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 | |
CEO | ||
Fentura Financial, Inc. | ||
(810) 714-3985 | ||
January 29, 2008 |
For Immediate Release
FOURTH QUARTER 2007 FINANCIAL PERFORMANCE HIGHLIGHTS
Fentura Financial, Inc. reported an operating loss for the fourth quarter of 2007 totaling $152,000 or a loss of $0.07 per diluted share. Net-income for the fourth quarter of 2006 totaled $1,507,000 or $0.70 per diluted share. As was reported to shareholders following the third quarter of 2007, fourth quarter operating results were again impacted by Fentura subsidiary banks providing additional reserves to their allowance for loan losses. Provisions totaled $1,234,000 for the quarter ended December 31, 2007 compared to the $240,000 reported for the fourth quarter of 2006. Management and the boards of directors concluded that it was necessary to increase the provision for loan losses based upon the allowance for loan loss computation, loan portfolio trends, increased charge offs and the continued softening of the Michigan economy. The dramatic decline in the housing industry has had a negative impact on the construction and land development portfolios of the banks. Such loans comprise approximately 12% of the total gross loan portfolio of $471,403,000. The remainder of the portfolio is comprised of a diverse borrowing base of loans to individuals and small businesses of various types.
For the year ended December 31, 2007, Fentura experienced an operating loss of $467,000 or a loss of $0.22 per diluted share compared to net income of $5,308,000 reported for the year ending December 31, 2006 or $2.47 per diluted share. Net-interest income of $20,593,000 reported at December 31, 2007 declined 10.5% from the $23,008,000 reported at December 31, 2006. Provision for loan losses totaled $7,466,000 during 2007 versus $1,120,000 reported for 2006. Non-interest income of $7,579,000 reported for the year ended December 31, 2007 declined modestly compared to the $7,643,000 reported for 2006, primarily due to a decline in gains on the sale of mortgage loans and a drop in total service charges on deposit accounts. Improvement was achieved in controlling operating expenses as total non-interest expense of
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$21,834,000 for 2007 reflected a 1% reduction from the $21,986,000 reported for the twelve months ended December 31, 2006.
According to Fentura’s CEO Donald L. Grill, “During 2007, we witnessed a dramatic contraction in the residential housing industry. New home sales, housing starts and home values dropped precipitously creating excess inventory and dramatically impacting the financial capability and repayment capacity of many of our construction and land development borrowers. In response, our banks added substantially to the allowance for loan losses, principally during the third quarter. The additional provision for loan loss expense offset traditional operating earnings and resulted in a loss for the full year.”
Total assets of $628,019,000 as of December 31, 2007 increased 1.0% from the $622,298,000 reported at the end 2006. Similarly, gross loans increased at year end 2007 to $471,403,000 compared to the $450,993,000 reported at December 31, 2006, an increase of 4.5%. New commercial loans were the primary contributor to the loan growth. Total deposits of $543,503,000 at December 31, 2007 were 2.8% above the $528,555,000 reported as of December 31, 2006 due to growth of interest bearing deposits. At December 31, 2007 total shareholder equity declined modestly at $49,496,000 compared to the $51,318,000 reported at year end 2006 based on the operating losses reported for the year.
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, and Jenison. 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.
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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 | ||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
Cash and due from banks | $ | 22,734 | $ | 22,122 | $ | 18,658 | $ | 17,236 | $ | 19,946 | ||||||||||
Short term investments | 7,300 | 350 | 4,250 | 6,100 | 9,500 | |||||||||||||||
