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 | ||
April 20, 2007 |
For Immediate Release
FENTURA FINANCIAL, INC. REPORTS FIRST QUARTER EARNINGS
Fenton, Michigan—April 20, 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 announced earnings of $948,000 or $.44 per diluted share for the quarter ended March 31, 2007. This represents a 21.5% decrease from the earnings of $1,207,000 or $.56 per diluted share for the first quarter of 2006.
FINANCIAL HIGHLIGHTS FOR THE QUARTER ENDED MARCH 31, 2007
1. | Total revenues increased 3.5 % driven by a 3.5% increase in interest income and a 3.8% increase in non-interest income. | ||
2. | Total gross loans increased $8,833,000 or 2.0% to $459,826,000 from December 31, 2006. | ||
3. | Total deposits of $531,349,000 increased $2,794,000 or 0.5% compared to December 31, 2006. | ||
4. | The net interest margin of 3.94% increased slightly from the 3.90% reported for the 4th quarter of 2006, but fell below the 4.26% level reported following the first quarter of 2006. | ||
5. | Return on average shareholder equity was 7.40% for the quarter ended March 31, 2007, a decline from the 10.21% reported for the same period in 2006. |
6. | Non-performing loans as a percent of total loans were 1.03% at March 31, 2007, an increase from 0.46% reported at the end of the first quarter of 2006. |
COMPONENTS OF THE FIRST QUARTER RESULTS
First quarter 2007 total revenue of $11,811,000 increased $400,000 or 3.5% over the $11,411,000 reported following the first quarter of 2006. Total interest income for the quarter increased $332,000 or 3.5% over the same quarter in 2006. Continued loan growth and improved earning asset yields contributed to the increased interest income. First quarter 2007 non-interest income of $1,865,000 also increased compared to the same quarter in 2006. A $124,000 or 32.4% increase in Trust and Investment income was the primary contributor to the improved quarter to quarter results. Net interest income was down when comparing the two quarters due to increased interest expense in 2007 as market rates increased and deposit balances transitioned to higher cost certificates of deposit. Accordingly, the net interest margin for the quarter ended March 31, 2007 declined to 3.94% as compared to the 4.26% reported for the quarter ending March 31, 2006.
First quarter 2007 non-interest expense of $5,496,000 declined 1.3% compared to the $5,569,000 reported following the first quarter of 2006, a reflection of subsidiary bank efforts to control operating expenses in light of the margin compression mentioned earlier.
Provision for loan losses expense was $439,000 for the quarter ended March 31, 2007 compared to $400,000 for the quarter ended March 31, 2006. The company performs a quarterly analysis of the adequacy of the allowance for loan losses to determine the necessary provision expense and allowance balance to cover identified losses based upon information available at the time regarding asset quality, loan trends and other economic factors. The provision recorded is a result of this computation. At March 31, 2007 the allowance for loan losses to gross loans was 1.51% compared to the 1.44% at March 31, 2006.
Total assets of the company of $624,952,000 at March 31, 2007 were comparable to the $624,320,000 reported at March 31, 2006. At March 31, 2007, gross loans totaled $459,826,000 an increase of 1.6% or $7,442,000 above the level of $452,384,000 reported at March 31, 2006. Commercial loans increased $38,284,000 offsetting a $21,476,000 decline in construction loans,
a $8,581,000 decline in consumer loans and a modest decline in real estate loans. Total deposits of $531,349,000 at March 31, 2007 declined nominally from the $533,965,000 reported at the end of the first quarter 2006.
The return on average shareholders equity for the quarter ended March 31, 2007 was 7.40% compared to 10.21% reported following the first quarter of 2006. Cash dividends paid to shareholders in the first quarter 2007 increased 11.3% from $541,000 paid in 2007 as compared to the $486,000 paid during the comparable quarter of 2006.
According to Fentura Financial, Inc. President and CEO Donald L. Grill, “the year to year decline in net income was a result of margin compression caused by the interest rate environment and competitive pressures as well as the softening of the Michigan economy. Our bankers are continuing to develop and implement pricing and growth strategies and working hard at controlling expenses in an attempt to maximize our performance during these challenging times.”
Fentura is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank headquartered in Fenton with offices serving in 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.
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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. Further information concerning our business, including additional factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission.
Fentura Financial Inc.
