Exhibit 99.1
FENTURA FINANCIAL, INC.
P.O. BOX 725
FENTON, MI 48430-0725
P.O. BOX 725
FENTON, MI 48430-0725
Contact: | Donald L. Grill Fentura Financial, Inc. (810) 714-3985 November 5, 2010 |
FENTURA ANNOUNCES THIRD QUARTER RESULTS AND
FEDERAL RESERVE BANK ACTION
FEDERAL RESERVE BANK ACTION
For the quarter ended September 30, 2010, Fentura Financial, Inc. reported an operating loss of $2,337,000, or $1.03 per share. At the close of the third quarter of 2009, Fentura reported an operating loss of $847,000, or $0.38 per share. For both calendar year quarters, extraordinary loan loss provision created the operating losses as many bank borrowers continue to struggle in making their loan repayment obligations. Non-performing asset totals declined $5,777,000 or 16.6% from the end of the third quarter 2009 through 2010. The subsidiary banks have been successful in dealing effectively with non-performing assets, in part, by selling such assets at or near carrying values. According the Fentura CEO Donald L. Grill, “While many of our borrowers continue to experience financial stress because of the recession, we are finally beginning to see some stabilization of property values and an improvement in the financial condition of some borrowers.”
On a year to date basis, the 2010 operating loss of $5,600,000, or $2.47 per share reflects improvement from the $17,871,000 or $8.13 per share loss in 2009. The improvement in the year to year performance reflects improvement in the bank’s overall asset quality. Similar to the results for the quarter, extraordinary loan loss provision dominated the financial results for both year to date periods.
Asset quality problems aside, the company has achieved year over year improvement in the areas of net interest margin, non interest income and non interest expense. The 2010 year to date net interest margin of 3.66% reflects a 26 basis point improvement over the margin through the same period in 2009. Similarly, year to date 2010 non interest income of $4,088,000 exceeded the 2009 year to date total by $843,000 or 26.0%. The continued focus on expense control at the subsidiary banks is apparent as total operating expenses declined $1,644,000 on a year to date basis between 2009 and 2010.
Total assets reflect a sharp decline of $105,614,000 between September 30, 2009 and September 30, 2010. Approximately half of the decline is attributable to the sale of Davison State Bank which took place in April of 2010. The remaining portion of the decline is a result of asset and liability management strategies employed by the banks to reduce the size of the bank balance sheets to maintain adequate levels of capitalization. At September 30, 2010, both subsidiary banks were considered adequately capitalized by regulatory standards. Continued operating losses caused a $3,475,000 decline in shareholders equity on a year to year basis.
In late October, Fentura received authorization from the Federal Reserve Bank to form a special purpose subsidiary in connection with the planned sale of West Michigan Community Bank. This was the final regulatory approval required in connection with the proposed sale, which is now expected to take place prior to year-end 2010. As announced earlier in the year, Fentura has agreed to sell the bank to private investors in a transaction that will recover a $9,484,000 investment in the bank and provide an approximate $950,000 gain to Fentura. In a simultaneous transaction, Fentura will acquire certain non-performing assets from the bank to be housed and serviced from the newly formed Fentura subsidiary. As the non-performing assets are converted to performing loans or liquidated, the proceeds will be available to strengthen the capital position of The State Bank through paid-in-capital injections by Fentura. It is expected that completion of the sale will also increase the Tier 1 leverage capital ratio of Fentura from 4.61% to 6.58%.
In an unrelated action, the Federal Reserve Bank of Chicago and Fentura Financial, Inc. have entered into a written agreement designed to strengthen the overall financial condition of the company. Among other things, the agreement calls for a commitment to oversight responsibilities involving the subsidiary banks, stock, debt, dividend and distribution limitations at both the bank and holding company levels, cash flow projections, capital plans and periodic regulatory reporting. A copy of the written agreement is attached as an exhibit to this release.
# # #
CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve 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 pricing. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Further information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filing with the Securities and Exchange Commission.
Fentura Financial Inc.
