Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with the December 31, 2019 presentation.
FENTON, Mich., Jan. 28, 2020 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces another strong quarter with net income of $2,552 for the three month period ended December 31, 2019 and record earnings of $11,578 for the twelve month period ended December 31, 2019.
- 12.73% increase in gross loans since December 31, 2018
- 13.10% increase in total deposits since December 31, 2018
- Net interest margin of 3.83% for the year ended December 31, 2019
- 20.14% increase in share price since December 31, 2018
Ronald L. Justice, President and CEO said, “I am excited to share our achievement of another record setting year. I am extremely proud of our team's ability to provide innovative solutions for our customers and community partners which continues to enhance shareholder value.”
Following is a discussion of the Corporation's financial performance as of, and for the quarter ended, December 31, 2019. At the end of this document is a list of abbreviations and acronyms.
Results of Operations
The following table outlines the Corporation's QTD results of operations and provides certain performance measures as of, and for the three month periods ended:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||||||||||||
| INCOME STATEMENT DATA | |||||||||||||||||||||||||||||
| Interest income | $ | 11,076 | $ | 11,240 | $ | 10,788 | $ | 10,437 | $ | 9,931 | |||||||||||||||||||
| Interest expense | 2,158 | 2,184 | 2,195 | 2,090 | 1,926 | ||||||||||||||||||||||||
| Net interest income | 8,918 | 9,056 | 8,593 | 8,347 | 8,005 | ||||||||||||||||||||||||
| Provision for loan losses | 436 | 422 | 264 | 213 | 290 | ||||||||||||||||||||||||
| Noninterest income | 2,129 | 2,262 | 2,250 | 1,522 | 1,703 | ||||||||||||||||||||||||
| Noninterest expenses | 7,415 | 6,608 | 6,691 | 6,509 | 6,907 | ||||||||||||||||||||||||
| Federal income tax expense | 644 | 873 | 791 | 633 | 502 | ||||||||||||||||||||||||
| Net income | $ | 2,552 | $ | 3,415 | $ | 3,097 | $ | 2,514 | $ | 2,009 | |||||||||||||||||||
| PER SHARE | |||||||||||||||||||||||||||||
| Earnings | $ | 0.55 | $ | 0.73 | $ | 0.67 | $ | 0.54 | $ | 0.46 | |||||||||||||||||||
| Dividends | $ | 0.07 | $ | 0.07 | $ | 0.07 | $ | 0.07 | $ | 0.06 | |||||||||||||||||||
| Tangible book value(1) | $ | 20.87 | $ | 20.37 | $ | 19.59 | $ | 18.88 | $ | 18.32 | |||||||||||||||||||
| Quoted market value | |||||||||||||||||||||||||||||
| High | $ | 25.50 | $ | 21.00 | $ | 21.00 | $ | 21.00 | $ | 22.02 | |||||||||||||||||||
| Low | $ | 20.60 | $ | 20.45 | $ | 20.45 | $ | 20.05 | $ | 20.10 | |||||||||||||||||||
| Close(1) | $ | 25.23 | $ | 21.00 | $ | 20.60 | $ | 20.89 | $ | 21.00 | |||||||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||||||||||||
| Return on average assets | 1.02 | % | 1.40 | % | 1.31 | % | 1.09 | % | 0.87 | % | |||||||||||||||||||
| Return on average shareholders' equity | 10.03 | % | 13.83 | % | 13.14 | % | 11.09 | % | 9.87 | % | |||||||||||||||||||
| Return on average tangible shareholders' equity | 10.46 | % | 14.47 | % | 13.79 | % | 11.66 | % | 10.47 | % | |||||||||||||||||||
| Efficiency ratio | 67.12 | % | 58.38 | % | 61.71 | % | 65.95 | % | 71.15 | % | |||||||||||||||||||
| Yield on earning assets (FTE) | 4.66 | % | 4.85 | % | 4.81 | % | 4.77 | % | 4.54 | % | |||||||||||||||||||
| Rate on interest bearing liabilities | 1.36 | % | 1.42 | % | 1.46 | % | 1.40 | % | 1.29 | % | |||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.75 | % | 3.91 | % | 3.83 | % | 3.82 | % | 3.66 | % | |||||||||||||||||||
| BALANCE SHEET DATA(1) | |||||||||||||||||||||||||||||
| Total investment securities | $ | 61,621 | $ | 62,351 | $ | 73,285 | $ | 82,222 | $ | 94,721 | |||||||||||||||||||
| Gross loans | $ | 870,555 | $ | 826,597 | $ | 813,547 | $ | 809,863 | $ | 772,227 | |||||||||||||||||||
| Total assets | $ | 1,034,759 | $ | 978,046 | $ | 949,790 | $ | 946,172 | $ | 926,450 | |||||||||||||||||||
| Total deposits | $ | 863,102 | $ | 801,101 | $ | 792,555 | $ | 789,533 | $ | 763,124 | |||||||||||||||||||
| Borrowed funds | $ | 61,500 | $ | 69,000 | $ | 54,000 | $ | 59,000 | $ | 69,000 | |||||||||||||||||||
| Total shareholders' equity | $ | 101,444 | $ | 99,142 | $ | 95,504 | $ | 92,236 | $ | 89,516 | |||||||||||||||||||
| Net loans to total deposits | 100.19 | % | 102.51 | % | 102.02 | % | 101.97 | % | 100.60 | % | |||||||||||||||||||
| Common shares outstanding | 4,664,369 | 4,658,722 | 4,653,343 | 4,647,978 | 4,636,455 | ||||||||||||||||||||||||
| QTD BALANCE SHEET AVERAGES | |||||||||||||||||||||||||||||
| Total assets | $ | 994,094 | $ | 971,074 | $ | 947,095 | $ | 934,078 | $ | 917,242 | |||||||||||||||||||
| Earning assets | $ | 944,192 | $ | 920,551 | $ | 900,738 | $ | 887,974 | $ | 868,498 | |||||||||||||||||||
| Interest bearing liabilities | $ | 629,454 | $ | 611,804 | $ | 603,965 | $ | 604,973 | $ | 592,878 | |||||||||||||||||||
| Total shareholders' equity | $ | 100,991 | $ | 97,958 | $ | 94,519 | $ | 91,964 | $ | 80,781 | |||||||||||||||||||
| Total tangible shareholders' equity | $ | 96,796 | $ | 93,650 | $ | 90,098 | $ | 87,430 | $ | 76,120 | |||||||||||||||||||
| Earned common shares outstanding | 4,652,569 | 4,646,835 | 4,641,161 | 4,635,255 | 4,332,665 | ||||||||||||||||||||||||
| Unvested stock grants | 9,947 | 9,967 | 9,967 | 9,788 | 3,022 | ||||||||||||||||||||||||
| Total common shares outstanding | 4,662,516 | 4,656,802 | 4,651,128 | 4,645,043 | 4,335,687 | ||||||||||||||||||||||||
| ASSET QUALITY(1) | |||||||||||||||||||||||||||||
| Nonperforming loans to gross loans | 0.17 | % | 0.11 | % | 0.13 | % | 0.15 | % | 0.14 | % | |||||||||||||||||||
| Nonperforming assets to total assets | 0.14 | % | 0.09 | % | 0.11 | % | 0.13 | % | 0.12 | % | |||||||||||||||||||
| ALLL to gross loans | 0.67 | % | 0.65 | % | 0.62 | % | 0.59 | % | 0.58 | % | |||||||||||||||||||
| CAPITAL RATIOS(1) | |||||||||||||||||||||||||||||
| Total capital to risk weighted assets | 14.03 | % | 14.42 | % | 14.18 | % | 13.99 | % | 14.00 | % | |||||||||||||||||||
| Tier 1 capital to risk weighted assets | 13.33 | % | 13.73 | % | 13.53 | % | 13.37 | % | 13.40 | % | |||||||||||||||||||
| CET1 capital to risk weighted assets | 11.64 | % | 11.96 | % | 11.73 | % | 11.54 | % | 11.52 | % | |||||||||||||||||||
| Tier 1 leverage ratio | 11.20 | % | 11.22 | % | 11.16 | % | 10.99 | % | 10.92 | % | |||||||||||||||||||
| (1)At end of period | |||||||||||||||||||||||||||||
The following table outlines the Corporation's YTD results of operations and provides certain performance measures as of, and for the twelve month periods ended:
| 12/31/2019 | 12/31/2018 | 12/31/2017 | 12/31/2016 | 12/31/2015 | |||||||||||||||||||||||||
| INCOME STATEMENT DATA | |||||||||||||||||||||||||||||
| Interest income | $ | 43,541 | $ | 36,350 | $ | 30,111 | $ | 18,645 | $ | 16,653 | |||||||||||||||||||
| Interest expense | 8,627 | 5,827 | 3,120 | 2,372 | 2,153 | ||||||||||||||||||||||||
