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Fentura Financial, Inc Announces First Quarter 2014 Results

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  • Operating results represent the 8th 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%

CONTACT: Ronald L. Justice President & CEO Fentura Financial, Inc. (810) 714-3902

Source:Fentura Financial, Inc.