- Net Income before tax and provision for loan loss exceeded prior quarter and prior year levels
- Book value increased 12.1% to $11.49 per share over prior year
- Solid growth shown in assets and core deposits in the current year
- Continued strength shown in non-interest income
FENTON, Mich., April 22, 2015 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) reported net income for the three months ended March 31, 2015 of $819,000 compared to earnings of $1,062,000 reported for the fourth quarter of 2014. On a pre-tax, pre-provision basis net income was $1.24 million in the current quarter compared to $1.17 million in the prior quarter.
Ronald L. Justice, President and CEO said, "I am very pleased with our strong performance and ability to continue growing our loan and deposit portfolios even in the current rate environment. While we have seen slight degradation in the net interest margin, that is largely due to protecting future revenue and has been more than offset by strength in our mortgage banking and wealth management areas. We continue to be excited about the future and look forward to building new relationships and enhancing those that we currently have using our community focused business model."
Total assets increased $18.4 million or 4.7% at March 31, 2015 compared to December 31, 2014, ending the quarter at $413.7 million. Cash and due from banks totals increased 68.8%, to $32.9 million at March 31, 2015 compared to the $19.5 million reported at December 31, 2014. This increase was primarily attributable to an increase in funding from deposit growth. Loan balances increased $7.3 million or 2.3% during the same period. Loans increased from continued efforts to grow the Bank's client base. During the quarter, the Bank experienced growth in both its mortgage and commercial loan portfolios. Loans totaled $327.3 million at March 31, 2015. Year over year, loans increased $53.5 million or 19.5% when compared to March 31, 2014. The increase in loans resulted from the Company's efforts to grow its loan portfolio with new and existing clients. The Company has also been successful with offering customers variable rate loans which help to manage interest rate risk in changing interest rate environments.
Deposit totals of $345.4 million, showed an increase of $17.5 million or 5.3% compared to the $327.9 million reported at December 31, 2014. The increase has primarily been in non-interest bearing and other non-maturity deposits as the Company continued efforts to grow its client base. We have seen an increase in municipal cash holdings, a portion of which tend to be relatively volatile, though no indications have been made that the balances will see material decreases in the near term. Additionally, commercial deposit account growth has been strong.
Fentura Financial, Inc. and The State Bank continue 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 the Bank's strong Tier 1 Leverage Capital Ratio at March 31, 2015 and December 31, 2014. The decline in the capital ratios quarter over quarter is primarily due to changes in the treatment of certain items in the calculation of regulatory capital in the current quarter along with the strong overall asset growth rate. Absent the change in calculation the ratios would have shown a very modest decline quarter over quarter.
| March 31, |
| December 31, |
| Regulatory |
|Tier 1 Leverage Capital Ratio||8.96%||9.24%||5.00%|
|Tier 1 Risk-Based Capital Ratio||10.56||11.01||8.00|
|Total Risk-Based Capital Ratio||11.82||12.26||10.00|
As seen in recent periods, the Company continued to benefit from improvement in credit quality during the 1st quarter of 2015. At March 31, 2015 loan delinquencies to total loans were 0.16% compared to 0.60% at March 31, 2014. Substandard assets totaled $2.8 million at March 31, 2015, down from $3.2 million reported at December 31, 2014. These numbers tend to be leading indicators of losses in the loan portfolio and are monitored monthly. The allowance for loan losses is calculated on a quarterly basis and at the end of the current quarter the Company believes that the allowance for loan loss is adequate to absorb losses inherent in the portfolio. Continued improvement in credit quality metrics could result in further releases of previously provided reserves for loan losses, as seen in the fourth quarter of 2014.
Net Interest Income
Net interest income of $3.4 million for the quarter ended March 31, 2015 was unchanged when compared to the fourth quarter of 2014 and improved relative to the $3.1 million reported in the first quarter of 2014. Both interest income and interest expense were flat relative to the prior quarter, while both numbers were higher than the same period last year, largely due to increases in the loan and deposit portfolios. While the portfolios showed increases over the prior quarter, the net interest margin declined 11 basis points, largely due the aforementioned strategy to offer competitively priced variable rate loans in order to more effectively manage the Company's interest rate risk. Additionally, when compared to the prior year, increases in rates on time deposits and the use of FHLB borrowings are also related to the overall management of interest rate risk, primarily by lengthening the terms of our funding portfolios.
Noninterest income was $1.6 million for the quarter ended March 31, 2015 compared to $1.5 million for the fourth quarter of 2014 and $1.1 million for the first quarter of 2014. The increase in the volume of mortgage loans sold in the secondary market and accordingly, the gain on sale from those loans (including the retention of mortgage servicing rights) along with increased revenue from wealth management activities contributed to the increase in the current period relative to both comparative prior periods. These increases were offset in both periods by modest declines in service charges on deposit accounts.