| Net interest income | 34,914 | 30,523 | 26,991 | 16,273 | 14,500 | ||||||||||||||||||||||||
| Provision for loan losses | 1,335 | 1,057 | 609 | (900 | ) | (1,000 | ) | ||||||||||||||||||||||
| Noninterest income | 8,163 | 8,277 | 8,988 | 6,658 | 6,575 | ||||||||||||||||||||||||
| Noninterest expenses | 27,223 | 25,310 | 23,818 | 17,097 | 14,976 | ||||||||||||||||||||||||
| Federal income tax expense | 2,941 | 2,319 | 2,876 | 2,293 | 2,407 | ||||||||||||||||||||||||
| Net income | $ | 11,578 | $ | 10,114 | $ | 8,676 | $ | 4,441 | $ | 4,692 | |||||||||||||||||||
| PER SHARE | |||||||||||||||||||||||||||||
| Earnings | $ | 2.49 | $ | 2.65 | $ | 2.39 | $ | 1.70 | $ | 1.87 | |||||||||||||||||||
| Dividends | $ | 0.28 | $ | 0.24 | $ | 0.20 | $ | 0.40 | $ | 0.12 | |||||||||||||||||||
| Tangible book value(1) | $ | 20.87 | $ | 18.32 | $ | 14.96 | $ | 12.41 | $ | 12.90 | |||||||||||||||||||
| Quoted market value | |||||||||||||||||||||||||||||
| High | $ | 25.50 | $ | 23.00 | $ | 20.65 | $ | 16.00 | $ | 15.00 | |||||||||||||||||||
| Low | $ | 20.05 | $ | 18.88 | $ | 15.10 | $ | 12.85 | $ | 9.90 | |||||||||||||||||||
| Close(1) | $ | 25.23 | $ | 21.00 | $ | 18.88 | $ | 16.00 | $ | 13.86 | |||||||||||||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||||||||||||
| Return on average assets | 1.20 | % | 1.20 | % | 1.19 | % | 0.93 | % | 1.00 | % | |||||||||||||||||||
| Return on average shareholders' equity | 12.02 | % | 15.05 | % | 15.38 | % | 10.28 | % | 12.73 | % | |||||||||||||||||||
| Return on average tangible shareholders' equity | 12.59 | % | 16.23 | % | 15.38 | % | 10.28 | % | 12.73 | % | |||||||||||||||||||
| Efficiency ratio | 63.20 | % | 65.23 | % | 66.20 | % | 74.56 | % | 71.06 | % | |||||||||||||||||||
| Yield on earning assets (FTE) | 4.77 | % | 4.57 | % | 4.55 | % | 4.38 | % | 4.48 | % | |||||||||||||||||||
| Rate on interest bearing liabilities | 1.41 | % | 1.07 | % | 0.65 | % | 0.76 | % | 0.77 | % | |||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.83 | % | 3.84 | % | 4.08 | % | 3.83 | % | 3.90 | % | |||||||||||||||||||
| BALANCE SHEET DATA(1) | |||||||||||||||||||||||||||||
| Total investment securities | $ | 61,621 | $ | 94,721 | $ | 55,323 | $ | 72,458 | $ | 25,708 | |||||||||||||||||||
| Gross loans | $ | 870,555 | $ | 772,227 | $ | 672,530 | $ | 515,775 | $ | 378,655 | |||||||||||||||||||
| Total assets | $ | 1,034,759 | $ | 926,450 | $ | 781,443 | $ | 703,350 | $ | 446,402 | |||||||||||||||||||
| Total deposits | $ | 863,102 | $ | 763,124 | $ | 673,505 | $ | 603,367 | $ | 375,971 | |||||||||||||||||||
| Borrowed funds | $ | 61,500 | $ | 69,000 | $ | 46,000 | $ | 45,000 | $ | 34,775 | |||||||||||||||||||
| Total shareholders' equity | $ | 101,444 | $ | 89,516 | $ | 59,447 | $ | 50,660 | $ | 32,474 | |||||||||||||||||||
| Net loans to total deposits | 100.19 | % | 100.60 | % | 99.32 | % | 85.01 | % | 99.78 | % | |||||||||||||||||||
| Common shares outstanding | 4,664,369 | 4,636,455 | 3,631,933 | 3,619,282 | 2,517,748 | ||||||||||||||||||||||||
| YTD BALANCE SHEET AVERAGES | |||||||||||||||||||||||||||||
| Total assets | $ | 961,586 | $ | 844,673 | $ | 730,974 | $ | 484,042 | $ | 423,562 | |||||||||||||||||||
| Earning assets | $ | 913,574 | $ | 796,283 | $ | 698,753 | $ | 429,547 | $ | 371,620 | |||||||||||||||||||
| Interest bearing liabilities | $ | 612,549 | $ | 544,344 | $ | 485,522 | $ | 306,614 | $ | 279,795 | |||||||||||||||||||
| Total shareholders' equity | $ | 96,358 | $ | 67,192 | $ | 56,429 | $ | 43,218 | $ | 36,864 | |||||||||||||||||||
| Total tangible shareholders' equity | $ | 91,994 | $ | 62,329 | $ | 52,181 | $ | 43,218 | $ | 36,864 | |||||||||||||||||||
| Earned common shares outstanding | 4,643,955 | 3,811,677 | 3,625,568 | 2,608,903 | 2,511,817 | ||||||||||||||||||||||||
| Unvested stock grants | 9,917 | 756 | — | — | — | ||||||||||||||||||||||||
| Total common shares outstanding | 4,653,872 | 3,812,433 | 3,625,568 | 2,608,903 | 2,511,817 | ||||||||||||||||||||||||
| ASSET QUALITY(1) | |||||||||||||||||||||||||||||
| Nonperforming loans to gross loans | 0.17 | % | 0.14 | % | — | % | — | % | 0.06 | % | |||||||||||||||||||
| Nonperforming assets to total assets | 0.14 | % | 0.12 | % | 0.02 | % | 0.04 | % | 0.16 | % | |||||||||||||||||||
| ALLL to gross loans | 0.67 | % | 0.58 | % | 0.54 | % | 0.55 | % | 0.93 | % | |||||||||||||||||||
| CAPITAL RATIOS(1) | |||||||||||||||||||||||||||||
| Total capital to risk weighted assets | 14.03 | % | 14.00 | % | 10.93 | % | 11.47 | % | 12.90 | % | |||||||||||||||||||
| Tier 1 capital to risk weighted assets | 13.33 | % | 13.40 | % | 10.39 | % | 10.95 | % | 12.00 | % | |||||||||||||||||||
| CET1 capital to risk weighted assets | 11.64 | % | 11.52 | % | 8.27 | % | 8.40 | % | 8.39 | % | |||||||||||||||||||
| Tier 1 leverage ratio | 11.20 | % | 10.92 | % | 8.98 | % | 11.93 | % | 10.80 | % | |||||||||||||||||||
| (1)At end of period | |||||||||||||||||||||||||||||
Income Statement Breakdown and Analysis
| Quarter to Date | |||||||||||||||||||
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||
| GAAP net income | $ | 2,552 | $ | 3,415 | $ | 3,097 | $ | 2,514 | $ | 2,009 | |||||||||
| Acquisition related items (net of tax) | |||||||||||||||||||
| Accretion on purchased loans | (126 | ) | (189 | ) | (145 | ) | (175 | ) | (167 | ) | |||||||||
| Amortization of CDIs | 89 | 88 | 90 | 89 | 107 | ||||||||||||||
| Amortization on acquired time deposits | 7 | 7 | 7 | 7 | 9 | ||||||||||||||
| Amortization on purchased MSRs | 3 | 3 | 3 | 3 | 6 | ||||||||||||||
| Total acquisition related items (net of tax) | (27 | ) | (91 | ) | (45 | ) | (76 | ) | (45 | ) | |||||||||
| Other nonrecurring items (net of tax) | |||||||||||||||||||
| Prepayment penalties collected | (42 | ) | (284 | ) | (9 | ) | (13 | ) | — | ||||||||||
| Total other nonrecurring items (net of tax) | (42 | ) | (284 | ) | (9 | ) | (13 | ) | — | ||||||||||
| Adjusted net income from operations | $ | 2,483 | $ | 3,040 | $ | 3,043 | $ | 2,425 | $ | 1,964 | |||||||||
| GAAP net interest income | $ | 8,918 | $ | 9,056 | $ | 8,593 | $ | 8,347 | $ | 8,005 | |||||||||
| Accretion on purchased loans | (160 | ) | (239 | ) | (183 | ) | (222 | ) | (211 | ) | |||||||||
| Prepayment penalties collected | (53 | ) | (360 | ) | (12 | ) | (16 | ) | — | ||||||||||
| Amortization on acquired time deposits | 9 | 9 | 9 | 9 | 12 | ||||||||||||||
| Adjusted net interest income | $ | 8,714 | $ | 8,466 | $ | 8,407 | $ | 8,118 | $ | 7,806 | |||||||||
| PERFORMANCE RATIOS | |||||||||||||||||||
| Based on adjusted net income from operations | |||||||||||||||||||
| Earnings per share | $ | 0.53 | $ | 0.65 | $ | 0.66 | $ | 0.52 | $ | 0.45 | |||||||||
| Return on average assets | 0.99 | % | 1.24 | % | 1.29 | % | 1.05 | % | 0.85 | % | |||||||||
| Return on average shareholders' equity | 9.75 | % | 12.31 | % | 12.91 | % | 10.69 | % | 9.65 | % | |||||||||
| Return on average tangible shareholders' equity | 10.18 | % | 12.88 | % | 13.55 | % | 11.25 | % | 10.24 | % | |||||||||
