EXHIBIT 99.1
FENTURA FINANCIAL, INC.
P.O. BOX 725
FENTON, MI 48430-0725
P.O. BOX 725
FENTON, MI 48430-0725
CONTACT: | RONALD L. JUSTICE FENTURA FINANCIAL, INC. (810)714-3902 February 1, 2007 |
For Immediate Release
FENTURA FINANCIAL, INC. ANNOUNCES A 15% INCREASE IN
QUARTERLY NET INCOME AND A 5% INCREASE IN NET
INCOME FOR 2006
QUARTERLY NET INCOME AND A 5% INCREASE IN NET
INCOME FOR 2006
Fenton, Michigan—February 1, 2007—Fentura Financial, Inc. (trading symbol: FETM), the holding company for The State Bank of Fenton, Michigan, Davison State Bank of Davison, Michigan, and West Michigan Community Bank of Hudsonville, Michigan, today reported that improved net interest income from loan growth and increases in trust and investment revenues and deposit service fees contributed to a 5% increase in net income for the year ended December 31, 2006.
Financial highlights for 2006 compared to 2005 include: | |||
1. | Fourth quarter net income increased 15% compared to the same period in 2005. | ||
2. | Yearly total interest income increased 17.8% driven by increases in interest income on loans. | ||
3. | Non-interest income increased 11.1% during 2006, with increases in service charges on deposits and income from trust and investment services. | ||
4. | Total loans including loans held for sale increased $12,821,000 or 2.91% during 2006. 5. A solid 4.11% net interest margin was achieved for 2006. 6. Return on average equity was 10.82% for the year. | ||
7. | While non-performing assets increased to 1.08% of total assets, overall asset quality remains strong. |
According to President and CEO, Donald L. Grill, “2006 was another record year for Fentura Financial, Inc. and its affiliate banks. Considering the challenges presented by the Michigan economy, I am proud that the Fentura team was able to continue to grow profitably, control costs, and manage asset quality at a level that resulted in such fine performance.”
Components of Fourth Quarter Results
For the fourth quarter ended December 31, 2006, net income totaled $1,506,000 or $0.70 per diluted share, compared to $1,310,000, or $0.62 per diluted share achieved during the fourth quarter of 2005 an increase of 15%. Contributing to the improved earnings was a non-interest income increase of $374,000 or 22.7% to $2,018,000 compared to the $1,644,000 reported for the same period in 2005 based on improved levels of service charges on deposits and trust and
investment services income in 2006. Non-interest income increases were partially offset by non-interest expenses which increased by a modest $67,000 or 1.3% comparing the two periods. Non-interest expenses increased in 2006 due to the occupancy expenses associated with the opening of a new community office of The State Bank in Grand Blanc, Michigan. Net interest income after provision for loan losses was flat comparing the two periods.
Provision for loan losses was $240,000 for the three months ended December 31, 2006 compared to $387,000 for the same period in 2005. The Company performs a quarterly analysis of the adequacy of the allowance for loan and lease losses to determine the necessary allowance balance to cover identified losses based upon information available at that time regarding assets quality, loan trends and other economic factors. The provision recorded is a result of this computation and while the provision was lower in 2006, the allowance for loan and lease losses to gross loans of 1.48% at December 31, 2006 was higher than the 1.43% reported at December 31, 2005.
Year-to-Date Results
Net income for the year totaled $5,308,000 or $2.47 per diluted share, compared to $5,054,000 or $2.40 per diluted share for 2005. Contributing to the increase in net income was net interest income which totaled $23,008,000 for the twelve month period ending December 31, 2006, an increase of $428,000 or 1.9% compared to the $22,580,000 reported for the same period in 2005. Total interest income increased $6,038,000 or 17.8% in 2006 from interest earned on new loans and due to increases in certain loan rate levels driven by increased market interest rates. The increase in interest income was partially offset by an interest expense increase of $5,610,000. Deposit interest rates were also impacted by the changes in market rates and competitive pressures, which caused the increase in interest expense in 2006. The net interest margin derived from the net interest income as a percent of average earning assets declined from the 4.23% reported in 2005 but remained strong at 4.11%.
Non-interest income at $7,643,000 for the twelve months ended December 31, 2006 increased $761,000 or 11.1% compared to the $6,882,000 reported in 2005. Contributing to the improved non-interest income, service charges on deposits increased 7.6% during the period and income from trust and investment services increased 34.3% in 2006 based on growth of trust, brokerage, and financial planning services.
Non-interest expense increased $1,186,000 or 5.7% to $21,986,000 during 2006 compared to the $20,800,000 reported for 2005. Increased salary and benefit expenses and occupancy expense associated with the opening of a new community office of The State Bank contributed to the increase in total non-interest expense.
