- Net Income for the quarter compared favorably to the earnings reported for the same period in 2012
- Loan growth exceeded expectations for the period and for the entire first half of 2013
- Operating results continue to strengthen capital, and the capital level is considered strong by industry regulation
- Credit Quality continues to strengthen, as both loan delinquencies and substandard assets experience declines
FENTON, Mich., Aug. 1, 2013 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQB:FETM) reported net income for the three months ended June 30, 2013 of $722,000 compared to earnings of $144,000 reported for the second quarter of 2012.
Regarding the positive results, President and CEO Ronald Justice noted "during the first six months of 2013, the Company grew loans by $27.8 million, strengthening net interest income and in turn improving net income and our capital position. Credit quality continued to improve during the first half of 2013 as well, with a reduced level of substandard assets and loan delinquencies. These trends contributed to our improved operating results by reducing certain noninterest expense associated with collecting and maintaining substandard assets, also limiting the need for additional provision in order to maintain an appropriate allowance for loan losses during the 6 month period."
Balance Sheet
Total assets declined $10.5 million or 3.3% at June 30, 2013 compared to March 31, 2013, while loan balances increased by $15.3 million or 7.2% during the same period. Loans increased from efforts to grow the Bank's client base and to improve net interest income. During the quarter the Bank experienced growth in its consumer, mortgage and commercial loan portfolios.
During the second quarter of 2013, deposits declined $10.9 million or 3.9% from the prior quarter. The decline of deposit funding is the contributing factor to the decline of total assets during the period. The deposit decline is primarily due to the seasonal trends of public fund clients. Despite the modest decline, Fentura continues to benefit from a solid and loyal core deposit funding base.
Capital
Both Fentura Financial 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 improvement at June 30, 2013 compared to December 31, 2012.
|
June 30, 2013 |
December 31, 2012 |
June 30, 2012 |
Regulatory Well Capitalized |
|
| Tier 1 Leverage Capital Ratio | 9.02% | 8.73% | 7.86% | 5.00% |
| Tier 1 Risk-Based Capital Ratio | 11.88 | 12.06 | 10.98 | 6.00% |
| Total Risk-Based Capital Ratio | 13.14 | 13.34 | 12.25 | 10.00% |
Credit Quality
Throughout the first six months of 2013, the Company continued to benefit from improvement in credit quality. At June 30, 2013 loan delinquencies to total loans were 0.58% compared to 1.86% at December 31, 2012, and 5.85% as of June 30, 2012. Substandard assets totaled $7.9 million at June 30, 2013, down from $13.2 million reported at December 31, 2012, and $23.9 at June 30, 2012. These asset trends limited the need for additional provisions for the allowance for loan losses during quarter and for the entire first half of 2013.
Net Interest Income
Net interest income of $2.7 million for the quarter ended June 30, 2013 improved modestly compared to the $2.6 million and $2.5 million reported for the first quarter of 2013 and the second quarter of 2012, respectively. Interest income improved during the three months ended June 30, 2013, from the interest on new loans added during the first half of 2013. Additionally, interest expense declined comparing the quarter ended June 30, 2013 to the same two prior periods as well, due to a decline in the amount of time deposits and lower rates on new time deposits.
On a year to date basis, net interest income was $5.2 million compared to $5.0 million reported for the first half of 2012. The year to year improvement is due to the decline in interest expense noted previously.
Noninterest Income
Noninterest income was $1.3 million for the quarter ended June 30, 2013 compared to the $1.5 million reported for the first quarter of 2013. Both income from Wealth Management and the gain on sales of mortgage loans experienced modest declines, contributing to the noninterest income decline in the second quarter.
For the six month ended June 30, 2013, noninterest income totaled $2.8 million compared to $2.3 million reported for the same period in 2012. The increase in 2013 is attributable to gains on the sale of mortgage loans due to increased volume in light of the favorable interest rate environment.