| Based on adjusted net interest income | |||||||||||||||||||
| Yield on earning assets (FTE) | 4.57 | % | 4.59 | % | 4.72 | % | 4.66 | % | 4.44 | % | |||||||||
| Rate on interest bearing liabilities | 1.37 | % | 1.43 | % | 1.47 | % | 1.41 | % | 1.30 | % | |||||||||
| Net interest margin to earning assets (FTE) | 3.66 | % | 3.66 | % | 3.75 | % | 3.72 | % | 3.57 | % | |||||||||
| Year to Date December 31 | Variance | |||||||||||||
| 2019 | 2018 | Amount | % | |||||||||||
| GAAP net income | $ | 11,578 | $ | 10,114 | $ | 1,464 | 14.47 | % | ||||||
| Acquisition related items (net of tax) | ||||||||||||||
| Accretion on purchased loans | (635 | ) | (788 | ) | 153 | (19.42 | )% | |||||||
| Amortization of CDIs | 356 | 428 | (72 | ) | (16.82 | )% | ||||||||
| Amortization on acquired time deposits | 28 | 36 | (8 | ) | (22.22 | )% | ||||||||
| Amortization on purchased MSRs | 12 | 24 | (12 | ) | (50.00 | )% | ||||||||
| Total acquisition related items (net of tax) | (239 | ) | (300 | ) | 61 | (20.33 | )% | |||||||
| Other nonrecurring items (net of tax) | ||||||||||||||
| Prepayment penalties collected | (348 | ) | (137 | ) | (211 | ) | 154.01 | % | ||||||
| Net gain from COLI death benefit | — | (933 | ) | 933 | (100.00 | )% | ||||||||
| Total other nonrecurring items (net of tax) | (348 | ) | (1,070 | ) | 722 | (67.48 | )% | |||||||
| Adjusted net income from operations | $ | 10,991 | $ | 8,744 | $ | 2,247 | 25.70 | % | ||||||
| GAAP net interest income | $ | 34,914 | $ | 30,523 | $ | 4,391 | 14.39 | % | ||||||
| Accretion on purchased loans | (804 | ) | (998 | ) | 194 | (19.44 | )% | |||||||
| Amortization on acquired time deposits | 36 | 46 | (10 | ) | (21.74 | )% | ||||||||
| Prepayment penalties collected | (441 | ) | (173 | ) | (268 | ) | 154.91 | % | ||||||
| Adjusted net interest income | $ | 33,705 | $ | 29,398 | $ | 4,307 | 14.65 | % | ||||||
| PERFORMANCE RATIOS | ||||||||||||||
| Based on adjusted net income from operations | ||||||||||||||
| Earnings per share | $ | 2.37 | $ | 2.29 | $ | 0.08 | 3.49 | % | ||||||
| Return on average assets | 1.14 | % | 1.04 | % | 0.10 | % | ||||||||
| Return on average shareholders' equity | 11.41 | % | 13.01 | % | (1.60 | )% | ||||||||
| Return on average tangible shareholders' equity | 11.95 | % | 14.03 | % | (2.08 | )% | ||||||||
| Based on adjusted net interest income | ||||||||||||||
| Yield on earning assets (FTE) | 4.69 | % | 4.45 | % | 0.24 | % | ||||||||
| Rate on interest bearing liabilities | 1.34 | % | 1.04 | % | 0.30 | % | ||||||||
| Net interest margin to earning assets (FTE) | 3.70 | % | 3.70 | % | — | % | ||||||||
To effectively compare core operating results from period to period, the impact of acquisition related items and other nonrecurring items have been isolated.
As outlined in the preceding tables, the Corporation has been able to generate strong net income and adjusted net income from operations. The Corporation has also been successful at consistently increasing adjusted net interest income. This increase continues to be primarily driven through increases in loans while maintaining relatively healthy interest margins. Into 2020, the Corporation expects to see a continued increase in net interest income. This increase will primarily be driven by loan growth. The Corporation expects net interest margin to earning assets to compress in 2020 due to the forecasted interest rate environment.
Average Balances, Interest Rate, and Net Interest Income
The following tables present the daily average amount outstanding for each major category of interest earning assets, nonearning assets, interest bearing liabilities, and noninterest bearing liabilities. These tables also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances.
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | |||||||||||||||||||||||||||||||||||||||
| Interest earning assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | 857,474 | $ | 10,581 | 4.90 | % | $ | 827,456 | $ | 10,639 | 5.10 | % | $ | 746,934 | $ | 9,132 | 4.85 | % | |||||||||||||||||||||||||||||
| Taxable investment securities | 49,982 | 307 | 2.44 | % | 58,059 | 375 | 2.56 | % | 78,496 | 541 | 2.73 | % | |||||||||||||||||||||||||||||||||||
| Nontaxable investment securities | 10,366 | 80 | 3.06 | % | 9,482 | 72 | 3.01 | % | 10,732 | 76 | 2.81 | % | |||||||||||||||||||||||||||||||||||
| Federal funds sold | 16,833 | 66 | 1.56 | % | 16,546 | 89 | 2.13 | % | 25,269 | 141 | 2.21 | % | |||||||||||||||||||||||||||||||||||
| Interest earning cash and cash equivalents | 6,387 | 28 | 1.74 | % | 5,858 | 35 | 2.37 | % | 3,917 | 19 | 1.92 | % | |||||||||||||||||||||||||||||||||||
| FHLB stock | 3,150 | 31 | 3.90 | % | 3,150 | 45 | 5.67 | % | 3,150 | 38 | 4.79 | % | |||||||||||||||||||||||||||||||||||
| Total earning assets | 944,192 | 11,093 | 4.66 | % | 920,551 | 11,255 | 4.85 | % | 868,498 | 9,947 | 4.54 | % | |||||||||||||||||||||||||||||||||||
| Nonearning assets | |||||||||||||||||||||||||||||||||||||||||||||||
| ALLL | (5,519 | ) | (5,139 | ) | (4,215 | ) | |||||||||||||||||||||||||||||||||||||||||
| Fixed assets | 15,395 | 14,942 | 14,874 | ||||||||||||||||||||||||||||||||||||||||||||
| Accrued income and other assets | 40,026 | 40,720 | 38,085 | ||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 994,094 | $ | 971,074 | $ | 917,242 | |||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 140,368 | $ | 410 | 1.16 | % | $ | 97,572 | $ | 244 | 0.99 | % | $ | 64,805 | $ | 53 | 0.32 | % | |||||||||||||||||||||||||||||
| Savings deposits | 225,219 | 217 | 0.38 | % | 243,796 | 282 | 0.46 | % | 237,486 | 215 | 0.36 | % | |||||||||||||||||||||||||||||||||||
| Time deposits | 201,640 | 1,089 | 2.14 | % | 209,984 | 1,207 | 2.28 | % | 228,953 | 1,204 | 2.09 | % | |||||||||||||||||||||||||||||||||||
| Borrowed funds | 62,227 | 442 | 2.82 | % | 60,452 | 451 | 2.96 | % | 61,634 | 454 | 2.92 | % | |||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 629,454 | 2,158 | 1.36 | % | 611,804 | 2,184 | 1.42 | % | 592,878 | 1,926 | 1.29 | % | |||||||||||||||||||||||||||||||||||
| Noninterest bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 254,858 | 253,292 | 240,253 | ||||||||||||||||||||||||||||||||||||||||||||
| Accrued interest and other liabilities | 8,791 | 8,020 | 3,330 | ||||||||||||||||||||||||||||||||||||||||||||
| Shareholders' equity | 100,991 | 97,958 | 80,781 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 994,094 | $ | 971,074 | $ | 917,242 | |||||||||||||||||||||||||||||||||||||||||
| Net interest income (FTE) | $ | 8,935 | $ | 9,071 | $ | 8,021 | |||||||||||||||||||||||||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.75 | % | 3.91 | % | 3.66 | % | |||||||||||||||||||||||||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
| Average Balance | Tax Equivalent Interest | Average Yield / Rate | Average Balance | Tax Equivalent Interest | Average Yield / Rate | |||||||||||||||||
| Interest earning assets | ||||||||||||||||||||||
