Fentura Financial, Inc. Announces Third Quarter 2015 Results
- Net Income exceeded prior year levels
- Net interest income increased from balance sheet growth and loan trends compared to prior quarter and prior year
- Book value increased 13.1% to $12.26 per share over prior year
- Continued growth shown in assets and core deposits
FENTON, Mich., Oct. 30, 2015 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) reported net income for the three months ended September 30, 2015 of $970,000 compared to earnings of $1.2 million reported for the second quarter of 2015 and $807,000 reported for the three months ended September 30, 2014. On a pre-tax, pre-provision basis net income was $1.5 million in the current quarter compared to $1.8 million in the prior quarter and $1.2 million reported for the quarter ended September 30, 2014. For the nine months ended September 30, 2015 the Company reported net income of $2.9 million compared to earnings of $2.3 million for the same period in 2014.
Ronald L. Justice, President and CEO said, "I continue to be pleased with Company operating results. Deposit growth has allowed us to fund solid loan growth, creating strong earnings performance fueled by improving net interest and noninterest income year over year. While economic forecasts vary, I feel we are positioned to continue efforts to enhance our core financial performance and expand our client base."
Total assets increased $18.5 million or 4.5% at September 30, 2015 compared to June 30, 2015, ending the quarter at $434.4 million. When compared to December 31, 2014, assets at September 30, 2015 increased $39.1 million or 9.9%. Cash and due from banks totals increased 20.4%, to $32.5 million at September 30, 2015 compared to the $27.0 million reported at June 30, 2015. Cash totals increases during the quarter were funded by the growth of deposits. Loan balances increased $14.3 million or 4.2% during the same period. Loans increased from continued efforts to grow the Bank's client base. During the quarter, the Bank experienced growth principally in its consumer and mortgage. Loans totaled $358.1 million at September 30, 2015. Year over year, loans increased $54.7 million or 18.0%. 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 $368.3 million, showed an increase of $17.2 million or 4.9% compared to the $351.1 million reported at June 30, 2015. The increase was in interest bearing 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 as well. 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. Year over year deposits increased $48.0 million or 15.0%.
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 September 30, 2015, December 31, 2014, and September 30, 2014. As the table reflects, the Bank's Tier 1 Leverage Capital ratio remains strong at September 30, 2015 due primarily to the improved level of capital from earnings. The decline in Tier 1 and Total Risk-Based Capital ratios year over year is primarily due to changes in the regulatory calculation of risk weighted assets along with the strong overall asset growth rate.
|Tier 1 Leverage Capital Ratio||9.42||%||9.83||%||9.44||%||5.00||%|
|Tier 1 Risk-Based Capital Ratio||10.72||11.80||11.36||8.00|
|Total Risk-Based Capital Ratio||11.92||13.05||12.62||10.00|
The Company continued to benefit from credit quality improvement during the 3rd quarter of 2015. At September 30, 2015 loan delinquencies to total loans were 0.11% compared to 0.12% and 0.14% at June 30, 2015 and September 30, 2014, respectively. Substandard assets totaled $1.0 million at the end of the third quarter down from the $1.2 million and $4.1 million reported at June 30, 2015 and September 30, 2014, respectively. These numbers tend to be leading indicators of potential 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 $3.7 million for the quarter ended September 30, 2015 reflects a 6.2% increase compared to the quarter ended June 30, 2015 and a 12.8% increase relative to the $3.3 million reported for the quarter ended September 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 $1.5 million for the quarter ended September 30, 2015 compared to $2.1 million for the second quarter of 2015 and $1.3 million for the third 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 compared to the same period in 2014. The noninterest income decline in the current quarter compared to the prior quarter is attributable to decline in gains on the sales of mortgage loans in the current quarter based on the volume of sold loans as well as a gain on an