Total cash & cash equivalents | 30,034 | 22,472 | 22,908 | 23,336 | 29,446 | |||||||||||||||
Securities: | ||||||||||||||||||||
Securities available for sale | 74,881 | 80,250 | 88,816 | 88,783 | 91,104 | |||||||||||||||
Securities held to maturity | 8,685 | 8,856 | 8,934 | 10,441 | 11,899 | |||||||||||||||
Total securities | 83,566 | 89,106 | 97,750 | 99,224 | 103,003 | |||||||||||||||
Loans held for sale | 1,655 | 2,349 | 1,066 | 2,352 | 2,226 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial | 313,642 | 303,533 | 298,359 | 298,338 | 272,401 | |||||||||||||||
Real estate — construction | 59,805 | 62,787 | 62,722 | 64,973 | 78,927 | |||||||||||||||
Real estate — mortgage | 39,817 | 40,926 | 37,842 | 35,562 | 36,867 | |||||||||||||||
Consumer | 58,139 | 59,800 | 59,147 | 60,953 | 62,798 | |||||||||||||||
Total loans | 471,403 | 467,046 | 458,070 | 459,826 | 450,993 | |||||||||||||||
Less: Allowance for loan losses | (8,554 | ) | (11,425 | ) | (7,174 | ) | (6,962 | ) | (6,692 | ) | ||||||||||
Net loans | 462,849 | 455,621 | 450,896 | 452,864 | 444,301 | |||||||||||||||
Bank owned life insurance | 7,042 | 6,974 | 6,920 | 6,872 | 6,815 | |||||||||||||||
Bank premises and equipment | 20,101 | 19,442 | 19,383 | 19,509 | 16,854 | |||||||||||||||
Federal Home Loan Bank stock | 2,032 | 2,032 | 2,032 | 2,032 | 2,032 | |||||||||||||||
Accrued interest receivable | 2,813 | 3,362 | 3,272 | 3,313 | 2,985 | |||||||||||||||
Goodwill | 7,955 | 7,955 | 7,955 | 7,955 | 7,955 | |||||||||||||||
Acquisition intangibles | 485 | 551 | 616 | 683 | 759 | |||||||||||||||
Other assets | 9,487 | 9,682 | 6,321 | 6,812 | 5,922 | |||||||||||||||
TOTAL ASSETS | $ | 628,019 | $ | 619,546 | $ | 619,119 | $ | 624,952 | $ | 622,298 | ||||||||||
LIABILITIES & SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing deposits | 75,148 | 75,280 | 81,606 | 77,790 | 74,887 | |||||||||||||||
Interest bearing deposits | 468,355 | 454,654 | 451,012 | 453,559 | 453,668 | |||||||||||||||
Total deposits | 543,503 | 529,934 | 532,618 | 531,349 | 528,555 | |||||||||||||||
Short-term borrowings | 649 | 5,250 | 1,074 | 450 | 1,500 | |||||||||||||||
Federal Home Loan Bank Advances | 11,030 | 11,030 | 11,030 | 11,052 | 11,052 | |||||||||||||||
Repurchase agreements | 5,000 | 5,000 | 5,000 | 10,000 | 10,000 | |||||||||||||||
Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | |||||||||||||||
Accrued interest, taxes & other liabilities | 4,341 | 4,269 | 3,070 | 5,797 | 5,873 | |||||||||||||||
Total liabilities | 578,523 | 569,483 | 566,792 | 572,648 | 570,980 | |||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Common stock — no par value | ||||||||||||||||||||
5,000,000 shares authorized | 42,478 | 42,304 | 42,538 | 42,476 | 42,158 | |||||||||||||||
Retained earnings | 7,488 | 8,180 | 10,827 | 10,524 | 10,118 | |||||||||||||||
Accumulated other comprehensive income (loss) | (470 | ) | (421 | ) | (1,038 | ) | (696 | ) | (958 | ) | ||||||||||
Total stockholders’ equity | 49,496 | 50,063 | 52,327 | 52,304 | 51,318 | |||||||||||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 628,019 | $ | 619,546 | $ | 619,119 | $ | 624,952 | $ | 622,298 | ||||||||||
Common stock shares issued & outstanding | 2,163,385 | 2,159,536 | 2,164,049 | 2,162,107 | 2,152,862 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Non-Performing Loans as a % of Total Loans | 2.86 | % | 3.03 | % | 0.66 | % | 1.03 | % | 1.13 | % | ||||||||||
Allowance for Loan Losses as a % of Non-Performing Loans | 63.18 | % | 80.44 | % | 227.44 | % | 146.02 | % | 131.16 | % | ||||||||||
Accruing Loans Past Due 90 Days More to Total Loans | 0.01 | % | 0.20 | % | 0.01 | % | 0.11 | % | 0.51 | % | ||||||||||
Non-Performing Assets as a % of Total Assets | 2.84 | % | 2.92 | % | 1.01 | % | 1.12 | % | 1.08 | % | ||||||||||
Quarterly Average Balances: | ||||||||||||||||||||
Total Loans | 472,205 | 462,981 | 461,450 | 452,274 | 452,334 | |||||||||||||||
Total Earning Assets | 565,614 | 564,033 | 564,364 | 569,289 | 569,756 | |||||||||||||||
Total Shareholders’ Equity | 50,001 | 52,434 | 53,224 | 51,968 | 51,253 | |||||||||||||||
Total Assets | 622,766 | 618,763 | 619,249 | 622,594 | 620,960 | |||||||||||||||
Diluted Shares Outstanding | 2,162,039 | 2,162,669 | 2,165,667 | 2,160,899 | 2,155,400 |