Provision for loan losses was $1,120,000 for the twelve months ended December 31, 2006 compared to $1,389,000 for 2005. The allowance for loan and lease losses to gross loans of 1.48% at December 31, 2006 was estimated as adequate based on the analysis described previously, and was higher than the 1.43% reported at December 31, 2005.
Total loans including loans held for sale were $453,219,000 at December 31, 2006, an increase of $12,821,000 or 2.9% compared to the $440,398,000 reported at December 31, 2005. The year-to-year increase in total loans was primarily attributable to the $20,444,000 or 6.2%
growth of commercial and real estate construction loans. Loan growth, as well as an increase in bank premises and equipment from the new community office at The State Bank contributed to the $3,209,000 increase in total assets to $622,298,000 at December 31, 2006 compared to the $619,089,000 reported for 2005.
The return on average assets for the Company at .85% for the year ended December 31, 2006 was unchanged from the .85% reported for 2005. The return on average shareholders’ equity for 2006 was 10.82% compared to 11.09% reported for 2005. Cash dividends paid to shareholders during 2006 increased 6.8% to $.94 per share compared to the $.88 per share paid in 2005. The 2006 fourth quarter dividend represents the 74th consecutive regular quarterly dividend paid since the Holding Company was formed in 1988.
Fentura is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank headquartered in Fenton with offices serving Fenton, Linden, Holly, Grand Blanc and Brighton; Davison State Bank headquartered in Davison, Michigan with offices serving the Davison area; and West Michigan Community Bank headquartered in Hudsonville, Michigan with offices serving Hudsonville, Holland, Jenison, and Grandville. Fentura Financial, Inc. shares are traded over the counter under the FETM trading symbol.
All per share information reflects a 10% stock dividend paid on August 4, 2006 for shareholders of record July 31, 2006.
# # #
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
Dec 31 | Sept 30 | June 30 | Mar 31 | Dec 31 | ||||||||||||||||
2006 | 2006 | 2006 | 2006 | 2005 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Cash and due from banks | $ | 19,946 | $ | 17,473 | $ | 19,346 | $ | 19,156 | $ | 21,327 | ||||||||||
Short term investments | 9,500 | 8,950 | 6,900 | 8,650 | 9,750 | |||||||||||||||
Total cash & cash equivalents | 29,446 | 26,423 | 26,246 | 27,806 | 31,077 | |||||||||||||||
Securities: | ||||||||||||||||||||
Securities available for sale | 91,104 | 92,557 | 92,646 | 93,217 | 99,542 | |||||||||||||||
Securities held to maturity | 11,899 | 12,202 | 16,958 | 15,395 | 14,851 | |||||||||||||||
�� | ||||||||||||||||||||
Total securities | 103,003 | 104,759 | 109,604 | 108,612 | 114,393 | |||||||||||||||
Loans held for sale | 2,226 | 2,079 | 679 | 1,695 | 1,042 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 272,401 | 268,305 | 265,097 | 260,054 | 254,498 | |||||||||||||||
Real estate — construction | 78,927 | 82,414 | 87,908 | 86,449 | 76,386 | |||||||||||||||
Real estate — mortgage | 36,867 | 37,963 | 37,076 | 36,347 | 37,627 | |||||||||||||||
Consumer | 62,798 | 65,090 | 66,896 | 69,534 | 70,845 | |||||||||||||||
Total loans | 450,993 | 453,772 | 456,977 | 452,384 | 439,356 | |||||||||||||||
Less: Allowance for loan losses | (6,692 | ) | (6,625 | ) | (6,682 | ) | (6,518 | ) | (6,301 | ) | ||||||||||
Net loans | 444,301 | 447,147 | 450,295 | 445,866 | 433,055 | |||||||||||||||
Bank owned life insurance | 6,815 | 6,736 | 6,683 | 6,642 | 6,579 | |||||||||||||||
Bank premises and equipment | 16,854 | 16,564 | 16,665 | 15,350 | 14,617 | |||||||||||||||