| Total loans | $ | 820,489 | $ | 41,102 | 5.01 | % | $ | 713,077 | $ | 34,371 | 4.82 | % | ||||||||||
| Taxable investment securities | 63,661 | 1,703 | 2.68 | % | 52,080 | 1,243 | 2.39 | % | ||||||||||||||
| Nontaxable investment securities | 9,951 | 297 | 2.98 | % | 11,651 | 306 | 2.63 | % | ||||||||||||||
| Federal funds sold | 10,904 | 216 | 1.98 | % | 13,559 | 286 | 2.11 | % | ||||||||||||||
| Interest earning cash and cash equivalents | 5,419 | 116 | 2.14 | % | 2,872 | 48 | 1.67 | % | ||||||||||||||
| FHLB stock | 3,150 | 169 | 5.37 | % | 3,044 | 160 | 5.26 | % | ||||||||||||||
| Total earning assets | 913,574 | 43,603 | 4.77 | % | 796,283 | 36,414 | 4.57 | % | ||||||||||||||
| Nonearning assets | ||||||||||||||||||||||
| ALLL | (5,018 | ) | (3,931 | ) | ||||||||||||||||||
| Fixed assets | 14,998 | 14,701 | ||||||||||||||||||||
| Accrued income and other assets | 38,032 | 37,620 | ||||||||||||||||||||
| Total assets | $ | 961,586 | $ | 844,673 | ||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||
| Interest bearing demand deposits | $ | 96,713 | $ | 855 | 0.88 | % | $ | 63,975 | $ | 165 | 0.26 | % | ||||||||||
| Savings deposits | 238,656 | 1,115 | 0.47 | % | 238,944 | 587 | 0.25 | % | ||||||||||||||
| Time deposits | 216,839 | 4,835 | 2.23 | % | 178,697 | 3,285 | 1.84 | % | ||||||||||||||
| Borrowed funds | 60,341 | 1,822 | 3.02 | % | 62,728 | 1,790 | 2.85 | % | ||||||||||||||
| Total interest bearing liabilities | 612,549 | 8,627 | 1.41 | % | 544,344 | 5,827 | 1.07 | % | ||||||||||||||
| Noninterest bearing liabilities | ||||||||||||||||||||||
| Noninterest bearing deposits | 246,357 | 230,280 | ||||||||||||||||||||
| Accrued interest and other liabilities | 6,322 | 2,857 | ||||||||||||||||||||
| Shareholders' equity | 96,358 | 67,192 | ||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 961,586 | $ | 844,673 | ||||||||||||||||||
| Net interest income (FTE) | $ | 34,976 | $ | 30,587 | ||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.83 | % | 3.84 | % | ||||||||||||||||||
Net Interest Income
Net interest income is the amount by which interest income on earning assets exceeds the interest expenses on interest bearing liabilities. Net interest income, which includes loan fees, is influenced by changes in the balance and mix of assets and liabilities and market interest rates. The Corporation exerts some control over these factors; however, FRB monetary policy and competition have a significant impact. For analytical purposes, net interest income is adjusted to a FTE basis by adding the income tax savings from interest on tax exempt loans, and nontaxable investment securities, thus making year-to-year comparisons more meaningful.
Volume and Rate Variance Analysis
The following table sets forth the effect of volume and rate changes on interest income and expense for the periods indicated. For the purpose of this table, changes in interest due to volume and rate were determined as follows:
| Volume - change in volume multiplied by the previous period's rate. |
| Rate - change in the FTE rate multiplied by the previous period's volume. |
The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2019 | December 31, 2019 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Compared To | Compared To | Compared To | |||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2019 | December 31, 2018 | December 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Increase (Decrease) Due to | Increase (Decrease) Due to | Increase (Decrease) Due to | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Volume | Rate | Net | Volume | Rate | Net | Volume | Rate | Net | |||||||||||||||||||||||||||||||||||||||||||||
| Changes in interest income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | 1,563 | $ | (1,621 | ) | $ | (58 | ) | $ | 1,355 | $ | 94 | $ | 1,449 | $ | 5,335 | $ | 1,396 | $ | 6,731 | |||||||||||||||||||||||||||||||||
| Taxable investment securities | (51 | ) | (17 | ) | (68 | ) | (181 | ) | (53 | ) | (234 | ) | 298 | 162 | 460 | ||||||||||||||||||||||||||||||||||||||
| Nontaxable investment securities | 7 | 1 | 8 | (14 | ) | 18 | 4 | (48 | ) | 39 | (9 | ) | |||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | 10 | (33 | ) | (23 | ) | (40 | ) | (35 | ) | (75 | ) | (53 | ) | (17 | ) | (70 | ) | ||||||||||||||||||||||||||||||||||||
| Interest earning cash and cash equivalents | 17 | (24 | ) | (7 | ) | 20 | (11 | ) | 9 | 52 | 16 | 68 | |||||||||||||||||||||||||||||||||||||||||
| FHLB stock | — | (14 | ) | (14 | ) | — | (7 | ) | (7 | ) | 6 | 3 | 9 | ||||||||||||||||||||||||||||||||||||||||
| Total changes in interest income | 1,546 | (1,708 | ) | (162 | ) | 1,140 | 6 | 1,146 | 5,590 | 1,599 | 7,189 | ||||||||||||||||||||||||||||||||||||||||||
| Changes in interest expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing demand deposits | 119 | 47 | 166 | 110 | 247 | 357 | 122 | 568 | 690 | ||||||||||||||||||||||||||||||||||||||||||||
| Savings deposits | (20 | ) | (45 | ) | (65 | ) | (44 | ) | 46 | 2 | (1 | ) | 529 | 528 | |||||||||||||||||||||||||||||||||||||||
| Time deposits | (46 | ) | (72 | ) | (118 | ) | (286 | ) | 171 | (115 | ) | 778 | 772 | 1,550 | |||||||||||||||||||||||||||||||||||||||
| Borrowed funds | 62 | (71 | ) | (9 | ) | 24 | (36 | ) | (12 | ) | (71 | ) | 103 | 32 | |||||||||||||||||||||||||||||||||||||||
| Total changes in interest expense | 115 | (141 | ) | (26 | ) | (196 | ) | 428 | 232 | 828 | 1,972 | 2,800 | |||||||||||||||||||||||||||||||||||||||||
| Net change in net interest income (FTE) | $ | 1,431 | $ | (1,567 | ) | $ | (136 | ) | $ | 1,336 | $ | (422 | ) | $ | 914 | $ | 4,762 | $ | (373 | ) | $ | 4,389 | |||||||||||||||||||||||||||||||
| Average Yield/Rate for the Three Month Periods Ended | |||||||||||||||||||||||||||||||
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||||||||||||||
| Total earning assets | 4.66 | % | 4.85 | % | 4.81 | % | 4.77 | % | 4.54 | % | |||||||||||||||||||||
| Total interest bearing liabilities | 1.36 | % | 1.42 | % | 1.46 | % | 1.40 | % | 1.29 | % | |||||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.75 | % | 3.91 | % | 3.83 | % | 3.82 | % | 3.66 | % | |||||||||||||||||||||
| Quarter to Date Net Interest Income (FTE) | ||||||||||||||
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Interest income | $ | 11,076 | $ | 11,240 | $ | 10,788 | $ | 10,437 | $ | 9,931 | ||||
| FTE adjustment | 17 | 15 | 15 | 16 | 16 | |||||||||
| Total interest income (FTE) | 11,093 | 11,255 | 10,803 | 10,453 | 9,947 | |||||||||
| Total interest expense | 2,158 | 2,184 | 2,195 | 2,090 | 1,926 | |||||||||
| Net interest income (FTE) | $ | 8,935 | $ | 9,071 | $ | 8,608 | $ | 8,363 | $ | 8,021 | ||||
As outlined in the previous tables, the Corporation has increased net interest income primarily through increases in volume. Net interest margins are expected to compress in 2020 as rates on interest earning assets are expected to fall faster than interest bearing liabilities.
