- Net Income for the year exceeded levels reported for 2012
- Book value increased 50.0% over prior year to $9.97 per
share
- Loan growth exceeded expectations for the year
- Operating results continue to strengthen capital, and our
Bank's capital level is considered well capitalized by industry
standards
- Credit quality continues to strengthen, as both loan
delinquencies and substandard assets improved significantly over
the prior year.
Fentura Financial, Inc. (OTCQB:FETM) reported pre-tax net income
for the three months ended December 31, 2013 of $818,000 compared
to pre-tax earnings of $650,000 reported for the fourth quarter of
2012. After tax net income for the period was $5.9 million,
compared to net income of $453,000 reported for the same period in
2012. After tax net income reflects the reversal of the deferred
tax asset valuation allowance of $4.9 million disallowed in
previous years. For the year ended December 31, 2013, after tax
earnings of $8.5 million compare favorably to the $1.3 million
reported for 2012.
Ronald L. Justice, President and CEO said, "We are proud of the
continued improvement of our Company throughout the year and our
2013 operating results. Loan growth continued during the fourth
quarter contributing to a $63.5 million increase in total loans for
the year. The interest income from this growth, our continued
control of funding costs, an increase in noninterest income, and
reduction of operating expenses all contributed to our strong core
operating results. The impact of the one-time reversal of the
deferred tax asset valuation allowance is a reflection of the
improvement in our financial condition made possible by the efforts
of our entire team.
Balance Sheet
Total assets increased $16.7 million or 5.3% at December 31,
2013 compared to September 30, 2013, ending the year at $335.2
million. Cash and due from banks totals declined 45.6%, to
$12.9 million at December 31, 2013 compared to the $23.6 million
reported at September 30, 2013. This decrease was primarily due to
the funding of new loans. Loan balances increased $22.3
million or 9.2% 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. Portfolio loans totaled $263.0 million
at December 31, 2013.
Deposit totals of $283.3 million at December 31, 2013, were at
the same level reported at the end of the prior
quarter. Deposits increased $7.5 million or 2.7% for the year
ended December 31, 2013. The increase throughout the year
occurred in both non-interest bearing and interest bearing
non-maturity deposits as the Company continued efforts to grow its
client 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 strengthening of the Bank's Tier 1 Leverage
Capital Ratio at December 31, 2013 compared to December 31, 2012.
The improvement in Tier 1 leverage capital year over
year is primarily due to the increase in capital from operating
results.
|
December 31, 2013 |
December 31, 2012 |
Regulatory Well
Capitalized |
Tier 1 Leverage Capital Ratio |
9.47% |
8.73% |
5.00% |
Tier 1 Risk-Based Capital Ratio |
11.04 |
12.06 |
6.00 |
Total Risk-Based Capital Ratio |
12.30 |
13.34 |
10.00 |
Credit Quality
Throughout 2013, the Company continued to benefit from
improvement in credit quality. At December 31, 2013 loan
delinquencies to total loans were 0.60% compared to 1.86% at
December 31, 2012. Substandard assets totaled $6.2 million at
December 31, 2013, down from $13.2 million reported at December 31,
2012. The low level of loan delinquencies and the improved
level of substandard assets eliminated the need for significant
additional provisions for the allowance for loan losses during
2013.
Net Interest Income
Net interest income of $3.0 million for the quarter ended
December 31, 2013 improved compared to the $2.8 million reported
for both the third quarter of 2013 and the $2.5 million reported
for the fourth quarter of 2012. Interest income improved
during the three months ended December 31, 2013, from the interest
on new loans added during the quarter and throughout the entire
year. Interest expense declined modestly comparing the quarter
ended December 31, 2013 to the quarter ended September 30, 2013,
due to the decrease in the amount of time deposits during the
quarter.
On a year to date basis, net interest income was $11.0 million
compared to $10.2 million reported in 2012. The year to year
improvement is due to the increase in interest income from loan
growth throughout the year and the decline in interest expense as
certificates of deposit matured and funds were placed in lower cost
savings accounts.
Noninterest Income
Noninterest income was $1.3 million for the quarter ended
December 31, 2013 compared to $1.6 million for the third quarter of
2013. The decline in the volume of mortgage loans sold in the
secondary market and accordingly, the gain on sale from those
loans, contributed to the decline in the current period compared to
the third quarter of
2013.
For the twelve months ended December 31, 2013, noninterest
income totaled $5.6 million compared to $4.8 million reported for
the prior year. The increase in 2013 is primarily attributable
to gains on the sale of mortgage loans due to increased volume
based on a favorable interest rate environment and gains from sales
of other real estate owned.