Federal Home Loan Bank stock | 2,032 | 2,172 | 2,432 | 2,300 | 2,300 | |||||||||||||||
Accrued interest receivable | 2,985 | 3,079 | 2,837 | 2,830 | 2,676 | |||||||||||||||
Goodwill | 7,955 | 7,955 | 7,955 | 7,955 | 7,955 | |||||||||||||||
Acquisition intangibles | 759 | 835 | 912 | 988 | 1,075 | |||||||||||||||
Other assets | 5,922 | 5,215 | 4,857 | 4,276 | 4,320 | |||||||||||||||
TOTAL ASSETS | $ | 622,298 | $ | 622,964 | $ | 629,165 | $ | 624,320 | $ | 619,089 | ||||||||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing deposits | 74,887 | 75,564 | 77,463 | 77,652 | 76,792 | |||||||||||||||
Interest bearing deposits | 453,668 | 456,021 | 456,937 | 456,313 | 451,262 | |||||||||||||||
Total deposits | 528,555 | 531,585 | 534,400 | 533,965 | 528,054 | |||||||||||||||
Short-term borrowings | 1,500 | 1,251 | 6,565 | 20 | 1,537 | |||||||||||||||
Federal Home Loan Bank Advances | 11,052 | 11,091 | 12,130 | 14,189 | 14,228 | |||||||||||||||
Repurchase agreements | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | |||||||||||||||
Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | |||||||||||||||
Accrued interest, taxes & other liabilities | 5,873 | 5,094 | 4,026 | 4,420 | 4,375 | |||||||||||||||
Total liabilities | 570,980 | 573,021 | 581,121 | 576,594 | 572,194 | |||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Common stock — no par value | ||||||||||||||||||||
5,000,000 shares authorized | 42,158 | 41,978 | 41,810 | 34,798 | 34,491 | |||||||||||||||
Retained earnings | 10,118 | 9,149 | 8,358 | 14,431 | 13,729 | |||||||||||||||
Accumulated other comprehensive income (loss) | (958 | ) | (1,184 | ) | (2,124 | ) | (1,503 | ) | (1,325 | ) | ||||||||||
Total stockholders’ equity | 51,318 | 49,943 | 48,044 | 47,726 | 46,895 | |||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 622,298 | $ | 622,964 | $ | 629,165 | $ | 624,320 | $ | 619,089 | ||||||||||
* Common stock shares issued & outstanding | 2,152,862 | 2,147,408 | 2,142,496 | 2,130,564 | 2,124,427 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Non-Performing Loans as a % of Total Loans | 1.13 | % | 0.44 | % | 0.44 | % | 0.46 | % | 0.67 | % | ||||||||||
Allowance for Loan Losses as a % of Non-Performing Loans | 131.16 | % | 333.58 | % | 330.14 | % | 312.91 | % | 213.09 | % | ||||||||||
Accruing Loans Past Due 90 Days More to Total Loans | 0.51 | % | 0.02 | % | 0.04 | % | 0.02 | % | 0.02 | % | ||||||||||
Non-Performing Assets as a % of Total Assets | 1.08 | % | 0.48 | % | 0.44 | % | 0.35 | % | 0.56 | % | ||||||||||
Quarterly Average Balances: | ||||||||||||||||||||
Total Loans | 452,334 | 451,301 | 455,734 | 446,889 | 436,632 | |||||||||||||||
Total Earning Assets | 569,756 | 577,454 | 573,687 | 570,751 | 559,834 | |||||||||||||||
Total Shareholders’ Equity | 51,253 | 48,844 | 48,223 | 47,937 | 47,497 | |||||||||||||||
Total Assets | 620,960 | 630,713 | 622,474 | 619,398 | 610,275 | |||||||||||||||
Diluted Shares Outstanding | 2,155,400 | 2,149,598 | 2,135,056 | 2,137,265 | 2,128,215 |
* | Per share data adjusted for 10% stock dividend paid August 4, 2006 |
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 | Twelve months ended | |||||||||||||||||||||||||||
Dec 31 | Sept 30 | June 30 | March 31 | Dec 31 | Dec 31 | Dec 31 | ||||||||||||||||||||||
2006 | 2006 | 2006 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||
Interest & fees on loans | $ | 8,920 | $ | 8,929 | $ | 8,852 | $ | 8,430 | $ | 8,154 | $ | 35,131 | $ | 29,670 | ||||||||||||||
Interest & dividends on securities: | ||||||||||||||||||||||||||||
Taxable | 865 | 860 | 852 | 883 | 786 | 3,461 | 3,250 | |||||||||||||||||||||
Tax-exempt | 202 | 205 | 196 | 207 | 90 | 809 | 794 | |||||||||||||||||||||