Noninterest Income
| Quarter to Date | ||||||||||||||
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Net gain on sales of mortgage loans | $ | 650 | $ | 665 | $ | 422 | $ | 195 | $ | 162 | ||||
| ATM and debit card income | 399 | 418 | 404 | 360 | 397 | |||||||||
| Trust and investment services | 337 | 395 | 459 | 328 | 372 | |||||||||
| Mortgage servicing fees | 256 | 243 | 230 | 211 | 208 | |||||||||
| Service charges on deposit accounts | 245 | 239 | 222 | 234 | 259 | |||||||||
| Net MSR income | 130 | 142 | 344 | 8 | 67 | |||||||||
| Net gain from COLI death benefit | — | — | — | — | — | |||||||||
| Net gain on sales of commercial loans | — | — | — | — | — | |||||||||
| Other income and fees | 112 | 160 | 169 | 186 | 238 | |||||||||
| Total noninterest income | $ | 2,129 | $ | 2,262 | $ | 2,250 | $ | 1,522 | $ | 1,703 | ||||
| Year to Date December 31 | Variance | |||||||||||||||||||||||||
| 2019 | 2018 | Amount | % | |||||||||||||||||||||||
| Net gain on sales of mortgage loans | $ | 1,932 | $ | 841 | $ | 1,091 | 129.73 | % | ||||||||||||||||||
| ATM and debit card income | 1,581 | 1,525 | 56 | 3.67 | % | |||||||||||||||||||||
| Trust and investment services | 1,519 | 1,591 | (72 | ) | (4.53 | )% | ||||||||||||||||||||
| Mortgage servicing fees | 940 | 785 | 155 | 19.75 | % | |||||||||||||||||||||
| Service charges on deposit accounts | 940 | 1,044 | (104 | ) | (9.96 | )% | ||||||||||||||||||||
| Net MSR income | 624 | 363 | 261 | 71.90 | % | |||||||||||||||||||||
| Net gain from COLI death benefit | — | 932 | (932 | ) | (100.00 | )% | ||||||||||||||||||||
| Net gain on sales of commercial loans | — | 518 | (518 | ) | (100.00 | )% | ||||||||||||||||||||
| Other income and fees | 627 | 678 | (51 | ) | (7.52 | )% | ||||||||||||||||||||
| Total noninterest income | $ | 8,163 | $ | 8,277 | $ | (114 | ) | (1.38 | )% | |||||||||||||||||
Net gain on sales of mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. During 2019, the interest rate environment was very advantageous for residential mortgage originations and refinancing. While residential mortgage demand continues to be strong, gains from the sales of mortgage loans is expected to decline in 2020 as refinancing activity will likely subside.
ATM and debit card income represents fees earned on ATM and debit card transactions. The Corporation expects these fees to increase modestly in 2020.
Trust and investment services includes income the Corporation earned from contracts with customers to manage assets for investment and/or to transact on their accounts. The wealth management component is strongly correlated to changes in the stock market and as such, can vary from period to period. Trust and investment services income is expected to approximate current levels in 2020.
Mortgage servicing fees includes the fees earned for servicing loans that have been sold into the secondary market. The increase in mortgage servicing fees is directly related to the increases in the size of the serviced portfolio. Mortgage servicing fees are expected to continue to increase in 2020.
Service charges on deposit accounts includes fees earned from deposit customers for transaction-based, account maintenance and overdraft services. The year-over-year decrease in service charges on deposit accounts is a result of a decline in NSF fees as well as a shift of customer demand toward deposit accounts with no or reduced service charges. Service charges on deposit accounts are expected to approximate current levels for the foreseeable future.
Net MSR income represents income generated from the capitalization of mortgage servicing rights, net of amortization. During the second quarter of 2019, the Corporation sold a pool of residential mortgage loans out of its loan portfolio, but retained servicing. This sale generated $266 of net MSR income. The Corporation expects net MSR income to stabilize in 2020.
Net gain from COLI death benefit is recognized in the event of the death of an insured individual. The Corporation does not expect to receive any gains from COLI death benefits in 2020.
Net gain on sales of commercial loans includes the income earned on the sale of commercial loans into the secondary market. There were no commercial loan sales in 2019. The Corporation continually analyzes its commercial loan portfolio for opportunistic sales strategies.
Other income and fees includes other income items, none of which are individually significant. Other income and fees are expected to approximate current levels for the foreseeable future.
Noninterest Expenses
| Quarter to Date | ||||||||||||||
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Total compensation | $ | 4,037 | $ | 3,530 | $ | 3,749 | $ | 3,630 | $ | 3,429 | ||||
| Furniture and equipment | 665 | 579 | 525 | 491 | 508 | |||||||||
| Professional services | 582 | 494 | 439 | 445 | 518 | |||||||||
| Occupancy | 467 | 444 | 426 | 437 | 416 | |||||||||
| Data processing | 272 | 323 | 281 | 278 | 512 | |||||||||
| Advertising and promotional | 232 | 222 | 291 | 163 | 198 | |||||||||
| Loan and collection | 203 | 120 | 119 | 110 | 134 | |||||||||
| Telephone and communication | 115 | 110 | 108 | 111 | 107 | |||||||||
| Amortization of CDIs | 113 | 112 | 114 | 112 | 136 | |||||||||
| ATM and debit card | 98 | 109 | 100 | 95 | 96 | |||||||||
| FDIC insurance premiums | 6 | 20 | 17 | 101 | 120 | |||||||||
| Other losses | — | 13 | 4 | 11 | 152 | |||||||||
| Other general and administrative | 625 | 532 | 518 | 525 | 581 | |||||||||
| Total noninterest expenses | $ | 7,415 | $ | 6,608 | $ | 6,691 | $ | 6,509 | $ | 6,907 | ||||
| Year to Date December 31 | Variance | |||||||||||
| 2019 | 2018 | Amount | % | |||||||||
| Total compensation | $ | 14,946 | $ | 13,421 | $ | 1,525 | 11.36 | % | ||||
| Furniture and equipment | 2,260 | 1,898 | 362 | 19.07 | % | |||||||
| Professional services | 1,960 | 1,787 | 173 | 9.68 | % | |||||||
| Occupancy | 1,774 | 1,639 | 135 | 8.24 | % | |||||||
| Data processing | 1,154 | 968 | 186 | 19.21 | % | |||||||
| Advertising and promotional | 908 | 718 | 190 | 26.46 | % | |||||||
| Loan and collection | 552 | 537 | 15 | 2.79 | % | |||||||
| Amortization of CDIs | 451 | 542 | (91 | ) | (16.79 | )% | ||||||
| Telephone and communication | 444 | 413 | 31 | 7.51 | % | |||||||
| ATM and debit card | 402 | 387 | 15 | 3.88 | % | |||||||
| FDIC insurance premiums | 144 | 472 | (328 | ) | (69.49 | )% | ||||||
| Other losses | 28 | 413 | (385 | ) | (93.22 | )% | ||||||
| Other general and administrative | 2,200 | 2,115 | 85 | 4.02 | % | |||||||
| Total noninterest expenses | $ | 27,223 | $ | 25,310 | $ | 1,913 | 7.56 | % | ||||
Total compensation includes salaries, commissions and incentives, employee benefits, and payroll taxes. Total compensation has increased due to annual merit increases and an increase in commissions and incentives paid. Fluctuations in commissions and incentives are primarily driven by residential mortgage originations, which can vary significantly from period to period. Total compensation is expected to increase modestly in 2020 as increases related to the increase in size and complexity of the Corporation will likely be offset by reductions in commissions and incentives.
Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, property taxes, utilities, insurance, certain service contracts, and other related items. These expenses are expected to increase with the size and complexity of the Corporation.
Professional services include expenses relating to third-party professional services. These services include, but are not limited to, regulatory, auditing, consulting, and legal. These expenses are expected to increase in future periods to ensure compliance with audit and regulatory requirements.
Data processing primarily includes the expenses relating to the Corporation's core data processor. The increase in 2019 is largely due to the growth in size and complexity of the Corporation. These expenses are expected to increase throughout 2020.
Advertising and promotional includes the Corporation's media costs and any donations or sponsorships made on behalf of the Corporation. The increase in expenses is a direct result of the Corporation enhancing its marketing efforts to attract new and expand existing customer loans and deposit accounts. These expenses are expected to increase into 2020 due to the Corporation's re-branding strategy and continued growth strategy.
Loan and collection includes expenses related to the origination and collection of loans, as well as expenses related to OREO. The Corporation does not expect any significant fluctuations through 2020.
Amortization of CDIs relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and is expected to approximate current levels in 2020.
Telephone and communication includes expenses relating to the Corporation's communication systems. These expenses have increased due to the growth in size and complexity of the Corporation and are expected to continue this trend for the foreseeable future.
ATM and debit card expenses fluctuate based on customer and non-customer utilization of ATMs and customer debit card volumes. The Corporation expects these fees to increase modestly into 2020.
FDIC insurance premiums typically fluctuate based on the size of the Corporation's balance sheet, capital position, overall risk profile, and examination ratings. FDIC insurance premiums decreased significantly in 2019 compared to 2018 due to a Small Bank Assessment Credit issued by the FDIC in the second quarter of 2019. The remaining balance of this credit is expected to be applied in the first quarter of 2020. Due to the application of the Small Bank Assessment Credit, FDIC insurance premiums are not expected to significantly increase in 2020.
