- Net Income for the quarter exceeded levels reported in the two previous quarters
- Loan growth exceeded expectations for the period and for the first nine months of 2013
- Operating results continue to strengthen capital, and the capital level is considered solid by industry standards
- Credit Quality continues to strengthen, as both loan delinquencies and substandard assets experienced improvements
FENTON, Mich., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQB:FETM) reported net income for the three months ended September 30, 2013 of $974,000 compared to earnings of $1,404,000 reported for the third quarter of 2012. On a year to date basis, earnings of $2,551,000 as of September 30, 2013 compare favorably to the $812,000 reported for the same period of 2012.
President and CEO Ronald Justice noted that he continues to be encouraged by performance trends. Loan growth continued throughout the third quarter contributing to a $41.1 million increase in total loans over December 31, 2012, further strengthening net interest income. The Company recognized $1.4 million in gains on mortgage loan sales during the nine months ended September 30, 2013 compared to $572,000 for the same period last year. Positive credit quality trends continued throughout the quarter, with historically low loan delinquencies and reduced levels of substandard assets, eliminating the need for additional provisions in order to maintain an appropriate allowance for loan losses at quarter end.
Balance Sheet
Total assets increased $11.5 million or 3.8% at September 30, 2013 compared to June 30, 2013. Loan balances increased $13.3 million or 5.8% 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 $241.7 million at September 30, 2013.
Deposit totals also improved during the third quarter of 2013, to $283.3 million, increasing $12.5 million or 4.6% from the prior quarter. The deposit increase is primarily due to the seasonal trends of public fund clients. The Company continues to benefit from a solid and loyal core deposit funding 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 improvement at September 30, 2013 compared to December 31, 2012. The improvement in tier 1 leverage capital year over year is primarily due to an increase in capital from operating results.
|
September 30, 2013 |
December 31, 2012 |
September 30, 2012 |
Regulatory Well Capitalized |
|
| Tier 1 Leverage Capital Ratio | 9.21% | 8.73% | 8.53% | 5.00% |
| Tier 1 Risk-Based Capital Ratio | 11.56 | 12.06 | 11.77 | 6.00% |
| Total Risk-Based Capital Ratio | 12.82 | 13.34 | 13.04 | 10.00% |
Credit Quality
Throughout the first nine months of 2013, the Company continued to benefit from improvement in credit quality. At September 30, 2013 loan delinquencies to total loans were 0.46% compared to 1.86% at December 31, 2012, and 2.58% as of September 30, 2012. Substandard assets totaled $6.2 million at September 30, 2013, down from $13.2 million reported at December 31, 2012, and $18.8 at September 30, 2012. These asset trends eliminated the need for additional provisions for the allowance for loan losses during the quarter and for the first nine months of 2013.
Net Interest Income
Net interest income of $2.8 million for the quarter ended September 30, 2013 improved modestly compared to the $2.7 million reported for both the second quarter of 2013 and the third quarter of 2012. Interest income improved during the three months ended September 30, 2013, from interest on new loans added during the quarter and throughout the first half of 2013. Interest expense increased modestly comparing the quarter ended September 30, 2013 to the quarter ended June 30, 2013, due to the increase in the amount of interest bearing deposits during the quarter.
On a year to date basis, net interest income was $8.1 million compared to $7.7 million reported for the same period of 2012. The year to year improvement is primarily due to a decline in interest expense as certificates of deposit have matured and funds have been placed in lower cost savings accounts.
Noninterest Income
Noninterest income was $1.6 million for the quarter ended September 30, 2013 compared to $1.3 million for the second quarter of 2013. Both income from Wealth Management and gains on the sale of Other Real Estate Owned contributed to the improvement during the current period.
For the nine months ended September 30, 2013, noninterest income totaled $4.3 million compared to $3.6 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 based on a favorable interest rate environment and gains from sale of Other Real Estate Owned.