The Company recorded $3.8 million of noninterest expense in the quarter ended March 31, 2015, flat with the level reported in the fourth quarter of 2014 and increased over the $3.3 million reported in the first quarter of 2014. On a quarterly basis, increases in salaries and benefits were largely offset by decreases in loan and collection expenses and other operating expenses. Year over year, the increase in noninterest expense is primarily based on an increase in salary and benefits expense. Salary and benefits expense increased in 2014 based on general annual salary increases, the rising costs of providing medical benefits, the return to historical levels of the Company's 401K match, and the reestablishment of a formal bonus program for staff.
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.|
|Balance Sheet Highlights|
|Cash and due from banks||32,947||19,522||14,887||11,276||16,061|
|Interest bearing non-maturity deposits||162,719||154,499||162,972||149,092||154,814|
|BALANCE SHEET RATIOS (unaudited)|
|Gross Loans to Deposits||94.75%||97.57%||94.75%||95.48%||93.12%|
|Earning Assets to Total Assets||86.73%||89.30%||90.08%||90.48%||89.22%|
|Securities and Cash to Assets||15.57%||13.29%||13.21%||12.80%||14.87%|
|Deposits to Assets||83.51%||82.96%||85.32%||84.71%||84.82%|
|Loan Loss Reserve to Gross Loans||1.36%||1.38%||1.58%||1.70%||1.80%|
|Net Charge-Offs to Gross Loans||-0.01%||-0.02%||0.02%||0.03%||-0.01%|
|Leverage Ratio - The State Bank||8.96%||9.53%||9.44%||9.71%||9.76%|
|Book Value per Share||$ 11.49||$ 11.24||$ 10.84||$ 10.51||$ 10.25|
|Income Statement Highlights - QTD||Mar-15||Dec-14||Sep-14||Jun-14||Mar-14|
|Net interest income||3,410||3,437||3,273||3,159||3,072|
|Provision for loan loss||--||(450)||--||--||--|
|Service charges on deposit accounts||194||232||232||212||205|
|Gain on sale of mortgage loans||609||530||285||410||114|
|Wealth management income||345||289||359||316||263|
|Other non-interest income||460||443||429||911||495|
|Salaries and benefits||2,237||2,116||1,921||2,007||1,863|
|Occupancy and equipment||583||552||539||542||547|
|Loan and collection||190||267||135||110||139|
|Other operating expenses||767||825||762||947||755|
|Net Income before tax||1,241||1,621||1,221||1,402||845|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$ 0.33||$ 0.43||$ 0.32||$ 0.38||$ 0.22|
|Pre-tax pre-provision earnings||1,241||1,171||1,221||1,402||845|
|Net Charge offs||(47)||(74)||48||86||(16)|
|Return on Equity (ROE)||11.40%||15.26%||12.00%||14.27%||10.04%|
|Return on Assets (ROA)||0.81%||1.10%||0.88%||1.08%||0.67%|
|Average Bank Prime||3.25%||3.25%||3.25%||3.25%||3.25%|
|Average Earning Asset Yield||4.49%||4.60%||4.52%||4.56%||4.61%|
|Average Cost of Funds||0.77%||0.78%||0.69%||0.68%||0.64%|
|Net impact of free funds||0.18%||0.18%||0.17%||0.17%||0.16%|
|Net Interest Margin||3.90%||4.01%||3.99%||4.05%||4.12%|
|Income Statement Highlights - YTD||Mar-15||Mar-14||Dec-14||Dec-13|
|Net interest income||3,410||3,072||12,942||11,027|
|Provision for loan loss||--||--||(450)||7|
|Service charges on deposit accounts||194||205||882||897|
|Gain on sale of mortgage loans||609||114||1,339||1,613|
|Wealth management income||345||263||1,228||996|
|Other non-interest income||460||495||2,276||2,077|
|Salaries and benefits||2,237||1,863||7,906||6,925|
|Occupancy and equipment||583||547||2,181||2,152|
|Loan and collection||190||139||652||688|
|Other operating expenses||767||755||3,289||3,471|
|Net Income before tax||1,241||845||5,089||3,367|
|Net Income from continuing operations||819||557||3,361||8,485|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$ 0.33||$ 0.22||$ 1.35||$ 3.44|
|Pre-tax pre-provision earnings||1,241||845||4,639||3,374|
|Net Charge offs||(47)||(16)||43||68|
|Return on Equity (ROE)||11.55%||10.18%||13.03%||46.78%|
|Return on Assets (ROA)||0.82%||0.67%||0.94%||2.71%|
|Average Bank Prime||3.25%||3.25%||3.25%||3.25%|
|Average Earning Asset Yield||4.49%||4.61%||4.57%||4.71%|
|Average Cost of Funds||0.77%||0.64%||0.70%||0.69%|
|Net impact of free funds||0.17%||0.16%||0.17%||0.15%|
|Net Interest Margin||3.90%||4.12%||4.04%||4.16%|
CONTACT: Ronald L. Justice President & CEO Fentura Financial, Inc. (810) 714-3902
Source:Fentura Financial, Inc.