense increased $130,000 or 4.1%. The decrease in noninterest expense in the current period compared to the fourth quarter 2013 is primarily due to nonrecurring operating losses incurred in the fourth quarter of 2013. The increase in noninterest expense in the current period compared to the first quarter of 2013 is attributable to an increase in salary and benefits expense. These expenses increased in the current period primarily due to annual salary increases to staff and the increased cost of providing medical benefits.
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. | |||||
| Mar-14 | Dec-13 | Sep-13 | Jun-13 | Mar-13 | |
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| Balance Sheet Highlights | |||||
| Cash and due from banks | 16,061 | 12,856 | 23,647 | 21,109 | 45,272 |
| Fed funds sold | -- | -- | -- | -- | -- |
| Investment securities | 35,478 | 36,574 | 38,147 | 41,379 | 42,582 |
| Commercial loans | 180,675 | 176,796 | 167,204 | 160,720 | 154,223 |
| Consumer loans | 25,470 | 25,336 | 24,907 | 24,462 | 24,017 |
| Mortgage loans | 67,696 | 61,846 | 49,554 | 43,182 | 34,791 |
| Gross loans | 273,841 | 263,978 | 241,665 | 228,364 | 213,031 |
| ALLL | (4,916) | (4,900) | (4,790) | (4,699) | (4,682) |
| Other assets | 26,224 | 26,717 | 19,816 | 20,817 | 21,284 |
| Total assets | 346,688 | 335,225 | 318,485 | 306,970 | 317,487 |
| Non-interest deposits | 83,378 | 82,585 | 81,195 | 84,366 | 84,490 |
| Interest bearing non-maturity deposits | 154,814 | 154,838 | 154,675 | 139,584 | 146,838 |
| Time deposits | 55,870 | 45,918 | 47,383 | 46,822 | 50,380 |
| Total deposits | 294,062 | 283,341 | 283,253 | 270,772 | 281,708 |
| Fed funds purchased | -- | -- | -- | -- | -- |
| Borrowings | 24,855 | 24,855 | 14,855 | 14,855 | 14,891 |
| Other liabilities | 2,265 | 2,267 | 1,958 | 3,994 | 3,901 |
| Equity | 25,506 | 24,762 | 18,419 | 17,349 | 16,987 |
| 346,688 | 335,225 | 318,485 | 306,970 | 317,487 | |
| BALANCE SHEET RATIOS (unaudited) | |||||
| Gross Loans to Deposits | 93.12% | 93.17% | 85.32% | 84.34% | 75.62% |
| Earning Assets to Total Assets | 89.22% | 89.66% | 87.86% | 87.87% | 80.51% |
| Securities and Cash to Assets | 14.87% | 14.75% | 19.40% | 20.36% | 27.67% |
| Deposits to Assets | 84.82% | 84.52% | 88.94% | 88.21% | 88.73% |
| Loan Loss Reserve to Gross Loans | 1.80% | 1.86% | 1.99% | 2.07% | 2.20% |
| Net Charge-Offs to Gross Loans | -0.01% | -0.04% | -0.04% | -0.01% | 0.13% |
| Leverage Ratio - The State Bank | 9.34% | 9.49% | 9.21% | 9.02% | 8.70% |
| Book Value per Share | $ 10.25 | $ 9.97 | $ 7.45 | $ 7.04 | $ 6.92 |
| Income Statement Highlights - QTD | Mar-14 | Dec-13 | Sep-13 | Jun-13 | Mar-13 |
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Interest income | 3,439 | 3,298 | 3,214 | 3,017 | 2,953 |
| Interest expense | 367 | 348 | 373 | 361 | 371 |
| Net interest income | 3,072 | 2,950 | 2,841 | 2,656 | 2,582 |
| Provision for loan loss | -- | -- | -- | -- | 7 |
| Service charges on deposit accounts | 205 | 230 | 231 | 215 | 220 |
| Gain on sale of mortgage loans | 114 | 186 | 419 | 433 | 575 |