Noninterest Expense
The Company recorded $3.4 million of noninterest expense in the quarter ended September 30, 2013, up from the $3.2 million reported in the second quarter of 2013. On a year to date basis, noninterest expense was $9.8 million in 2013 and $10.6 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 several operating losses recognized in the same time period 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. | |||||
| Sep-13 | Jun-13 | Mar-13 | Dec-12 | Sep-12 | |
| Balance Sheet Highlights | |||||
| Cash and due from banks | 23,647 | 21,109 | 45,272 | 45,712 | 42,768 |
| Fed funds sold | -- | -- | -- | -- | -- |
| Investment securities | 38,147 | 41,379 | 42,582 | 48,249 | 51,812 |
| Commercial loans | 167,204 | 160,720 | 154,223 | 146,482 | 144,612 |
| Consumer loans | 24,907 | 24,462 | 24,017 | 23,423 | 23,304 |
| Mortgage loans | 49,554 | 43,182 | 34,791 | 30,623 | 29,687 |
| Gross loans | 241,665 | 228,364 | 213,031 | 200,528 | 197,603 |
| ALLL | (4,790) | (4,699) | (4,682) | (4,962) | (6,267) |
| Other assets | 19,816 | 20,817 | 21,284 | 21,195 | 20,585 |
| Total assets | 318,485 | 306,970 | 317,487 | 310,722 | 306,501 |
| Non-interest deposits | 81,195 | 84,366 | 84,490 | 80,550 | 70,293 |
| Interest bearing non-maturity deposits | 154,675 | 139,584 | 146,838 | 145,471 | 145,368 |
| Time deposits | 47,383 | 46,822 | 50,380 | 49,818 | 56,718 |
| Total deposits | 283,253 | 270,772 | 281,708 | 275,839 | 272,379 |
| Fed funds purchased | -- | -- | -- | -- | -- |
| Borrowings | 14,855 | 14,855 | 14,891 | 14,891 | 14,891 |
| Other liabilities | 1,958 | 3,994 | 3,901 | 3,789 | 3,376 |
| Equity | 18,419 | 17,349 | 16,987 | 16,203 | 15,855 |
| 318,485 | 306,970 | 317,487 | 310,722 | 306,501 | |
| BALANCE SHEET RATIOS | |||||
| Gross Loans to Deposits | 85.3% | 84.3% | 75.6% | 72.7% | 72.6% |
| Earning Assets to Total Assets | 87.9% | 87.9% | 80.5% | 80.1% | 81.4% |
| Securities and Cash to Assets | 19.4% | 20.4% | 27.7% | 30.2% | 30.9% |
| Deposits to Assets | 88.9% | 88.2% | 88.7% | 88.8% | 88.9% |
| Loss Reserve to Gross Loans | 2.0% | 2.1% | 2.2% | 2.5% | 3.2% |
| Net Charge-Offs to Gross Loans | 0.0% | 0.0% | 0.1% | 0.4% | 0.0% |
| Leverage Ratio - The State Bank | 9.2% | 9.0% | 8.7% | 8.7% | 8.5% |
| Income Statement Highlights - QTD | Sep-13 | Jun-13 | Mar-13 | Dec-12 | Sep-12 |
| Interest income | 3,214 | 3,017 | 2,953 | 2,924 | 3,096 |
| Interest expense | 373 | 361 | 371 | 394 | 390 |
| Net interest income | 2,841 | 2,656 | 2,582 | 2,530 | 2,706 |
| Provision for loan loss | -- | -- | 7 | (600) | (850) |
| Service charges on deposit accounts | 231 | 215 | 220 | 268 | 264 |
| Gain on sale of mortgage loans | 419 | 433 | 575 | 389 | 204 |
| Wealth management income | 275 | 217 | 231 | 212 | 346 |
| Other non-interest income | 638 | 445 | 428 | 331 | 509 |
| Salaries and benefits | 1,788 | 1,736 | 1,656 | 1,900 | 1,544 |