Included in other losses was a $260 one-time loan related expense in the first quarter of 2018 and a one-time loss totaling $132 in the fourth quarter of 2018 related to assets acquired from Community Bancorp, Inc. Excluding these isolated items, other losses have not been significant and no significant other losses are anticipated in 2020.
Other general and administrative includes miscellaneous other expense items, none of which are individually significant. These expenses are expected to approximate current levels into the foreseeable future.
Balance Sheet Breakdown and Analysis
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| ASSETS | ||||||||||||||
| Cash and cash equivalents | $ | 46,803 | $ | 37,572 | $ | 20,067 | $ | 16,509 | $ | 23,412 | ||||
| Total investment securities | 61,621 | 62,351 | 73,285 | 82,222 | 94,721 | |||||||||
| Loans HFS | 19,491 | 15,111 | 6,771 | 1,835 | 903 | |||||||||
| Gross loans | 870,555 | 826,597 | 813,547 | 809,863 | 772,227 | |||||||||
| Less ALLL | 5,813 | 5,413 | 5,014 | 4,745 | 4,488 | |||||||||
| Net loans | 864,742 | 821,184 | 808,533 | 805,118 | 767,739 | |||||||||
| All other assets | 42,102 | 41,828 | 41,134 | 40,488 | 39,675 | |||||||||
| Total assets | $ | 1,034,759 | $ | 978,046 | $ | 949,790 | $ | 946,172 | $ | 926,450 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Total deposits | $ | 863,102 | $ | 801,101 | $ | 792,555 | $ | 789,533 | $ | 763,124 | ||||
| Total borrowed funds | 61,500 | 69,000 | 54,000 | 59,000 | 69,000 | |||||||||
| Accrued interest and other liabilities | 8,713 | 8,803 | 7,731 | 5,403 | 4,810 | |||||||||
| Total liabilities | 933,315 | 878,904 | 854,286 | 853,936 | 836,934 | |||||||||
| Total shareholders' equity | 101,444 | 99,142 | 95,504 | 92,236 | 89,516 | |||||||||
| Total liabilities and shareholders' equity | $ | 1,034,759 | $ | 978,046 | $ | 949,790 | $ | 946,172 | $ | 926,450 | ||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||
| Variance | Variance | ||||||||||||
| Amount | % | Amount | % | ||||||||||
| ASSETS | |||||||||||||
| Cash and cash equivalents | $ | 9,231 | 24.57 | % | $ | 23,391 | 99.91 | % | |||||
| Total investment securities | (730 | ) | (1.17 | )% | (33,100 | ) | (34.94 | )% | |||||
| Loans HFS | 4,380 | 28.99 | % | 18,588 | 2,058.47 | % | |||||||
| Gross loans | 43,958 | 5.32 | % | 98,328 | 12.73 | % | |||||||
| Less ALLL | 400 | 7.39 | % | 1,325 | 29.52 | % | |||||||
| Net loans | 43,558 | 5.30 | % | 97,003 | 12.63 | % | |||||||
| All other assets | 274 | 0.66 | % | 2,427 | 6.12 | % | |||||||
| Total assets | $ | 56,713 | 5.80 | % | $ | 108,309 | 11.69 | % | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
| Total deposits | $ | 62,001 | 7.74 | % | $ | 99,978 | 13.10 | % | |||||
| Total borrowed funds | (7,500 | ) | (10.87 | )% | (7,500 | ) | (10.87 | )% | |||||
| Accrued interest and other liabilities | (90 | ) | (1.02 | )% | 3,903 | 81.14 | % | ||||||
| Total liabilities | 54,411 | 3.24 | % | 96,381 | 6.02 | % | |||||||
| Total shareholders' equity | 2,302 | 2.32 | % | 11,928 | 13.32 | % | |||||||
| Total liabilities and shareholders' equity | $ | 56,713 | 5.80 | % | $ | 108,309 | 11.69 | % | |||||
Cash and cash equivalents
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||
| Cash and due from banks | $ | 23,803 | $ | 28,572 | $ | 17,067 | $ | 16,509 | $ | 19,412 | |||||||
| Federal funds sold | 23,000 | 9,000 | 3,000 | — | 4,000 | ||||||||||||
| Cash and cash equivalents | $ | 46,803 | $ | 37,572 | $ | 20,067 | $ | 16,509 | $ | 23,412 | |||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||||||
| Variance | Variance | ||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||
| Cash and due from banks | $ | (4,769 | ) | (16.69 | )% | $ | 4,391 | 22.62 | % | ||||||||
| Federal funds sold | 14,000 | 155.56 | % | 19,000 | 475 | % | |||||||||||
| Cash and cash equivalents | $ | 9,231 | 24.57 | % | $ | 23,391 | 99.91 | % | |||||||||
Cash and cash equivalents, which is comprised of cash and due from banks and federal funds sold, fluctuate from period to period based on loan demand and variances in deposit accounts. Federal funds sold increased in the fourth quarter of 2019 compared to the third quarter due to an increase in total deposits. The Corporation will partially fund the expected loan growth in 2020 with the balance of federal funds sold, which will likely reduce the balance of cash and cash equivalents.
Total investment securities
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||||||||||||||||
| AFS | |||||||||||||||||||||||||||||||||
| U.S. Government and federal agency | $ | 18,867 | $ | 22,854 | $ | 33,842 | $ | 38,796 | $ | 57,029 | |||||||||||||||||||||||
| State and municipal | 10,691 | 10,194 | 8,889 | 10,322 | 10,558 | ||||||||||||||||||||||||||||
| Collateralized mortgage obligations - agencies | 9,527 | 10,826 | 11,856 | 12,516 | 9,833 | ||||||||||||||||||||||||||||
| Certificates of deposit | 6,659 | 7,155 | 7,154 | 8,394 | 8,393 | ||||||||||||||||||||||||||||
| Mortgage backed residential | 10,748 | 6,227 | 6,733 | 7,031 | 4,276 | ||||||||||||||||||||||||||||
| Unrealized gain/(loss) on AFS securities | 1,092 | 1,048 | 776 | 288 | (235 | ) | |||||||||||||||||||||||||||
| Total AFS | 57,584 | 58,304 | 69,250 | 77,347 | 89,854 | ||||||||||||||||||||||||||||
| HTM State and municipal | 2,096 | 2,100 | 2,104 | 2,965 | 2,971 | ||||||||||||||||||||||||||||
| Equity securities | 1,941 | 1,947 | 1,931 | 1,910 | 1,896 | ||||||||||||||||||||||||||||
| Total investment securities | $ | 61,621 | $ | 62,351 | $ | 73,285 | $ | 82,222 | $ | 94,721 | |||||||||||||||||||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||
| Variance | Variance | ||||||||||||
| Amount | % | Amount | % | ||||||||||
| AFS | |||||||||||||
| U.S. Government and federal agency | $ | (3,987 | ) | (17.45 | )% | $ | (38,162 | ) | (66.92 | )% | |||
| State and municipal | 497 | 4.88 | % | 133 | 1.26 | % | |||||||
| Collateralized mortgage obligations - agencies | (1,299 | ) | (12.00 | )% | (306 | ) | (3.11 | )% | |||||
| Certificates of deposit | (496 | ) | (6.93 | )% | (1,734 | ) | (20.66 | )% | |||||
| Mortgage backed residential | 4,521 | 72.6 | % | 6,472 | 151.36 | % | |||||||
| Unrealized gain/(loss) on AFS securities | 44 | 4.2 | % | 1,327 | (564.68 | )% | |||||||
| Total AFS | (720 | ) | (1.23 | )% | (32,270 | ) | (35.91 | )% | |||||
| HTM State and municipal | (4 | ) | (0.19 | )% | (875 | ) | (29.45 | )% | |||||
| Equity securities | (6 | ) | (0.31 | )% | 45 | 2.37 | % | ||||||
| Total investment securities | $ | (730 | ) | (1.17 | )% | $ | (33,100 | ) | (34.94 | )% | |||
During 2018, the Corporation increased total investment securities due to advantageous pricing opportunities. However, since late 2018, yields on bonds that meet the Corporation's investment standards have declined significantly. As such, the Corporation has not replaced the majority of maturing investments. Total investment securities are expected to grow with overall balance sheet growth as it is an important source of liquidity and consistent earnings.
Loans HFS
Loans HFS represent the balance of loans that have been committed to be sold to the secondary market, but have not yet been delivered. The level of loans HFS fluctuates based on loan demand as well as the timing of loan deliveries to the secondary market. As residential mortgage activity is expected to decrease in 2020, the balance of loans HFS will likely decline.
