Fentura Financial, Inc Announces Second Quarter 2015 Results
- Net Income exceeded prior quarter and prior year levels
- Net interest income and noninterest income increased from balance sheet growth and loan trends compared to prior quarter and prior year
- Book value increased 13.6% to $11.94 per share over prior year
- Continued growth shown in assets and core deposits
FENTON, Mich., July 29, 2015 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) reported net income for the three months ended June 30, 2015 of $1.2 million compared to earnings of $819,000 reported for the first quarter of 2015 and $935,000 reported for the three months ended June 30, 2014. On a pre-tax, pre-provision basis net income was $1.8 million in the current quarter compared to $1.2 million in the prior quarter and $1.4 million reported for the quarter ended June 30, 2014. For the six months ended June 30, 2015 the Company reported net income of $2.0 million compared to earnings of $1.5 million for the same period in 2014.
Ronald L. Justice, President and CEO said, "I am very pleased with our strong operating results and the continued growth of our loan and deposit portfolios. Our balance sheet growth has continued to strengthen net interest income and the current rate environment has supported solid results from mortgage banking and our wealth management group. I remain optimistic and excited about the future and the ability to enhance our business and financial performance through our relationship and community focused business model."
Total assets increased $2.2 million or 0.5% at June 30, 2015 compared to March 31, 2015, ending the quarter at $415.8 million. When compared to December 31, 2014, assets at June 30, 2015 increased $20.6 million or 5.2%. Cash and due from banks totals decreased 18.0%, to $27.0 million at June 30, 2015 compared to the $32.9 million reported at March 31, 2015. Cash totals declined during the quarter due to the funding of new loans. Loan balances increased $16.5 million or 5.0% 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 $343.8 million at June 30, 2015. Year over year, loans increased $59.2 million or 20.8%. The increase in loans resulted from the Company's efforts to grow its loan portfolio with new and existing clients. Additionally, the Company has continued to have success in offering customers variable rate loans which help to manage interest rate risk in changing interest rate environments.
Deposit totals of $351.1 million, showed an increase of $5.6 million or 1.6% compared to the $345.4 million reported at March 31, 2015. 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 based on our efforts to grow these relationships. A portion of municipal deposits can have seasonal volatility, 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. For the six months ended June 30, 2015, deposits increased $23.1 million or 7.1%.
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 June 30, 2015, December 31, 2014, and June 30, 2014. As the table reflects, the Bank's Tier 1 Leverage Capital ratio has strengthened during 2015 due primarily to the improved level of capital from earnings. The decline in Tier 1 and Total Risk-Based Capital ratios compared to prior periods is primarily due to changes in the regulatory calculation of risk weighted assets along with the strong overall asset growth rate.
|June 30,||December 31,||June 30,||Regulatory|
|Tier 1 Leverage Capital Ratio||9.53||%||9.83||%||9.70||%||5.00||%|
|Tier 1 Risk-Based Capital Ratio||10.78||11.80||11.67||8.00|
|Total Risk-Based Capital Ratio||11.99||13.05||12.92||10.00|
The Company continued to benefit from credit quality improvement during the 2nd quarter of 2015. At June 30, 2015, loan delinquencies to total loans were 0.12% compared to 0.16% and 0.42% at March 31, 2015 and June 30, 2014, respectively. Substandard assets totaled $1.2 million at the end of the second quarter down from the $2.8 million and $5.1 million reported at March 31, 2015 and June 30, 2014, respectively. 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 $3.5 million for the quarter ended June 30, 2015 reflects a 1.9% increase compared to the quarter ended March 31, 2015 and a 10.0% increase relative to the $3.2 million reported for the quarter ended June 30, 2014. The increase in the current quarter compared to both prior periods is attributable to improved levels of interest income from loan growth. While the portfolios showed increases over prior periods, the net interest margin declined during the period, largely due the Company's 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 $2.1 million for the quarter ended June 30, 2015 compared to $1.6 million for the first quarter of 2015 and $1.8 million for the second 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) contributed to the increase in the current period relative to both comparative prior periods. Additionally, other non-interest income increased during the current quarter relative to both comparative prior periods, due to gains on the sale of Other Real Estate Owned and a gain on an investment held by the holding company. For the six months ended June 30, 2015, noninterest income of $3.7 million represents an increase of $735,000 or 25.1% over the same period in 2014. The substantial increase is attributable to the previously mentioned gain on the sales of mortgage loans along with increased revenue from wealth management activities.
The Company recorded $3.8 million of noninterest expense in the quarter ended June 30, 2015, flat with the level reported in the first quarter of 2015 and an increase over the $3.6 million reported in the second quarter of 2014. The current quarter increase over the 2nd quarter of 2014 is primarily attributable to salary and benefits. These expenses increased due to commissions paid associated with mortgage loan volumes and the strong gains on the sales of these loans in the secondary market. For the six months ended June 30, 2015, noninterest expense totaled $7.6 million an increase over the $6.9 million reported for the same period of 2014. The increase is attributable to salary and benefits expense. Salary and benefits expense increased in 2015 based on general annual salary increases, the rising cost of providing medical benefits, and an accrual increase to the formal annual bonus program.