| Occupancy and equipment | 561 | 531 | 533 | 550 | 544 |
| Loan and collection | 217 | 186 | 173 | 212 | 412 |
| Other operating expenses | 864 | 791 | 812 | 1,018 | 975 |
| Net Income before tax | 974 | 722 | 855 | 650 | 1,404 |
| Income Taxes | -- | -- | -- | 197 | -- |
| Net Income | 974 | 722 | 855 | 453 | 1,404 |
| INCOME STATEMENT RATIOS/DATA | |||||
| Basic earnings per share | $ 0.40 | $ 0.29 | $ 0.35 | $ 0.19 | $ 0.58 |
| Pre-tax pre-provision earnings | 974 | 722 | 862 | 50 | 554 |
| Net Charge offs | (92) | (17) | 260 | 694 | 42 |
| Return on Equity (ROE) | 19.19% | 17.89% | 19.29% | 7.26% | 7.29% |
| Return on Assets (ROA) | 1.10% | 1.03% | 1.12% | 0.42% | 0.36% |
| Efficiency Ratio | 80.56% | 81.32% | 79.87% | 94.64% | 93.25% |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | 3.25% |
| Average Earning Asset Yield | 4.69% | 4.70% | 4.85% | 4.70% | 4.77% |
| Average Cost of Funds | 0.71% | 0.71% | 0.71% | 0.76% | 0.73% |
| Spread | 3.99% | 3.99% | 4.14% | 3.94% | 4.04% |
| Net impact of free funds | 0.19% | 0.20% | 0.11% | 0.06% | -0.06% |
| Net Interest Margin | 4.18% | 4.19% | 4.25% | 4.00% | 3.98% |
| Income Statement Highlights - YTD | Sep-13 | Sep-12 | Dec-12 | Dec-11 | |
| Interest income | 9,184 | 9,269 | 12,193 | 13,142 | |
| Interest expense | 1,106 | 1,551 | 1,945 | 2,983 | |
| Net interest income | 8,078 | 7,718 | 10,248 | 10,159 | |
| Provision for loan loss | 7 | 92 | (508) | 3,142 | |
| Service charges on deposit accounts | 666 | 762 | 1,030 | 1,157 | |
| Gain on sale of mortgage loans | 1,428 | 572 | 961 | 348 | |
| Wealth management income | 723 | 858 | 1,071 | 960 | |
| Other non-interest income | 1,510 | 1,445 | 1,775 | 2,393 | |
| Salaries and benefits | 5,180 | 4,875 | 6,775 | 6,763 | |
| Occupancy and equipment | 1,624 | 1,605 | 2,155 | 2,158 | |
| Loan and collection | 576 | 732 | 944 | 1,217 | |
| Other operating expenses | 2,467 | 3,363 | 4,381 | 3,687 | |
| Net Income before tax | 2,551 | 688 | 1,338 | (1,950) | |
| Income Taxes | -- | (124) | 73 | 52 | |
| Net Income from continuing operations | 2,551 | 812 | 1,265 | (2,002) | |
| INCOME STATEMENT RATIOS/DATA | |||||
| Basic earnings per share | $ 1.03 | $ 0.34 | $ 0.52 | $ (0.86) | |
| Pre-tax pre-provision earnings | 2,558 | 780 | 830 | 1,192 | |
| Net Charge offs | 150 | 2,586 | 3,280 | 5,005 | |
| Return on Equity (ROE) | 19.19% | 7.29% | 7.26% | -12.95% | |
| Return on Assets (ROA) | 1.10% | 0.36% | 0.42% | -0.66% | |
| Efficiency Ratio | 80.56% | 93.25% | 94.64% | 91.95% | |
| Average Bank Prime | 3.25% | 3.25% | 3.25% | 3.25% | |
| Average Earning Asset Yield | 1.58% | 1.59% | 1.19% | 1.22% | |
| Average Cost of Funds | 0.24% | 0.32% | 0.23% | 0.33% | |
| Spread | 1.35% | 1.27% | 0.96% | 0.89% | |
| Net impact of free funds | 2.83% | 2.71% | 3.04% | 2.89% | |
| Net Interest Margin | 4.18% | 3.98% | 4.00% | 3.78% |