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 | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||||||
Interest & fees on loans | $ | 8,612 | $ | 8,796 | $ | 8,917 | $ | 8,647 | $ | 8,920 | $ | 34,972 | $ | 35,131 | ||||||||||||||
Interest & dividends on securities: | ||||||||||||||||||||||||||||
Taxable | 713 | 786 | 801 | 917 | 865 | 3,217 | 3,461 | |||||||||||||||||||||
Tax-exempt | 158 | 169 | 180 | 215 | 202 | 722 | 809 | |||||||||||||||||||||
Interest on federal funds sold | 52 | 40 | 44 | 167 | 124 | 303 | 515 | |||||||||||||||||||||
Total interest income | 9,535 | 9,791 | 9,942 | 9,946 | 10,111 | 39,214 | 39,916 | |||||||||||||||||||||
Interest expense: | ||||||||||||||||||||||||||||
Deposits | 4,306 | 4,147 | 3,990 | 3,961 | 3,964 | 16,404 | 14,743 | |||||||||||||||||||||
Borrowings | 525 | 547 | 560 | 585 | 552 | 2,217 | 2,165 | |||||||||||||||||||||
Total interest expense | 4,831 | 4,694 | 4,550 | 4,546 | 4,516 | 18,621 | 16,908 | |||||||||||||||||||||
Net interest income | 4,704 | 5,097 | 5,392 | 5,400 | 5,595 | 20,593 | 23,008 | |||||||||||||||||||||
Provision for loan losses | 1,234 | 5,144 | 649 | 439 | 240 | 7,466 | 1,120 | |||||||||||||||||||||
Net interest income after provision for loan losses | 3,470 | (47 | ) | 4,743 | 4,961 | 5,355 | 13,127 | 21,888 | ||||||||||||||||||||
Non-interest income: | ||||||||||||||||||||||||||||
Service charges on deposit accounts | 874 | 860 | 836 | 851 | 958 | 3,421 | 3,708 | |||||||||||||||||||||
Gain on sale of mortgage loans | 133 | 65 | 119 | 84 | 171 | 401 | 615 | |||||||||||||||||||||
Trust & investment services income | 462 | 471 | 461 | 507 | 382 | 1,901 | 1,554 | |||||||||||||||||||||
Loss on sale of securities | 2 | — | — | — | — | 2 | (2 | ) | ||||||||||||||||||||
Other income and fees | 245 | 574 | 612 | 423 | 507 | 1,854 | 1,768 | |||||||||||||||||||||
Total non-interest income | 1,716 | 1,970 | 2,028 | 1,865 | 2,018 | 7,579 | 7,643 | |||||||||||||||||||||
Non-interest expense: | ||||||||||||||||||||||||||||
Salaries & employee benefits | 2,876 | 2,868 | 3,193 | 3,247 | 2,894 | 12,183 | 12,738 | |||||||||||||||||||||
Occupancy | 533 | 543 | 510 | 503 | 459 | 2,090 | 1,858 | |||||||||||||||||||||
Furniture and equipment | 549 | 532 | 534 | 525 | 539 | 2,139 | 2,140 | |||||||||||||||||||||
Loan and collection | 465 | 111 | 85 | 91 | 93 | 753 | 320 | |||||||||||||||||||||
Advertising and promotional | 90 | 125 | 159 | 112 | 130 | 486 | 624 | |||||||||||||||||||||
Other operating expenses | 991 | 1,057 | 1,117 | 1,018 | 1,086 | 4,183 | 4,306 | |||||||||||||||||||||
Total non-interest expense | 5,504 | 5,236 | 5,598 | 5,496 | 5,201 | 21,834 | 21,986 | |||||||||||||||||||||
Income before federal income taxes | (318 | ) | (3,313 | ) | 1,173 | 1,330 | 2,172 | (1,128 | ) | 7,545 | ||||||||||||||||||
Federal income taxes | (166 | ) | (1,206 | ) | 329 | 382 | 665 | (661 | ) | 2,237 | ||||||||||||||||||
Net Income | $ | (152 | ) | $ | (2,107 | ) | $ | 844 | $ | 948 | $ | 1,507 | $ | (467 | ) | $ | 5,308 | |||||||||||
Per Share Data: | ||||||||||||||||||||||||||||
Basic earnings | $ | (0.07 | ) | $ | (0.98 | ) | $ | 0.39 | $ | 0.44 | $ | 0.70 | $ | (0.22 | ) | $ | 2.48 | |||||||||||
Diluted earnings | $ | (0.07 | ) | $ | (0.98 | ) | $ | 0.39 | $ | 0.44 | $ | 0.70 | $ | (0.22 | ) | $ | 2.47 | |||||||||||
Cash dividends declared | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 1.00 | $ | 0.94 | ||||||||||||||
Performance Ratios: | ||||||||||||||||||||||||||||
Return on Average Assets | -0.02 | % | -0.34 | % | 0.55 | % | 0.62 | % | 0.96 | % | -0.08 | % | 0.85 | % | ||||||||||||||
Return on Average Equity | -0.30 | % | -4.02 | % | 6.36 | % | 7.40 | % | 11.66 | % | -0.89 | % | 10.82 | % | ||||||||||||||
Net Interest Margin (FTE) | 3.37 | % | 3.66 | % | 3.91 | % | 3.94 | % | 3.90 | % | 3.72 | % | 4.11 | % | ||||||||||||||
Book Value Per Share | $ | 22.88 | $ | 23.22 | $ | 24.18 | $ | 24.19 | $ | 24.08 | $ | 22.88 | $ | 24.08 | ||||||||||||||
Net Charge-offs | 4,105 | 892 | 437 | 169 | 173 | 5,603 | 729 | |||||||||||||||||||||
Ratio of Net charge-offs to Gross Loans | 0.87 | % | 0.19 | % | 0.10 | % | 0.04 | % | 0.04 | % | 1.18 | % | 0.16 | % |