Noninterest Expense
The Company recorded $3.4 million of noninterest expense in the
quarter ended December 31, 2013, flat compared with the $3.4
million reported in the third quarter of 2013. For the year,
noninterest expense was $13.2 million in 2013 and $14.3 million
during 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 and a decline in loan and collection expenses as asset quality
and loan delinquencies improved.
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. |
|
|
|
|
|
|
|
|
|
|
|
|
Dec-13 |
Sep-13 |
Jun-13 |
Mar-13 |
Dec-12 |
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
Balance Sheet
Highlights |
|
|
|
|
|
Cash and due from banks |
12,856 |
23,647 |
21,109 |
45,272 |
45,712 |
Fed funds sold |
-- |
-- |
-- |
-- |
-- |
Investment securities |
36,574 |
38,147 |
41,379 |
42,582 |
48,249 |
Commercial loans |
176,796 |
167,204 |
160,720 |
154,223 |
146,482 |
Consumer loans |
25,336 |
24,907 |
24,462 |
24,017 |
23,423 |
Mortgage loans |
61,846 |
49,554 |
43,182 |
34,791 |
30,623 |
Gross loans |
263,978 |
241,665 |
228,364 |
213,031 |
200,528 |
ALLL |
(4,900) |
(4,790) |
(4,699) |
(4,682) |
(4,962) |
Other assets |
26,717 |
19,816 |
20,817 |
21,284 |
21,195 |
Total assets |
335,225 |
318,485 |
306,970 |
317,487 |
310,722 |
|
|
|
|
|
|
Non-interest deposits |
82,585 |
81,195 |
84,366 |
84,490 |
80,550 |
Interest bearing non-maturity deposits |
154,838 |
154,675 |
139,584 |
146,838 |
145,471 |
Time deposits |
45,918 |
47,383 |
46,822 |
50,380 |
49,818 |
Total deposits |
283,341 |
283,253 |
270,772 |
281,708 |
275,839 |
Fed funds purchased |
-- |
-- |
-- |
-- |
-- |
Borrowings |
24,855 |
14,855 |
14,855 |
14,891 |
14,891 |
Other liabilities |
2,267 |
1,958 |
3,994 |
3,901 |
3,789 |
Equity |
24,762 |
18,419 |
17,349 |
16,987 |
16,203 |
|
335,225 |
318,485 |
306,970 |
317,487 |
310,722 |
BALANCE SHEET RATIOS
(unaudited) |
|
|
|
|
|
Gross Loans to Deposits |
93.17% |
85.32% |
84.34% |
75.62% |
72.70% |
Earning Assets to Total Assets |
89.66% |
87.86% |
87.87% |
80.51% |
80.06% |
Securities and Cash to Assets |
14.75% |
19.40% |
20.36% |
27.67% |
30.24% |
Deposits to Assets |
84.52% |
88.94% |
88.21% |
88.73% |
88.77% |
Loan Loss Reserve to Gross Loans |
1.86 |
1.99 |
2.07 |
2.20 |
2.48 |
Net Charge-Offs to Gross Loans |
-4.10% |
-3.84% |
-0.76% |
13.43% |
34.71% |
Leverage Ratio - The State Bank |
9.47% |
9.21% |
9.02% |
8.70% |
8.73% |
Book Value per Share |
$ 9.97 |
$ 7.45 |
$ 7.04 |
$ 6.92 |
$ 6.63 |
|
|
|
|
|
|
Income Statement Highlights -
QTD |
Dec-13 |
Sep-13 |
Jun-13 |
Mar-13 |
Dec-12 |
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
Interest income |
3,298 |
3,214 |
3,017 |
2,953 |
2,924 |
Interest expense |
348 |
373 |
361 |
371 |
394 |
Net interest income |
2,950 |
2,841 |
2,656 |
2,582 |
2,530 |
Provision for loan loss |
-- |
-- |
-- |
7 |
(600) |
Service charges on deposit accounts |
230 |
231 |
215 |
220 |
268 |
Gain on sale of mortgage loans |
186 |
419 |
433 |
575 |
389 |
Wealth management income |
274 |
275 |
217 |
231 |
212 |
Other non-interest income |
566 |
638 |
445 |
428 |
331 |