Noninterest Expense
The Company recorded $3.2 million of noninterest expense in both the first and second quarters of 2013. On a year to date basis, noninterest expense was $6.4 million in 2013 and $7.1 million for the same period in 2012. The decline in noninterest expense in 2013 is based on several factors. FDIC assessment expense was lower in 2013 compared to 2012 due to the Bank's release from its consent agreement with both the FDIC and the State's Department of Insurance and Financial Services. Additionally, noninterest expense improved in 2013 due to the nonrecurring nature of losses recognized in the first six months of 2012.
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 Brighton area is served by Livingston Community Bank, a division of The State Bank. 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-13 | Mar-13 | Dec-12 | Sep-12 | Jun-12 | |
| Balance Sheet Highlights | |||||
| Cash and due from banks | 21,109 | 45,272 | 45,712 | 42,768 | 16,529 |
| Fed funds sold | -- | -- | -- | -- | -- |
| Investment securities | 41,379 | 42,582 | 48,249 | 51,812 | 60,199 |
| Commercial loans | 160,720 | 154,223 | 146,482 | 144,612 | 142,101 |
| Consumer loans | 24,462 | 24,017 | 23,423 | 23,304 | 24,288 |
| Mortgage loans | 43,182 | 34,791 | 30,623 | 29,687 | 40,495 |
| Gross loans | 228,364 | 213,031 | 200,528 | 197,603 | 206,884 |
| ALLL | (4,699) | (4,682) | (4,962) | (6,267) | (7,083) |
| Other assets | 20,817 | 21,284 | 21,195 | 20,585 | 21,342 |
| Total assets | 306,970 | 317,487 | 310,722 | 306,501 | 297,871 |
| Non-interest deposits | 84,366 | 84,490 | 80,550 | 70,293 | 70,831 |
| Interest bearing non-maturity deposits | 139,584 | 146,838 | 145,471 | 145,368 | 133,871 |
| Time deposits | 46,822 | 50,380 | 49,818 | 56,718 | 60,524 |
| Total deposits | 270,772 | 281,708 | 275,839 | 272,379 | 265,226 |
| Fed funds purchased | -- | -- | -- | -- | -- |
| Borrowings | 14,855 | 14,891 | 14,891 | 14,891 | 14,891 |
| Other liabilities | 3,994 | 3,901 | 3,789 | 3,376 | 3,408 |
| Equity | 17,349 | 16,987 | 16,203 | 15,855 | 14,346 |
| 306,970 | 317,487 | 310,722 | 306,501 | 297,871 | |
| BALANCE SHEET RATIOS | |||||
| Gross Loans to Deposits | 84.3% | 75.6% | 72.7% | 72.6% | 78.0% |
| Earning Assets to Total Assets | 87.9% | 80.5% | 80.1% | 81.4% | 89.7% |
| Securities and Cash to Assets | 20.4% | 27.7% | 30.2% | 30.9% | 25.8% |
| Deposits to Assets | 88.2% | 88.7% | 88.8% | 88.9% | 89.0% |
| Loss Reserve to Gross Loans | 2.1% | 2.2% | 2.5% | 3.2% | 3.4% |
| Net Charge-Offs to Gross Loans | 0.0% | 0.0% | 0.4% | 0.0% | 0.6% |
| Leverage Ratio - The State Bank | 9.0% | 8.7% | 8.7% | 8.5% | 8.1% |
| Income Statement Highlights - QTD | Jun-13 | Mar-13 | Dec-12 | Sep-12 | Jun-12 |
| Interest income | 3,017 | 2,953 | 2,924 | 3,096 | 3,059 |
| Interest expense | 361 | 371 | 394 | 390 | 533 |
| Net interest income | 2,656 | 2,582 | 2,530 | 2,706 | 2,526 |
| Provision for loan loss | -- | 7 | (600) | (850) | 80 |
| Service charges on deposit accounts | 215 | 220 | 268 | 264 | 248 |
| Gain on sale of mortgage loans | 433 | 575 | 389 | 204 | 153 |