| Wealth management income | 263 | 274 | 275 | 217 | 231 |
| Other non-interest income | 495 | 566 | 638 | 445 | 428 |
| Salaries and benefits | 1,863 | 1,745 | 1,788 | 1,736 | 1,656 |
| Occupancy and equipment | 547 | 527 | 561 | 531 | 533 |
| Loan and collection | 139 | 112 | 217 | 186 | 173 |
| Other operating expenses | 755 | 1,004 | 864 | 791 | 812 |
| Net Income before tax | 845 | 818 | 974 | 722 | 855 |
| Income Taxes | 288 | (5,118) | -- | -- | -- |
| Net Income | 557 | 5,936 | 974 | 722 | 855 |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.22 | $ 2.40 | $ 0.40 | $ 0.29 | $ 0.35 |
| Pre-tax pre-provision earnings | 845 | 818 | 974 | 722 | 862 |
| Net Charge offs | (16) | (108) | (92) | (17) | 286 |
| Return on Equity (ROE) | 10.04% | 123.38% | 21.92% | 16.43% | 19.03% |
| Return on Assets (ROA) | 0.67% | 7.43% | 1.24% | 0.94% | 1.10% |
| Efficiency Ratio | 79.63% | 80.55% | 77.88% | 81.80% | 78.64% |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
| Average Earning Asset Yield | 4.61% | 4.60% | 4.69% | 4.70% | 4.85% |
| Average Cost of Funds | 0.64% | 0.64% | 0.71% | 0.71% | 0.71% |
| Spread | 3.96% | 3.96% | 3.99% | 3.99% | 4.14% |
| Net impact of free funds | 0.16% | 0.16% | 0.17% | 0.15% | 0.11% |
| Net Interest Margin | 4.12% | 4.12% | 4.15% | 4.14% | 4.25% |
| Income Statement Highlights - YTD | Mar-14 | Mar-13 | Dec-13 | Dec-12 | |
| Unaudited | Unaudited | ||||
| Interest income | 3,439 | 2,953 | 12,481 | 12,193 | |
| Interest expense | 367 | 371 | 1,454 | 1,945 | |
| Net interest income | 3,072 | 2,582 | 11,027 | 10,248 | |
| Provision for loan loss | -- | 7 | 7 | (508) | |
| Service charges on deposit accounts | 205 | 220 | 897 | 1,030 | |
| Gain on sale of mortgage loans | 114 | 575 | 1,613 | 961 | |
| Wealth management income | 263 | 231 | 996 | 1,071 | |
| Other non-interest income | 495 | 428 | 2,077 | 1,775 | |
| Salaries and benefits | 1,863 | 1,656 | 6,925 | 6,775 | |
| Occupancy and equipment | 547 | 533 | 2,152 | 2,155 | |
| Loan and collection | 139 | 173 | 688 | 944 | |
| Other operating expenses | 755 | 812 | 3,470 | 4,382 | |
| Net Income before tax | 845 | 855 | 3,368 | 1,337 | |
| Income Taxes | 288 | -- | (5,118) | 73 | |
| Net Income from continuing operations | 557 | 855 | 8,486 | 1,264 | |
| INCOME STATEMENT RATIOS/DATA (unaudited) | |||||
| Basic earnings per share | $ 0.22 | $ 0.35 | $ 3.44 | $ 0.52 | |
| Pre-tax pre-provision earnings | 845 | 862 | 3,375 | 829 | |
| Net Charge offs | (16) | 286 | 69 | 2,694 | |
| Return on Equity (ROE) | 10.18% | 19.29% | 46.78% | 7.26% | |
| Return on Assets (ROA) | 0.67% | 1.12% | 2.71% | 0.42% | |
| Efficiency Ratio | 80.82% | 79.87% | 80.83% | 94.64% | |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | |
| Average Earning Asset Yield | 4.61% | 4.85% | 4.71% | 4.75% | |
| Average Cost of Funds | 0.64% | 0.71% | 0.69% | 0.92% | |
| Spread | 3.96% | 4.14% | 4.02% | 3.83% | |
| Net impact of free funds | 0.16% | 0.11% | 0.15% | 0.17% | |
| Net Interest Margin | 4.12% | 4.25% | 4.16% | 4.00% | |
Ronald L. Justice President & CEO Fentura Financial, Inc. (810) 714-3902