Interest on federal funds sold | 124 | 218 | 79 | 94 | 110 | 515 | 164 | |||||||||||||||||||||
Total interest income | 10,111 | 10,212 | 9,979 | 9,614 | 9,140 | 39,916 | 33,878 | |||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||||
Deposits | 3,964 | 3,943 | 3,594 | 3,241 | 2,941 | 14,743 | 9,390 | |||||||||||||||||||||
Borrowings | 552 | 567 | 540 | 507 | 473 | 2,165 | 1,908 | |||||||||||||||||||||
Total interest expense | 4,516 | 4,510 | 4,134 | 3,748 | 3,414 | 16,908 | 11,298 | |||||||||||||||||||||
Net interest income | 5,595 | 5,702 | 5,845 | 5,866 | 5,726 | 23,008 | 22,580 | |||||||||||||||||||||
Provision for loan losses | 240 | 240 | 240 | 400 | 387 | 1,120 | 1,389 | |||||||||||||||||||||
Net interest income after provision for loan losses | 5,355 | 5,462 | 5,605 | 5,466 | 5,339 | 21,888 | 21,191 | |||||||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||||
Service charges on deposit accounts | 958 | 989 | 950 | 831 | 874 | 3,708 | 3,445 | |||||||||||||||||||||
Gain on sale of mortgage loans | 171 | 124 | 157 | 163 | 212 | 615 | 842 | |||||||||||||||||||||
Trust & investment services income | 382 | 372 | 417 | 383 | 315 | 1,554 | 1,157 | |||||||||||||||||||||
Loss on sale of securities | — | (2 | ) | — | — | (41 | ) | (2 | ) | (149 | ) | |||||||||||||||||
Other income and fees | 507 | 457 | 364 | 420 | 284 | 1,768 | 1,587 | |||||||||||||||||||||
Total non-interest income | 2,018 | 1,940 | 1,888 | 1,797 | 1,644 | 7,643 | 6,882 | |||||||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||||
Salaries & employee benefits | 2,894 | 3,197 | 3,313 | 3,334 | 2,920 | 12,738 | 11,983 | |||||||||||||||||||||
Occupancy | 459 | 457 | 510 | 432 | 348 | 1,858 | 1,673 | |||||||||||||||||||||
Furniture and equipment | 539 | 541 | 551 | 508 | 504 | 2,140 | 2,080 | |||||||||||||||||||||
Loan and collection | 93 | 72 | 84 | 71 | 133 | 320 | 388 | |||||||||||||||||||||
Advertising and promotional | 130 | 140 | 201 | 153 | 118 | 624 | 627 | |||||||||||||||||||||
Other operating expenses | 1,087 | 1,096 | 1,054 | 1,071 | 1,112 | 4,306 | 4,049 | |||||||||||||||||||||
Total non-interest expense | 5,202 | 5,503 | 5,713 | 5,569 | 5,135 | 21,986 | 20,800 | |||||||||||||||||||||
Income before federal income taxes | 2,171 | 1,899 | 1,780 | 1,694 | 1,848 | 7,545 | 7,273 | |||||||||||||||||||||
Federal income taxes | 665 | 563 | 522 | 487 | 538 | 2,237 | 2,219 | |||||||||||||||||||||
Net Income | $ | 1,506 | $ | 1,336 | $ | 1,258 | $ | 1,207 | $ | 1,310 | $ | 5,308 | $ | 5,054 | ||||||||||||||
*Per Share Data: | ||||||||||||||||||||||||||||
Basic earnings | $ | 0.70 | $ | 0.62 | $ | 0.59 | $ | 0.56 | $ | 0.62 | $ | 2.48 | $ | 2.41 | ||||||||||||||
Diluted earnings | $ | 0.70 | $ | 0.62 | $ | 0.59 | $ | 0.56 | $ | 0.62 | $ | 2.47 | $ | 2.40 | ||||||||||||||
Cash dividends declared | $ | 0.25 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.94 | $ | 0.88 | ||||||||||||||
Performance Ratios: | ||||||||||||||||||||||||||||
Return on Average Assets | 0.96 | % | 0.84 | % | 0.81 | % | 0.79 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||||
Return on Average Equity | 11.66 | % | 10.85 | % | 10.46 | % | 10.21 | % | 10.94 | % | 10.82 | % | 11.09 | % | ||||||||||||||
Net Interest Margin (FTE) | 3.90 | % | 4.01 | % | 4.17 | % | 4.26 | % | 4.11 | % | 4.11 | % | 4.23 | % | ||||||||||||||
Book Value Per Share | $ | 24.08 | $ | 23.25 | $ | 20.38 | $ | 20.38 | $ | 22.07 | $ | 24.08 | $ | 22.07 | ||||||||||||||
Net Charge-offs | 173 | 297 | 76 | 183 | 380 | 729 | 589 | |||||||||||||||||||||
Ratio of Net charge-offs to Gross Loans | 0.04 | % | 0.12 | % | 0.06 | % | 0.04 | % | 0.09 | % | 0.16 | % | 0.13 | % |
* | Per share data adjusted for 10% stock dividend paid August 4, 2006 |