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED
Mar 31 | Dec 31 | Sept 30 | June 30 | Mar 31 | ||||||||||||||||
2007 | 2006 | 2006 | 2006 | 2006 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Cash and due from banks | $ | 17,236 | $ | 19,946 | $ | 17,473 | $ | 19,346 | $ | 19,156 | ||||||||||
Short term investments | 6,100 | 9,500 | 8,950 | 6,900 | 8,650 | |||||||||||||||
Total cash & cash equivalents | 23,336 | 29,446 | 26,423 | 26,246 | 27,806 | |||||||||||||||
Securities: | ||||||||||||||||||||
Securities available for sale | 88,783 | 91,104 | 92,557 | 92,646 | 93,217 | |||||||||||||||
Securities held to maturity | 10,441 | 11,899 | 12,202 | 16,958 | 15,395 | |||||||||||||||
Total securities | 99,224 | 103,003 | 104,759 | 109,604 | 108,612 | |||||||||||||||
Loans held for sale | 2,352 | 2,226 | 2,079 | 679 | 1,695 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 298,338 | 272,401 | 268,305 | 265,097 | 260,054 | |||||||||||||||
Real estate — construction | 64,973 | 78,927 | 82,414 | 87,908 | 86,449 | |||||||||||||||
Real estate — mortgage | 35,562 | 36,867 | 37,963 | 37,076 | 36,347 | |||||||||||||||
Consumer | 60,953 | 62,798 | 65,090 | 66,896 | 69,534 | |||||||||||||||
Total loans | 459,826 | 450,993 | 453,772 | 456,977 | 452,384 | |||||||||||||||
Less: Allowance for loan losses | (6,962 | ) | (6,692 | ) | (6,625 | ) | (6,682 | ) | (6,518 | ) | ||||||||||
Net loans | 452,864 | 444,301 | 447,147 | 450,295 | 445,866 | |||||||||||||||
Bank owned life insurance | 6,872 | 6,815 | 6,736 | 6,683 | 6,642 | |||||||||||||||
Bank premises and equipment | 19,509 | 16,854 | 16,564 | 16,665 | 15,350 | |||||||||||||||
Federal Home Loan Bank stock | 2,032 | 2,032 | 2,172 | 2,432 | 2,300 | |||||||||||||||
Accrued interest receivable | 3,313 | 2,985 | 3,079 | 2,837 | 2,830 | |||||||||||||||
Goodwill | 7,955 | 7,955 | 7,955 | 7,955 | 7,955 | |||||||||||||||
Acquisition intangibles | 683 | 759 | 835 | 912 | 988 | |||||||||||||||
Other assets | 6,813 | 5,922 | 5,215 | 4,857 | 4,276 | |||||||||||||||
TOTAL ASSETS | $ | 624,952 | $ | 622,298 | $ | 622,964 | $ | 629,165 | $ | 624,320 | ||||||||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing deposits | 77,790 | 74,887 | 75,564 | 77,463 | 77,652 | |||||||||||||||
Interest bearing deposits | 453,559 | 453,668 | 456,021 | 456,937 | 456,313 | |||||||||||||||
Total deposits | 531,349 | 528,555 | 531,585 | 534,400 | 533,965 | |||||||||||||||
Short-term borrowings | 450 | 1,500 | 1,251 | 6,565 | 20 | |||||||||||||||
Federal Home Loan Bank Advances | 11,052 | 11,052 | 11,091 | 12,130 | 14,189 | |||||||||||||||
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 | 5,797 | 5,873 | 5,094 | 4,026 | 4,420 | |||||||||||||||
Total liabilities | 572,648 | 570,980 | 573,021 | 581,121 | 576,594 | |||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Common stock — no par value 5,000,000 shares authorized | 42,476 | 42,158 | 41,978 | 41,810 | 34,798 | |||||||||||||||
Retained earnings | 10,524 | 10,118 | 9,149 | 8,358 | 14,431 | |||||||||||||||
Accumulated other comprehensive income (loss) | (696 | ) | (958 | ) | (1,184 | ) | (2,124 | ) | (1,503 | ) | ||||||||||
Total stockholders’ equity | 52,304 | 51,318 | 49,943 | 48,044 | 47,726 | |||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 624,952 | $ | 622,298 | $ | 622,964 | $ | 629,165 | $ | 624,320 | ||||||||||
* Common stock shares issued & outstanding | 2,162,107 | 2,152,862 | 2,147,408 | 2,142,496 | 2,130,564 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Non-Performing Loans as a % of Total Loans | 1.03 | % | 1.13 | % | 0.44 | % | 0.44 | % | 0.46 | % | ||||||||||
Allowance for Loan Losses as a % of Non-Performing Loans | 146.02 | % | 131.16 | % | 333.58 | % | 330.14 | % | 312.91 | % | ||||||||||
Accruing Loans Past Due 90 Days More to Total Loans | 0.11 | % | 0.51 | % | 0.02 | % | 0.04 | % | 0.02 | % | ||||||||||