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sept 30 | ||||||||||||||||
2010 | 2010 | 2010 | 2009 | 2009 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Cash and due from banks | $ | 14,787 | $ | 15,535 | $ | 17,019 | $ | 18,459 | $ | 18,814 | ||||||||||
Short term investments | 39,700 | 28,050 | 28,650 | 23,650 | 27,250 | |||||||||||||||
Total cash & cash equivalents | 54,487 | 43,585 | 45,669 | 42,109 | 46,064 | |||||||||||||||
Securities: | ||||||||||||||||||||
Securities available for sale | 54,786 | 45,604 | 42,113 | 43,608 | 49,405 | |||||||||||||||
Securities held to maturity | 4,471 | 4,697 | 5,453 | 5,456 | 5,577 | |||||||||||||||
Total securities | 59,257 | 50,301 | 47,566 | 49,064 | 54,982 | |||||||||||||||
Loans held for sale | 1,877 | 1,259 | 1,265 | 831 | 1,434 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 228,731 | 244,672 | 252,231 | 252,764 | 270,542 | |||||||||||||||
Real estate — construction | 15,439 | 17,578 | 20,129 | 26,295 | 34,072 | |||||||||||||||
Real estate — mortgage | 23,719 | 24,465 | 25,751 | 28,058 | 30,829 | |||||||||||||||
Consumer | 42,806 | 43,567 | 45,509 | 48,313 | 50,438 | |||||||||||||||
Total loans | 310,695 | 330,282 | 343,620 | 355,430 | 385,881 | |||||||||||||||
Less: Allowance for loan losses | (15,037 | ) | (14,227 | ) | (12,338 | ) | (10,726 | ) | (14,485 | ) | ||||||||||
Net loans | 295,658 | 316,055 | 331,282 | 344,704 | 371,396 | |||||||||||||||
Bank owned life insurance | 7,070 | 7,318 | 7,267 | 7,221 | 7,138 | |||||||||||||||
Bank premises and equipment | 15,254 | 15,471 | 15,697 | 15,914 | 16,111 | |||||||||||||||
Federal Home Loan Bank stock | 1,900 | 1,900 | 1,900 | 1,900 | 1,900 | |||||||||||||||
Accrued interest receivable | 1,582 | 1,743 | 1,927 | 1,813 | 2,020 | |||||||||||||||
Acquisition intangibles | 84 | 105 | 126 | 157 | 189 | |||||||||||||||
Other Real Estate Owned | 9,003 | 7,948 | 8,928 | 7,967 | 6,856 | |||||||||||||||
Assets of discontinued operations | — | — | 37,378 | 37,919 | 41,195 | |||||||||||||||
Other assets | 3,206 | 9,605 | 9,989 | 12,480 | 5,707 | |||||||||||||||
TOTAL ASSETS | $ | 449,378 | $ | 455,290 | $ | 508,994 | $ | 522,079 | $ | 554,992 | ||||||||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing deposits | 68,361 | 69,955 | 65,886 | 64,530 | 63,786 | |||||||||||||||
Interest bearing deposits | 340,882 | 341,429 | 362,903 | 376,245 | 405,080 | |||||||||||||||
Total deposits | 409,243 | 411,384 | 428,789 | 440,775 | 468,866 | |||||||||||||||
Short-term borrowings | 116 | 10 | 67 | 164 | 34 | |||||||||||||||
Federal Home Loan Bank Advances | 5,954 | 7,954 | 7,981 | 7,981 | 9,981 | |||||||||||||||
Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | |||||||||||||||
Liabilities of discontinued operations | — | — | 34,596 | 35,217 | 38,164 | |||||||||||||||
Accrued interest, taxes & other liabilities | 3,993 | 4,047 | 3,318 | 3,410 | 4,400 | |||||||||||||||
Total liabilities | 433,306 | 437,395 | 488,751 | 501,547 | 535,445 | |||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Common stock — no par value | ||||||||||||||||||||
5,000,000 shares authorized | 43,002 | 42,974 | 42,945 | 42,913 | 42,883 | |||||||||||||||
Retained earnings | (27,257 | ) | (24,920 | ) | (22,140 | ) | (21,657 | ) | (22,548 | ) | ||||||||||
Accumulated other comprehensive income (loss) | 327 | (159 | ) | (562 | ) | (724 | ) | (788 | ) | |||||||||||
Total stockholders’ equity | 16,072 | 17,895 | 20,243 | 20,532 | 19,547 | |||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 449,378 | $ | 455,290 | $ | 508,994 | $ | 522,079 | $ | 554,992 | ||||||||||
Common stock shares issued & outstanding | 2,289,912 | 2,276,441 | 2,267,135 | 2,248,553 | 2,225,214 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Non-Performing Loans as a % of Total Loans | 5.96 | % | 6.18 | % | 5.96 | % | 6.56 | % | 6.73 | % | ||||||||||
Allowance for Loan Losses as a % of Non-Performing Loans | 80.69 | % | 69.47 | % | 60.00 | % | 45.87 | % | 56.12 | % | ||||||||||
Accruing Loans Past Due 90 Days More to Total Loans | 0.00 | % | 0.35 | % | 0.12 | % | 0.09 | % | 0.05 | % | ||||||||||
Non-Performing Assets as a % of Total Assets | 6.45 | % | 6.87 | % | 6.52 | % | 6.96 | % | 6.27 | % | ||||||||||
Quarterly Average Balances: | ||||||||||||||||||||
Total Loans | 322,276 | 338,814 | 356,573 | 373,415 | 392,044 | |||||||||||||||
Total Earning Assets | 414,782 | 418,691 | 427,638 | 448,117 | 456,172 | |||||||||||||||
Total Shareholders’ Equity | 18,260 | 19,870 | 20,750 | 20,281 | 20,167 | |||||||||||||||
Total Assets | 457,986 | 477,761 | 513,830 | 530,250 | 562,326 | |||||||||||||||
Diluted Shares Outstanding | 2,277,406 | 2,276,441 | 2,249,917 | 2,226,745 | 2,210,613 |
Fentura Financial Inc.