| Wealth management income | 217 | 231 | 212 | 346 | 293 |
| Other non-interest income | 445 | 428 | 331 | 509 | 447 |
| Salaries and benefits | 1,736 | 1,656 | 1,900 | 1,544 | 1,608 |
| Occupancy and equipment | 531 | 533 | 550 | 544 | 540 |
| Loan and collection | 186 | 173 | 212 | 412 | 171 |
| Other operating expenses | 791 | 812 | 1,018 | 975 | 1,124 |
| Net Income before tax | 722 | 855 | 650 | 1,404 | 144 |
| Income Taxes | -- | -- | 197 | -- | -- |
| Net Income | 722 | 855 | 453 | 1,404 | 144 |
| INCOME STATEMENT RATIOS/DATA | |||||
| Basic earnings per share | $ 0.29 | $ 0.35 | $ 0.19 | $ 0.58 | $ 0.06 |
| Pre-tax pre-provision earnings | 722 | 862 | 50 | 554 | 225 |
| Net Charge offs | (17) | 260 | 694 | 42 | 1,193 |
| Return on Equity (ROE) | 17.89% | 19.29% | 7.26% | 7.29% | -8.07% |
| Return on Assets (ROA) | 1.03% | 1.12% | 0.42% | 0.36% | -0.40% |
| Efficiency Ratio | 81.32% | 79.87% | 94.64% | 93.25% | 96.96% |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
| Average Earning Asset Yield | 4.70% | 4.85% | 4.70% | 4.77% | 4.74% |
| Average Cost of Funds | 0.71% | 0.71% | 0.76% | 0.73% | 1.02% |
| Spread | 3.99% | 4.14% | 3.94% | 4.04% | 3.72% |
| Net impact of free funds | 0.20% | 0.11% | 0.06% | -0.06% | 0.16% |
| Net Interest Margin | 4.19% | 4.25% | 4.00% | 3.98% | 3.88% |
| Income Statement Highlights - YTD | Jun-13 | Jun-12 | Dec-12 | Dec-11 | |
| Interest income | 5,970 | 6,173 | 12,193 | 13,142 | |
| Interest expense | 732 | 1,161 | 1,945 | 2,983 | |
| Net interest income | 5,238 | 5,012 | 10,248 | 10,159 | |
| Provision for loan loss | 7 | 942 | (508) | 3,142 | |
| Service charges on deposit accounts | 436 | 499 | 1,030 | 1,157 | |
| Gain on sale of mortgage loans | 1,009 | 369 | 961 | 348 | |
| Wealth management income | 448 | 512 | 1,071 | 960 | |
| Other non-interest income | 871 | 933 | 1,775 | 2,393 | |
| Salaries and benefits | 3,392 | 3,332 | 6,775 | 6,763 | |
| Occupancy and equipment | 1,064 | 1,061 | 2,155 | 2,158 | |
| Loan and collection | 359 | 321 | 944 | 1,217 | |
| Other operating expenses | 1,603 | 2,388 | 4,382 | 3,688 | |
| Net Income before tax | 1,577 | (719) | 1,337 | (1,951) | |
| Income Taxes | -- | (124) | 73 | 52 | |
| Net Income from continuing operations | 1,577 | (595) | 1,264 | (2,003) | |
| INCOME STATEMENT RATIOS/DATA | |||||
| Basic earnings per share | $ 0.64 | $ (0.25) | $ 0.52 | $ (0.86) | |
| Pre-tax pre-provision earnings | 1,584 | 223 | 830 | 1,192 | |
| Net Charge offs | 242 | 2,544 | 3,280 | 5,005 | |
| Return on Equity (ROE) | 17.89% | -8.07% | 7.26% | -12.95% | |
| Return on Assets (ROA) | 1.03% | -0.40% | 0.42% | -0.66% | |
| Efficiency Ratio | 81.32% | 96.96% | 94.64% | 91.95% | |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | |
| Average Earning Asset Yield | 2.39% | 2.39% | 1.19% | 1.22% | |
| Average Cost of Funds | 0.36% | 0.55% | 0.23% | 0.33% | |
| Spread | 2.03% | 1.84% | 0.96% | 0.89% | |
| Net impact of free funds | 2.16% | 2.04% | 3.04% | 2.89% | |
| Net Interest Margin | 4.19% | 3.88% | 4.00% | 3.78% |