investment held by the holding company that was sold and the gain recognized in the second quarter of this year. For the nine months ended September 30, 2015, noninterest income of $5.1 million represents an increase of $898,000 or 21.2% 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 $3.7 million of noninterest expense in the quarter ended September 30, 2015, an $89,000 decline of the level reported in second quarter of 2015 and an increase over the $3.4 million reported in the third quarter of 2014. The current quarter decrease over the 2nd quarter of year is primarily attributable to a modest decline in other operating expense. The current quarter increase of the same quarter in 2014 is primarily attributable to an increase in 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 nine months ended September 30, 2015, noninterest expense totaled $11.2 million an increase over the $10.3 million reported for the same period of 2014. The increase is primarily 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||32,517||27,003||32,947||19,522||14,887|
|Interest bearing non-maturity deposits||182,865||157,860||162,719||154,499||162,972|
|BALANCE SHEET RATIOS (unaudited)|
|Gross Loans to Deposits||97.24||%||97.93||%||94.75||%||97.57||%||94.75||%|
|Earning Assets to Total Assets||88.78||%||89.70||%||86.73||%||89.30||%||90.08||%|
|Securities and Cash to Assets||13.82||%||13.52||%||15.57||%||13.29||%||13.21||%|
|Deposits to Assets||84.78||%||84.43||%||83.51||%||82.96||%||85.32||%|
|Loan Loss Reserve to Gross Loans||1.24||%||1.26||%||1.36||%||1.38||%||1.58||%|
|Net Charge-Offs to Gross Loans||-0.01||%||0.03||%||-0.01||%||-0.02||%||0.02||%|
|Leverage Ratio - The State Bank||9.42||%||9.55||%||9.07||%||9.83||%||9.44||%|
|Book Value per Share||$||12.26||$||11.94||$||11.49||$||11.24||$||10.84|
|Income Statement Highlights - QTD||Sep-15||Jun-15||Mar-15||Dec-14||Sep-14|
|Net interest income||3,691||3,476||3,410||3,437||3,273|
|Provision for loan loss||-||-||-||(450||)||-|
|Service charges on deposit accounts||202||207||194||232||232|
|Gain on sale of mortgage loans||454||655||609||530||285|
|Wealth management income||343||304||345||289||359|
|Other non-interest income||469||886||460||443||429|
|Salaries and benefits||2,186||2,194||2,237||2,116||1,921|
|Occupancy and equipment||557||554||583||552||539|
|Loan and collection||124||154||190||267||135|
|Other operating expenses||821||875||767||825||762|
|Net Income before tax||1,471||1,751||1,241||1,621||1,221|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$||0.39||$||0.46||$||0.33||$||0.43||$||0.32|
|Pre-tax pre-provision earnings||1,471||1,751||1,241||1,171||1,221|
|Net Charge offs||(33||)||120||(47||)||(74||)||48|
|Return on Equity (ROE)||8.81||%||10.78||%||11.40||%||15.26||%||12.00||%|
|Return on Assets (ROA)||0.89||%||1.10||%||0.81||%||1.10||%||0.88||%|
|Average Bank Prime||3.25||%||3.25||%||3.25||%||3.25||%||3.25||%|
|Average Earning Asset Yield||4.46||%||4.42||%||4.49||%||4.60||%||4.52||%|
|Average Cost of Funds||0.75||%||0.77||%||0.77||%||0.78||%||0.69||%|
|Net impact of free funds||0.19||%||0.19||%||0.18||%||0.18||%||0.17||%|
|Net Interest Margin||3.90||%||3.84||%||3.90||%||4.01||%||3.99||%|
|Income Statement Highlights - YTD||Sep-15||Sep-14||Dec-14||Dec-13|
|Net interest income||10,579||9,504||12,942||11,027|
|Provision for loan loss||-||-||(450||)||7|
|Service charges on deposit accounts||603||650||882||897|
|Gain on sale of mortgage loans||1,718||808||1,339||1,613|
|Wealth management income||992||939||1,228||996|
|Other non-interest income||1,816||1,834||2,276||2,077|
|Salaries and benefits||6,617||5,790||7,906||6,925|
|Occupancy and equipment||1,694||1,628||2,181||2,152|
|Loan and collection||468||385||652||688|
|Other operating expenses||2,464||2,464||3,289||3,471|
|Net Income before tax||4,465||3,468||5,089||3,367|
|Net Income from continuing operations||2,947||2,299||3,361||8,485|
|INCOME STATEMENT RATIOS/DATA (unaudited)|
|Basic earnings per share||$||1.17||$||0.92||$||1.35||$||3.44|
|Pre-tax pre-provision earnings||4,465||3,468||4,639||3,374|
|Net Charge offs||41||117||43||68|
|Return on Equity (ROE)||10.21||%||12.24||%||13.03||%||46.78||%|
|Return on Assets (ROA)||0.94||%||0.88||%||0.94||%||2.71||%|
|Average Bank Prime||3.25||%||3.25||%||3.25||%||3.25||%|
|Average Earning Asset Yield||4.46||%||4.56||%||4.57||%||4.71||%|
|Average Cost of Funds||0.77||%||0.67||%||0.70||%||0.69||%|
|Net impact of free funds||0.18||%||0.16||%||0.17||%||0.15||%|
|Net Interest Margin||3.88||%||4.05||%||4.04||%||4.16||%|