Non-Performing Assets as a % of Total Assets | 1.12 | % | 1.08 | % | 0.48 | % | 0.44 | % | 0.35 | % | ||||||||||
Quarterly Average Balances: | ||||||||||||||||||||
Total Loans | 452,274 | 452,334 | 451,301 | 455,734 | 446,889 | |||||||||||||||
Total Earning Assets | 569,289 | 569,756 | 577,454 | 573,687 | 570,751 | |||||||||||||||
Total Shareholders’ Equity | 51,968 | 51,253 | 48,844 | 48,223 | 47,937 | |||||||||||||||
Total Assets | 622,594 | 620,960 | 630,713 | 622,474 | 619,398 | |||||||||||||||
Diluted Shares Outstanding | 2,160,899 | 2,155,400 | 2,149,598 | 2,135,056 | 2,137,265 |
* | 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 | ||||||||||||||||||||
March 31 | Dec 31 | Sept 30 | June 30 | March 31 | ||||||||||||||||
2007 | 2006 | 2006 | 2006 | 2006 | ||||||||||||||||
Interest income: | ||||||||||||||||||||
Interest & fees on loans | $ | 8,647 | $ | 8,920 | $ | 8,929 | $ | 8,852 | $ | 8,430 | ||||||||||
Interest & dividends on securities: | ||||||||||||||||||||
Taxable | 917 | 865 | 860 | 852 | 883 | |||||||||||||||
Tax-exempt | 215 | 202 | 205 | 196 | 207 | |||||||||||||||
Interest on federal funds sold | 167 | 124 | 218 | 79 | 94 | |||||||||||||||
Total interest income | 9,946 | 10,111 | 10,212 | 9,979 | 9,614 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 3,961 | 3,964 | 3,943 | 3,594 | 3,241 | |||||||||||||||
Borrowings | 585 | 552 | 567 | 540 | 507 | |||||||||||||||
Total interest expense | 4,546 | 4,516 | 4,510 | 4,134 | 3,748 | |||||||||||||||
Net interest income | 5,400 | 5,595 | 5,702 | 5,845 | 5,866 | |||||||||||||||
Provision for loan losses | 439 | 240 | 240 | 240 | 400 | |||||||||||||||
Net interest income after provision for loan losses | 4,961 | 5,355 | 5,462 | 5,605 | 5,466 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges on deposit accounts | 851 | 958 | 989 | 950 | 831 | |||||||||||||||
Gain on sale of mortgage loans | 84 | 171 | 124 | 157 | 163 | |||||||||||||||
Trust & investment services income | 507 | 382 | 372 | 417 | 383 | |||||||||||||||
Loss on sale of securities | — | — | (2 | ) | — | — | ||||||||||||||
Other income and fees | 423 | 507 | 457 | 364 | 420 | |||||||||||||||
Total non-interest income | 1,865 | 2,018 | 1,940 | 1,888 | 1,797 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Salaries & employee benefits | 3,247 | 2,894 | 3,197 | 3,313 | 3,334 | |||||||||||||||
Occupancy | 503 | 459 | 457 | 510 | 432 | |||||||||||||||
Furniture and equipment | 525 | 539 | 541 | 551 | 508 | |||||||||||||||
Loan and collection | 91 | 93 | 72 | 84 | 71 | |||||||||||||||
Advertising and promotional | 112 | 130 | 140 | 201 | 153 | |||||||||||||||
Other operating expenses | 1,018 | 1,086 | 1,096 | 1,054 | 1,071 | |||||||||||||||
Total non-interest expense | 5,496 | 5,201 | 5,503 | 5,713 | 5,569 | |||||||||||||||
Income before federal income taxes | 1,330 | 2,172 | 1,899 | 1,780 | 1,694 | |||||||||||||||
Federal income taxes | 382 | 665 | 563 | 522 | 487 | |||||||||||||||
Net Income | $ | 948 | $ | 1,507 | $ | 1,336 | $ | 1,258 | $ | 1,207 | ||||||||||
*Per Share Data: | ||||||||||||||||||||
Basic earnings | $ | 0.44 | $ | 0.70 | $ | 0.62 | $ | 0.59 | $ | 0.57 | ||||||||||
Diluted earnings | $ | 0.44 | $ | 0.70 | $ | 0.62 | $ | 0.59 | $ | 0.56 | ||||||||||
Cash dividends declared | $ | 0.25 | $ | 0.25 | $ | 0.23 | $ | 0.23 | $ | 0.23 | ||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on Average Assets | 0.62 | % | 0.96 | % | 0.84 | % | 0.81 | % | 0.79 | % | ||||||||||
Return on Average Equity | 7.40 | % | 11.66 | % | 10.85 | % | 10.46 | % | 10.21 | % | ||||||||||
Net Interest Margin (FTE) | 3.94 | % | 3.90 | % | 4.01 | % | 4.17 | % | 4.26 | % | ||||||||||
Book Value Per Share | $ | 24.19 | $ | 24.08 | $ | 23.25 | $ | 20.38 | $ | 22.33 | ||||||||||
Net Charge-offs | 169 | 173 | 297 | 76 | 183 | |||||||||||||||
Ratio of Net charge-offs to Gross Loans | 0.04 | % | 0.04 | % | 0.12 | % | 0.06 | % | 0.04 | % |
* | Per share data adjusted for 10% stock dividend paid August 4, 2006 |