Consolidated Income Statements
(Dollars in thousands, except per share data)
UNAUDITED
Consolidated Income Statements
(Dollars in thousands, except per share data)
UNAUDITED
Three Months ended | Nine months ended | |||||||||||||||||||||||||||
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sept 30 | Sep 30 | Sep 30 | ||||||||||||||||||||||
(prior periods restated with out DSB) | 2010 | 2010 | 2010 | 2009 | 2009 | 2010 | 2009 | |||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||
Interest & fees on loans | $ | 5,030 | $ | 5,200 | $ | 5,306 | $ | 5,665 | $ | 5,936 | $ | 15,536 | $ | 18,399 | ||||||||||||||
Interest & dividends on securities: | ||||||||||||||||||||||||||||
Taxable | 340 | 297 | 292 | 323 | 403 | 929 | 1,213 | |||||||||||||||||||||
Tax-exempt | 54 | 104 | 124 | 128 | 136 | 282 | 418 | |||||||||||||||||||||
Interest on federal funds sold | 12 | 10 | 5 | 3 | 2 | 27 | 1 | |||||||||||||||||||||
Total interest income | 5,436 | 5,611 | 5,727 | 6,119 | 6,477 | 16,774 | 20,031 | |||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||||
Deposits | 1,451 | 1,594 | 1,817 | 2,035 | 2,278 | 4,862 | 7,503 | |||||||||||||||||||||
Borrowings | 203 | 198 | 197 | 220 | 226 | 598 | 829 | |||||||||||||||||||||
Total interest expense | 1,654 | 1,792 | 2,014 | 2,255 | 2,504 | 5,460 | 8,332 | |||||||||||||||||||||
Net interest income | 3,782 | 3,819 | 3,713 | 3,864 | 3,973 | 11,314 | 11,699 | |||||||||||||||||||||
Provision for loan losses | 2,905 | 3,619 | 1,790 | 3,417 | 1,940 | 8,314 | 11,306 | |||||||||||||||||||||
Net interest income after provision for loan losses | 877 | 200 | 1,923 | 447 | 2,033 | 3,000 | 393 | |||||||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||||
Service charges on deposit accounts | 378 | 403 | 474 | 532 | 519 | 1,255 | 1,435 | |||||||||||||||||||||
Gain on sale of mortgage loans | 214 | 135 | 93 | 155 | 100 | 442 | 612 | |||||||||||||||||||||
Trust & investment services income | 376 | 338 | 389 | 330 | 458 | 1,103 | 1,285 | |||||||||||||||||||||
Gain (Loss) on sale of securities | — | 75 | — | — | 12 | — | — | |||||||||||||||||||||
Other than temporary impairment loss | (307 | ) | — | — | (79 | ) | — | (307 | ) | — | ||||||||||||||||||
Income (Loss) on Equity Investment | — | — | — | — | — | — | (1,560 | ) | ||||||||||||||||||||
Other income and fees | 522 | 607 | 391 | 481 | 391 | 1,595 | 1,473 | |||||||||||||||||||||
Total non-interest income | 1,183 | 1,558 | 1,347 | 1,419 | 1,480 | 4,088 | 3,245 | |||||||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||||
Salaries & employee benefits | 2,013 | 2,063 | 2,114 | 1,942 | 2,129 | 6,191 | 6,752 | |||||||||||||||||||||
Occupancy | 430 | 431 | 449 | 423 | 428 | 1,310 | 1,378 | |||||||||||||||||||||