Salaries and benefits |
1,745 |
1,788 |
1,736 |
1,656 |
1,900 |
Occupancy and equipment |
527 |
561 |
531 |
533 |
550 |
Loan and collection |
112 |
217 |
186 |
173 |
212 |
Other operating expenses |
1,004 |
864 |
791 |
812 |
1,018 |
Net Income before tax |
818 |
974 |
722 |
855 |
650 |
Income Taxes |
(5,118) |
-- |
-- |
-- |
197 |
Net Income |
5,936 |
974 |
722 |
855 |
453 |
|
|
|
|
|
|
INCOME STATEMENT RATIOS/DATA
(unaudited) |
|
|
|
|
Basic earnings per share |
$ 2.40 |
$ 0.40 |
$ 0.29 |
$ 0.35 |
$ 0.19 |
Pre-tax pre-provision earnings |
818 |
974 |
722 |
862 |
50 |
Net Charge offs |
(108) |
(92) |
(17) |
286 |
694 |
Return on Equity (ROE) |
46.78% |
19.19% |
17.89% |
19.29% |
7.26% |
Return on Assets (ROA) |
2.71% |
1.10% |
1.03% |
1.12% |
0.42% |
Efficiency Ratio |
80.83% |
80.56% |
81.32% |
79.87% |
94.64% |
Average Bank Prime |
3.25% |
3.25% |
3.25% |
3.25% |
3.25% |
Average Earning Asset Yield |
4.60% |
4.69% |
4.70% |
4.85% |
4.70% |
Average Cost of Funds |
0.64% |
0.71% |
0.71% |
0.71% |
0.76% |
Spread |
3.96% |
3.99% |
3.99% |
4.14% |
3.94% |
Net impact of free funds |
0.20% |
0.19% |
0.20% |
0.11% |
0.06% |
Net Interest Margin |
4.16% |
4.18% |
4.19% |
4.25% |
4.00% |
|
|
|
|
|
|
Income Statement Highlights -
YTD |
Dec-13 |
Dec-12 |
|
Dec-12 |
Dec-11 |
|
Unaudited |
|
|
|
|
Interest income |
12,481 |
12,193 |
|
12,193 |
13,142 |
Interest expense |
1,454 |
1,945 |
|
1,945 |
2,983 |
Net interest income |
11,027 |
10,248 |
|
10,248 |
10,159 |
Provision for loan loss |
7 |
(508) |
|
(508) |
3,142 |
Service charges on deposit accounts |
897 |
1,030 |
|
1,030 |
1,157 |
Gain on sale of mortgage loans |
1,613 |
961 |
|
961 |
348 |
Wealth management income |
996 |
1,071 |
|
1,071 |
960 |
Other non-interest income |
2,077 |
1,775 |
|
1,775 |
2,393 |
Salaries and benefits |
6,925 |
6,775 |
|
6,775 |
6,763 |
Occupancy and equipment |
2,152 |
2,155 |
|
2,155 |
2,158 |
Loan and collection |
688 |
944 |
|
944 |
1,217 |
Other operating expenses |
3,471 |
4,381 |
|
4,381 |
3,687 |
Net Income before tax |
3,367 |
1,338 |
|
1,338 |
(1,950) |
Income Taxes |
(5,118) |
73 |
|
73 |
52 |
Net Income from continuing operations |
8,485 |
1,265 |
|
1,265 |
(2,002) |
|
|
|
|
|
|
INCOME STATEMENT RATIOS/DATA
(unaudited) |
|
|
|
|
Basic earnings per share |
$ 3.44 |
$ 0.52 |
|
$ 0.52 |
$ (0.86) |
Pre-tax pre-provision earnings |
3,374 |
830 |
|
830 |
1,192 |
Net Charge offs |
68 |
2,694 |
|
2,694 |
5,005 |
Return on Equity (ROE) |
46.78% |
7.26% |
|
7.26% |
-12.95% |
Return on Assets (ROA) |
2.71% |
0.42% |
|
0.42% |
-0.66% |
Efficiency Ratio |
80.83% |
94.64% |
|
94.64% |
91.95% |
Average Bank Prime |
3.25% |
3.25% |
|
3.25% |
3.25% |
Average Earning Asset Yield |
4.71% |
4.75% |
|
4.75% |
4.89% |
Average Cost of Funds |
0.69% |
0.92% |
|
0.92% |
1.33% |
Spread |
4.02% |
3.83% |
|
3.83% |
3.56% |
Net impact of free funds |
0.15% |
0.17% |
|
0.17% |
0.22% |
Net Interest Margin |
4.16% |
4.00% |
|
4.00% |
3.78% |
CONTACT: Ronald L. Justice
President & CEO
Fentura Financial, Inc.
(810) 714-3902
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