Net loans
The following tables outline the composition and changes in the loan portfolio as of:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||
| Commercial real estate | $ | 455,289 | $ | 420,127 | $ | 408,103 | $ | 394,462 | $ | 369,043 | |||||||||
| Residential real estate | 292,946 | 291,401 | 289,944 | 306,466 | 293,271 | ||||||||||||||
| Commercial | 71,689 | 63,747 | 63,998 | 56,790 | 56,583 | ||||||||||||||
| Home equity | 41,987 | 43,061 | 42,890 | 43,130 | 43,597 | ||||||||||||||
| Installment | 8,644 | 8,261 | 8,612 | 9,015 | 9,733 | ||||||||||||||
| Gross loans | $ | 870,555 | $ | 826,597 | $ | 813,547 | $ | 809,863 | $ | 772,227 | |||||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||||||||
| Variance | Variance | ||||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||||
| Commercial real estate | $ | 35,162 | 8.37 | % | $ | 86,246 | 23.37 | % | |||||||||||
| Residential real estate | 1,545 | 0.53 | % | (325 | ) | (0.11 | )% | ||||||||||||
| Commercial | 7,942 | 12.46 | % | 15,106 | 26.70 | % | |||||||||||||
| Home equity | (1,074 | ) | (2.49 | )% | (1,610 | ) | (3.69 | )% | |||||||||||
| Installment | 383 | 4.64 | % | (1,089 | ) | (11.19 | )% | ||||||||||||
| Gross loans | $ | 43,958 | 5.32 | % | $ | 98,328 | 12.73 | % | |||||||||||
The following table summarizes the Corporation's current, past due, and nonaccrual loans as of:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Accruing interest | ||||||||||||||
| Current | $ | 867,901 | $ | 824,587 | $ | 811,184 | $ | 807,671 | $ | 769,799 | ||||
| Past due 30-89 days | 1,213 | 1,089 | 1,275 | 1,009 | 1,325 | |||||||||
| Past due 90 days or more | 239 | 209 | 301 | 310 | 191 | |||||||||
| Total accruing interest | 869,353 | 825,885 | 812,760 | 808,990 | 771,315 | |||||||||
| Nonaccrual | 1,202 | 712 | 787 | 873 | 912 | |||||||||
| Total loans | $ | 870,555 | $ | 826,597 | $ | 813,547 | $ | 809,863 | $ | 772,227 | ||||
| Total loans past due and in nonaccrual status | $ | 2,654 | $ | 2,010 | $ | 2,363 | $ | 2,192 | $ | 2,428 | ||||
The following table summarizes the Corporation's nonperforming assets as of:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Nonaccrual loans | $ | 1,202 | $ | 712 | $ | 787 | $ | 873 | $ | 912 | ||||
| Accruing loans past due 90 days or more | 239 | 209 | 301 | 310 | 191 | |||||||||
| Total nonperforming loans | 1,441 | 921 | 1,088 | 1,183 | 1,103 | |||||||||
| OREO | — | — | — | — | 32 | |||||||||
| Total nonperforming assets | $ | 1,441 | $ | 921 | $ | 1,088 | $ | 1,183 | $ | 1,135 | ||||
The following table summarizes the Corporation's primary asset quality measures as of:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||
| Nonperforming loans to gross loans | 0.17 | % | 0.11 | % | 0.13 | % | 0.15 | % | 0.14 | % | |||||||||
| Nonperforming assets to total assets | 0.14 | % | 0.09 | % | 0.11 | % | 0.13 | % | 0.12 | % | |||||||||
| ALLL to gross loans | 0.67 | % | 0.65 | % | 0.62 | % | 0.59 | % | 0.58 | % | |||||||||
As outlined in the preceding tables, the Corporation has been successful in growing its loan portfolio over the past 12 months with most of the growth coming in the form of commercial and commercial real estate loans. Despite the above peer growth, the Corporation has not relaxed its underwriting standards as evidenced by the low level of nonperforming loans.
The following table summarizes the balance of net unamortized discounts on purchased loans as of:
| 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | ||||||||||
| Net unamortized discount on purchased loans | $ | 1,462 | $ | 1,626 | $ | 1,914 | $ | 2,095 | $ | 2,318 | ||||
All other assets
The following tables outline the composition and changes in other assets as of:
| 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | ||||||||||
| Premises and equipment, net | $ | 15,245 | $ | 15,443 | $ | 14,792 | $ | 14,838 | $ | 14,761 | ||||
| COLI | 10,316 | 10,248 | 10,181 | 10,070 | 10,007 | |||||||||
| MSR | 4,030 | 3,900 | 3,758 | 3,414 | 3,406 | |||||||||
| Goodwill | 3,219 | 3,219 | 3,219 | 3,219 | 3,219 | |||||||||
| FHLB stock | 3,150 | 3,150 | 3,150 | 3,150 | 3,150 | |||||||||
| AIR | 2,877 | 2,954 | 3,350 | 3,298 | 3,020 | |||||||||
| CDI assets | 902 | 1,015 | 1,128 | 1,241 | 1,353 | |||||||||
| Right-of-use assets | 475 | 105 | 119 | 132 | — | |||||||||
| OREO | — | — | — | — | 32 | |||||||||
| Other assets | 1,888 | 1,794 | 1,437 | 1,126 | 727 | |||||||||
| All other assets | $ | 42,102 | $ | 41,828 | $ | 41,134 | $ | 40,488 | $ | 39,675 | ||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||
| Variance | Variance | ||||||||||||
| Amount | % | Amount | % | ||||||||||
| Premises and equipment, net | $ | (198 | ) | (1.28 | )% | $ | 484 | 3.28 | % | ||||
| COLI | 68 | 0.66 | % | 309 | 3.09 | % | |||||||
| MSR | 130 | 3.33 | % | 624 | 18.32 | % | |||||||
| Goodwill | — | — | % | — | — | % | |||||||
| FHLB stock | — | — | % | — | — | % | |||||||
| AIR | (77 | ) | (2.61 | )% | (143 | ) | (4.74 | )% | |||||
| CDI assets | (113 | ) | (11.13 | )% | (451 | ) | (33.33 | )% | |||||
| Right-of-use assets | 370 | 352.38 | % | 475 | N/M | ||||||||
| OREO | — | — | % | (32 | ) | (100.00 | )% | ||||||
| Other assets | 94 | 5.24 | % | 1,161 | 159.70 | % | |||||||
| All other assets | 274 | 0.66 | % | $ | 2,427 | 6.12 | % | ||||||
MSRs are servicing assets that are recognized from the sales of mortgage loans. A portion of the cost of originating the loan is allocated to the servicing right based on relative fair value. The increase in MSRs for 2019 is due to the increased volume of residential mortgage loan sales. The Corporation expects nominal growth in MSRs in 2020 due to continued residential mortgage origination.
Right-of-use assets were established pursuant to the adoption of ASU 2016-02 on January 1, 2019. Right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term, for leases that are longer than 12 months. The large increase from September 30, 2019 was due to an additional lease being entered into by the Corporation.
All other assets are expected to increase commensurate with the overall growth of the Corporation.
Total deposits
The following tables outline the composition and changes in the deposit portfolio as of:
| 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | |||||||||||||||
| Demand | $ | 260,503 | $ | 253,784 | $ | 248,795 | $ | 237,213 | $ | 233,954 | |||||||||
| Savings | 215,218 | 213,494 | 232,130 | 230,006 | 223,728 | ||||||||||||||
| Money market demand | 88,350 | 80,873 | 69,374 | 61,294 | 61,369 | ||||||||||||||
| NOW | 75,976 | 39,286 | 14,925 | 17,450 | 10,234 | ||||||||||||||
| Other time deposits | 176,441 | 175,361 | 178,789 | 181,720 | 169,590 | ||||||||||||||
| Brokered time deposits | 28,605 | 16,326 | 23,484 | 35,398 | 37,298 | ||||||||||||||
| Internet time deposits | 18,009 | 21,977 | 25,058 | 26,452 | 26,951 | ||||||||||||||
| Total deposits | $ | 863,102 | $ | 801,101 | $ | 792,555 | $ | 789,533 | $ | 763,124 | |||||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||||||||
| Variance | Variance | ||||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||||
| Demand | $ | 6,719 | 2.65 | % | $ | 26,549 | 11.35 | % | |||||||||||
| Savings | 1,724 | 0.81 | % | (8,510 | ) | (3.80 | )% | ||||||||||||
| Money market demand | 7,477 | 9.25 | % | 26,981 | 43.97 | % | |||||||||||||
| NOW | 36,690 | 93.39 | % | 65,742 | 642.39 | % | |||||||||||||
| Other time deposits | 1,080 | 0.62 | % | 6,851 | 4.04 | % | |||||||||||||
| Brokered time deposits | 12,279 | 75.21 | % | (8,693 | ) | (23.31 | )% | ||||||||||||
| Internet time deposits | (3,968 | ) | (18.06 | )% | (8,942 | ) | (33.18 | )% | |||||||||||
| Total deposits | $ | 62,001 | 7.74 | % | $ | 99,978 | 13.10 | % | |||||||||||
The Corporation has continued its focus of growing non-contractual deposits while supplementing funding with time deposits. The Corporation has been able to drive this meaningful increase through enhanced organic growth strategies. The Corporation expects deposit growth to remain strong in 2020.