Furniture and equipment | 395 | 386 | 371 | 406 | 385 | 1,152 | 1,212 | |||||||||||||||||||||
Loan and collection | 542 | 433 | 557 | 1,204 | 984 | 1,532 | 2,302 | |||||||||||||||||||||
Advertising and promotional | 25 | 45 | 28 | 22 | 39 | 98 | 126 | |||||||||||||||||||||
Loss on Equity Impairment | — | — | — | 9 | — | — | — | |||||||||||||||||||||
Loss/(Recovery) on impairment of held for sale operations | — | — | — | — | — | — | — | |||||||||||||||||||||
Other operating expenses | 1,242 | 1,012 | 1,048 | 1,271 | 1,016 | 3,301 | 3,458 | |||||||||||||||||||||
Total non-interest expense | 4,647 | 4,370 | 4,567 | 5,277 | 4,981 | 13,584 | 15,228 | |||||||||||||||||||||
Income (loss) from continuing operations before income tax | (2,587 | ) | (2,612 | ) | (1,297 | ) | (3,411 | ) | (1,468 | ) | (6,496 | ) | (11,590 | ) | ||||||||||||||
Federal income taxes (benefit) | (250 | ) | 53 | (327 | ) | (4,034 | ) | (332 | ) | (524 | ) | 5,266 | ||||||||||||||||
Net income (loss) from continuing operations | (2,337 | ) | (2,665 | ) | (970 | ) | 623 | (1,136 | ) | (5,972 | ) | (16,856 | ) | |||||||||||||||
Net Income (loss) from discontinued operations, net of tax | — | (115 | ) | 487 | 267 | 289 | 372 | (1,015 | ) | |||||||||||||||||||
Net Income (loss) | $ | (2,337 | ) | $ | (2,780 | ) | $ | (483 | ) | $ | 890 | $ | (847 | ) | $ | (5,600 | ) | $ | (17,871 | ) | ||||||||
Net Income (Loss) per share from continuing operations: | ||||||||||||||||||||||||||||
Basic and diluted earnings | $ | (1.03 | ) | $ | (1.17 | ) | $ | (0.43 | ) | $ | 0.28 | $ | (0.51 | ) | $ | (2.64 | ) | $ | (7.67 | ) | ||||||||
Net Income (Loss) per share from discontinued operations: | ||||||||||||||||||||||||||||
Basic and diluted earnings | $ | — | $ | (0.06 | ) | $ | 0.22 | $ | 0.12 | $ | 0.13 | $ | (0.17 | ) | $ | (0.46 | ) | |||||||||||
Net Income (Loss) per share: | ||||||||||||||||||||||||||||
Basic and diluted earnings | $ | (1.03 | ) | $ | (1.23 | ) | $ | (0.21 | ) | $ | 0.40 | $ | (0.38 | ) | $ | (2.47 | ) | $ | (8.13 | ) | ||||||||
Performance Ratios: | ||||||||||||||||||||||||||||
Return on Average Assets | -0.51 | % | -0.58 | % | -0.09 | % | 0.17 | % | -0.15 | % | -1.55 | % | -4.16 | % | ||||||||||||||
Return on Average Equity | -12.80 | % | -13.99 | % | -2.33 | % | 4.39 | % | -4.20 | % | -28.56 | % | -59.04 | % | ||||||||||||||
Net Interest Margin (FTE) | 3.66 | % | 3.66 | % | 3.59 | % | 3.49 | % | 3.53 | % | 3.66 | % | 3.40 | % | ||||||||||||||
Book Value Per Share | $ | 7.02 | $ | 7.86 | $ | 8.93 | $ | 9.13 | $ | 8.78 | $ | 7.02 | $ | 8.78 | ||||||||||||||
Net Charge-offs | 2,095 | 1,908 | 178 | 7,278 | 1,425 | 4,003 | 7,276 | |||||||||||||||||||||
Ratio of Net charge-offs to Gross Loans | 0.67 | % | 0.58 | % | 0.05 | % | 2.05 | % | 0.48 | % | 1.29 | % | 1.89 | % |