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||27,003||32,947||19,522||14,887||11,276|
|Interest bearing non-maturity deposits||157,860||162,719||154,499||162,972||149,092|
|BALANCE SHEET RATIOS (unaudited)|
|Gross Loans to Deposits||97.93||%||94.75||%||97.57||%||94.75||%||95.48||%|
|Earning Assets to Total Assets||89.70||%||86.73||%||89.30||%||90.08||%||90.48||%|
|Securities and Cash to Assets||13.52||%||15.57||%||13.29||%||13.21||%||12.80||%|
|Deposits to Assets||84.43||%||83.51||%||82.96||%||85.32||%||84.71||%|
|Loan Loss Reserve to Gross Loans||1.26||%||1.36||%||1.38||%||1.58||%||1.70||%|
|Net Charge-Offs to Gross Loans||0.03||%||-0.01||%||-0.02||%||0.02||%||0.03||%|
|Leverage Ratio - The State Bank||9.53||%||9.38||%||9.83||%||9.43||%||9.70||%|
|Book Value per Share||$||11.94||$||11.49||$||11.24||$||10.84||$||10.51|
|Income Statement Highlights - QTD||Jun-15||Mar-15||Dec-14||Sep-14||Jun-14|
|Net interest income||3,476||3,410||3,437||3,273||3,159|
|Provision for loan loss||-||-||(450||)||-||-|
|Service charges on deposit accounts||207||194||232||232||212|
|Gain on sale of mortgage loans||655||609||530||285||410|
|Wealth management income||304||345||289||359||316|
|Other non-interest income||886||460||443||429||911|
|Salaries and benefits||2,194||2,237||2,116||1,921||2,007|
|Occupancy and equipment||554||583||552||539||542|
|Loan and collection||154||190||267||135||110|
|Other operating expenses||875||767||825||762||947|
|Net Income before tax||1,751||1,241||1,621||1,221||1,402|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$||0.46||$||0.33||$||0.43||$||0.32||$||0.38|
|Pre-tax pre-provision earnings||1,751||1,241||1,171||1,221||1,402|
|Net Charge offs||120||(47||)||(74||)||48||86|
|Return on Equity (ROE)||10.78||%||11.40||%||15.40||%||12.00||%||14.27||%|
|Return on Assets (ROA)||1.10||%||0.81||%||1.10||%||0.88||%||1.08||%|
|Average Bank Prime||3.25||%||3.25||%||3.25||%||3.25||%||3.25||%|
|Average Earning Asset Yield||4.42||%||4.49||%||4.60||%||4.52||%||4.56||%|
|Average Cost of Funds||0.77||%||0.77||%||0.78||%||0.69||%||0.68||%|
|Net impact of free funds||0.19||%||0.18||%||0.18||%||0.17||%||0.17||%|
|Net Interest Margin||3.84||%||3.90||%||4.01||%||3.99||%||4.05||%|
|Income Statement Highlights - YTD||Jun-15||Jun-14||Dec-14||Dec-13|
|Net interest income||6,886||6,231||12,942||11,027|
|Provision for loan loss||-||-||(450||)||7|
|Service charges on deposit accounts||401||418||882||897|
|Gain on sale of mortgage loans||1,265||523||1,339||1,613|
|Wealth management income||649||580||1,228||996|
|Other non-interest income||1,346||1,405||2,276||2,077|
|Salaries and benefits||4,431||3,869||7,906||6,925|
|Occupancy and equipment||1,137||1,089||2,181||2,152|
|Loan and collection||344||250||652||688|
|Other operating expenses||1,643||1,702||3,288||3,472|
|Net Income before tax||2,992||2,247||5,090||3,366|
|Net Income from continuing operations||1,975||1,492||3,362||8,484|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$||0.79||$||0.60||$||1.35||$||3.44|
|Pre-tax pre-provision earnings||2,992||2,247||4,640||3,373|
|Net Charge offs||73||69||44||68|
|Return on Equity (ROE)||11.12||%||12.43||%||13.06||%||46.78||%|
|Return on Assets (ROA)||0.97||%||0.88||%||0.94||%||2.71||%|
|Average Bank Prime||3.25||%||3.25||%||3.25||%||3.25||%|
|Average Earning Asset Yield||4.46||%||4.58||%||4.57||%||4.71||%|
|Average Cost of Funds||0.77||%||0.66||%||0.70||%||0.69||%|
|Net impact of free funds||0.18||%||0.16||%||0.17||%||0.15||%|
|Net Interest Margin||3.87||%||4.09||%||4.04||%||4.16||%|