Total borrowed funds
The following tables outline the composition and changes in borrowed funds as of:
| 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | |||||||||||||||
| FHLB borrowings | $ | 47,500 | $ | 55,000 | $ | 40,000 | $ | 40,000 | $ | 55,000 | |||||||||
| Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | ||||||||||||||
| Federal funds purchased | — | — | — | 5,000 | — | ||||||||||||||
| Total borrowed funds | $ | 61,500 | $ | 69,000 | $ | 54,000 | $ | 59,000 | $ | 69,000 | |||||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | ||||||||||||||||||
| Variance | Variance | ||||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||||
| FHLB borrowings | $ | (7,500 | ) | (13.64 | )% | $ | (7,500 | ) | (13.64 | )% | |||||||||
| Subordinated debentures | — | — | % | — | — | % | |||||||||||||
| Federal funds purchased | — | — | % | — | — | % | |||||||||||||
| Total borrowed funds | $ | (7,500 | ) | (10.87 | )% | $ | (7,500 | ) | (10.87 | )% | |||||||||
While the Corporation increased its reliance on borrowed funds in 2018 to fund its strong loan demand, borrowed funds gradually declined in the quarters prior to September 30, 2019 as the Corporation has been able to fund organic growth through increases in deposit accounts. Total borrowed funds increased in the third quarter of 2019 as the interest rates for FHLB borrowings were extremely attractive. Total borrowed funds are expected to decrease as current FHLB borrowings mature. The Corporation continually analyzes the market for opportunities and will borrow funds when deemed financially beneficial.
Wholesale funding sources
The following tables outline the composition and changes in wholesale funding sources as of:
| 12/31/19 | 9/30/19 | 6/30/19 | 3/31/19 | 12/31/18 | ||||||||||||||||
| FHLB borrowings | $ | 47,500 | $ | 55,000 | $ | 40,000 | $ | 40,000 | $ | 55,000 | ||||||||||
| Brokered time deposits | 28,605 | 16,326 | 23,484 | 35,398 | 37,298 | |||||||||||||||
| Internet time deposits | 18,009 | 21,977 | 25,058 | 26,452 | 26,951 | |||||||||||||||
| Total wholesale funds | $ | 94,114 | $ | 93,303 | $ | 88,542 | $ | 101,850 | $ | 119,249 | ||||||||||
| 12/31/2019 vs 9/30/2019 | 12/31/2019 vs 12/31/2018 | |||||||||||||||||||
| Variance | Variance | |||||||||||||||||||
| Amount | % | Amount | % | |||||||||||||||||
| FHLB borrowings | $ | (7,500 | ) | (13.64 | )% | $ | (7,500 | ) | (13.64 | )% | ||||||||||
| Brokered time deposits | 12,279 | 75.21 | % | (8,693 | ) | (23.31 | )% | |||||||||||||
| Internet time deposits | (3,968 | ) | (18.06 | )% | (8,942 | ) | (33.18 | )% | ||||||||||||
| Total wholesale funds | $ | 811 | 0.87 | % | $ | (25,135 | ) | (21.08 | )% | |||||||||||
The Corporation utilizes wholesale funds to provide balance sheet growth. As wholesale funding is typically more expensive than core deposits, the Corporation continually analyzes sources of wholesale funding when the increases in interest earning assets out-pace the increases in core deposits. The Corporation does not anticipate any significant changes to wholesale funding levels in 2020.
Accrued interest and other liabilities
Accrued interest and other liabilities includes accrued interest payable, federal income taxes payable, deferred federal income taxes payable, and all other liabilities (none of which are individually significant). Accrued interest and other liabilities are not expected to fluctuate significantly in future periods.
Total shareholders' equity
Total shareholders' equity includes common stock, retained earnings, and AOCI. During the fourth quarter of 2018, the Corporation increased its capital position through a private placement of common stock to both retail and accredited individual investors. The private placement generated net proceeds of $20,500. These proceeds were used to fund the Corporation's strong organic growth, opportunistic strategic growth, and enhance its capital position. The balance of growth in retained earnings was the result of the Corporation's strong earnings. Total shareholders' equity is expected to continue to grow in 2020 through the Corporation's earnings as no significant changes in dividend strategy are anticipated.
Stock Performance
The following graph compares the cumulative total shareholder return on the Corporation's common stock for the last five years with the cumulative total return on the ABA NASDAQ Community Bank Index (NASDAQ: XX:ABAQ) over the same period. The graph assumes the value of an investment in the Corporation's common stock and the ABA NASDAQ Community Bank Index was $100 at December 31, 2014 and all dividends were reinvested.
| Year | FETM | ABQ Index | ||||||||||
| 12/31/2014 | $ | 100.00 | $ | 100.00 | ||||||||
| 12/31/2015 | 141.21 | 107.45 | ||||||||||
| 12/31/2016 | 166.87 | 146.12 | ||||||||||
| 12/31/2017 | 197.98 | 145.96 | ||||||||||
| 12/31/2018 | 221.82 | 122.73 | ||||||||||
| 12/31/2019 | 267.37 | 147.67 | ||||||||||
Abbreviations and Acronyms
| ABA: American Bankers Association | FTE: Fully taxable equivalent |
| ACH: Automated Clearing House | GAAP: Generally Accepted Accounting Principles |
| AFS: Available-for-sale | HFS: Held for sale |
| AIR: Accrued interest receivable | HTM: Held to maturity |
| ALLL: Allowance for loan losses | IRA: Individual retirement account |
| AOCI: Accumulated other comprehensive income | LIBOR: London Interbank Offered Rate |
| ARRC: Alternative Reference Rates Committee | MSR: Mortgage servicing rights |
| ASC: Accounting Standards Codification | N/M: Not meaningful |
| ASU: Accounting Standards Update | NASDAQ: National Association of Securities Dealers Automated Quotations |
| ATM: Automated teller machine | |
| CDI: Core deposit intangible | NOW: Negotiable order of withdrawal |
| CET1: Common equity tier 1 | NSF: Non-sufficient funds |
| COLI: Corporate owned life insurance | OCI: Other comprehensive income |
| DRIP: Dividend Reinvestment Plan | OIS: Overnight Index Swap |
| EPS: Earnings Per Common Share | OREO: Other real estate owned |
| ESOP: Employee Stock Ownership Plan | OTTI: Other-than-temporary impairment |
| FASB: Financial Accounting Standards Board | QTD: Quarter to date |
| FDIC: Federal Deposit Insurance Corporation | SBA: Small Business Association |
| FHLB: Federal Home Loan Bank | SERP: Supplemental Executive Retirement Plan |
| FHLLC: Fentura Holdings LLC | SOFR: Secured Overnight Funding Rate |
| FHLMC: Federal Home Loan Mortgage Corporation | TDR: Troubled debt restructuring |
| FRB: Federal Reserve Bank | YTD: Year to date |
About Fentura Financial, Inc. and The State Bank
Fentura Financial, Inc. is the holding company for The State Bank. It was formed in 1987 and is traded on the OTCQX exchange under the symbol FETM, and was recognized as one of the Top 50 performing stocks in 2016 and 2018 on that exchange.
The State Bank is a full-service, 5-Star Bauer Financial rated commercial, retail and trust bank headquartered in Fenton, Michigan. It currently operates 15 full-service branches in Genesee, Livingston, Oakland, Saginaw, and Shiawassee Counties and a loan production office in Saginaw County. The State Bank was ranked #20 by S&P Global in terms of 2018 performance for banks under $2 billion in assets. The State Bank’s commercial department provides a complete array of products including lines of credit, term loans, commercial mortgages, SBA loans and a full-suite of cash management products. The retail department offers personal checking, savings, time and IRA deposit accounts and a wide array of loan products including home equity, auto and personal loans. The residential loan department offers construction, purchase and refinance residential mortgage loans. The wealth management department offers a full-service suite of trust and portfolio management services. More information can be found at www.thestatebank.com or www.fentura.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.
| Contacts: | Ronald L. Justice | Aaron D. Wirsing |
| President & CEO | Chief Financial Officer | |
| Fentura Financial, Inc. | Fentura Financial, Inc. | |
| 810.714.3902 | 810.714.3925 | |
| ronj@thestatebank.com | aaronw@thestatebank.com |
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/564a2927-c77a-4acd-a1df-49f9d7ca7055