FENTON, Mich., April 29, 2022 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces quarterly results of net income of $3,084 for the three month period ended March 31, 2022.
"I am pleased to report solid operating results for the first quarter of 2022. Loan growth and asset quality remained strong through the first quarter of 2022 leading to a $39,259 increase of total loans during the period. This growth has primarily been driven by our commercial lending team as they continue to expand relationships with existing customers as well as develop new relationships. I am confident the Fentura team's focus remains committed to our mission and supporting the needs of our customers and communities we serve."
Following is a discussion of the Corporation's financial performance as of, and for the three month period ended March 31, 2022. 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:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||||||||
| INCOME STATEMENT DATA | ||||||||||||||||||||
| Interest income | $ | 12,301 | $ | 11,749 | $ | 11,584 | $ | 11,658 | $ | 11,919 | ||||||||||
| Interest expense | 599 | 645 | 653 | 762 | 676 | |||||||||||||||
| Net interest income | 11,702 | 11,104 | 10,931 | 10,896 | 11,243 | |||||||||||||||
| Provision for loan losses | 502 | 38 | (436 | ) | 6 | 212 | ||||||||||||||
| Noninterest income | 2,792 | 3,097 | 2,899 | 4,230 | 3,853 | |||||||||||||||
| Noninterest expenses | 10,151 | 9,957 | 9,453 | 9,222 | 9,030 | |||||||||||||||
| Federal income tax expense | 757 | 864 | 958 | 1,172 | 1,198 | |||||||||||||||
| Net income | $ | 3,084 | $ | 3,342 | $ | 3,855 | $ | 4,726 | $ | 4,656 | ||||||||||
| PER SHARE | ||||||||||||||||||||
| Earnings | $ | 0.69 | $ | 0.74 | $ | 0.84 | $ | 1.02 | $ | 1.00 | ||||||||||
| Dividends | $ | 0.090 | $ | 0.080 | $ | 0.080 | $ | 0.080 | $ | 0.080 | ||||||||||
| Tangible book value(1) | $ | 24.97 | $ | 25.43 | $ | 26.53 | $ | 25.73 | $ | 24.75 | ||||||||||
| Quoted market value | ||||||||||||||||||||
| High | $ | 29.25 | $ | 28.28 | $ | 26.25 | $ | 27.40 | $ | 24.75 | ||||||||||
| Low | $ | 27.10 | $ | 25.75 | $ | 25.60 | $ | 23.55 | $ | 21.90 | ||||||||||
| Close(1) | $ | 27.90 | $ | 28.28 | $ | 25.75 | $ | 26.00 | $ | 23.30 | ||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average assets | 0.86 | % | 0.98 | % | 1.16 | % | 1.45 | % | 1.50 | % | ||||||||||
| Return on average shareholders' equity | 10.53 | % | 10.56 | % | 12.26 | % | 15.64 | % | 15.86 | % | ||||||||||
| Return on average tangible shareholders' equity | 11.49 | % | 10.87 | % | 12.63 | % | 16.12 | % | 16.38 | % | ||||||||||
| Efficiency ratio | 70.04 | % | 70.11 | % | 68.35 | % | 60.97 | % | 59.82 | % | ||||||||||
| Yield on earning assets (FTE) | 3.70 | % | 3.67 | % | 3.69 | % | 3.79 | % | 4.01 | % | ||||||||||
| Rate on interest bearing liabilities | 0.29 | % | 0.33 | % | 0.34 | % | 0.41 | % | 0.37 | % | ||||||||||
| Net interest margin to earning assets (FTE) | 3.52 | % | 3.47 | % | 3.48 | % | 3.55 | % | 3.79 | % | ||||||||||
| BALANCE SHEET DATA(1) | ||||||||||||||||||||
| Total investment securities | $ | 151,579 | $ | 164,942 | $ | 138,476 | $ | 129,944 | $ | 89,772 | ||||||||||
| Gross loans | $ | 1,139,351 | $ | 1,100,092 | $ | 1,015,177 | $ | 986,358 | $ | 1,028,117 | ||||||||||
| Total assets | $ | 1,434,052 | $ | 1,417,801 | $ | 1,329,300 | $ | 1,309,685 | $ | 1,303,175 | ||||||||||
| Total deposits | $ | 1,252,892 | $ | 1,228,298 | $ | 1,144,291 | $ | 1,126,496 | $ | 1,122,508 | ||||||||||
| Borrowed funds | $ | 52,000 | $ | 50,000 | $ | 50,000 | $ | 49,500 | $ | 49,000 | ||||||||||
| Total shareholders' equity | $ | 121,346 | $ | 124,455 | $ | 124,809 | $ | 122,986 | $ | 119,360 | ||||||||||
| Net loans to total deposits | 90.06 | % | 88.71 | % | 87.80 | % | 86.60 | % | 90.60 | % | ||||||||||
| Common shares outstanding | 4,459,544 | 4,496,701 | 4,569,955 | 4,638,614 | 4,673,932 | |||||||||||||||
| QTD BALANCE SHEET AVERAGES | ||||||||||||||||||||
| Total assets | $ | 1,448,545 | $ | 1,353,694 | $ | 1,323,912 | $ | 1,309,942 | $ | 1,259,119 | ||||||||||
| Earning assets | $ | 1,348,647 | $ | 1,273,650 | $ | 1,248,018 | $ | 1,234,827 | $ | 1,206,411 | ||||||||||
| Interest bearing liabilities | $ | 831,200 | $ | 773,082 | $ | 756,545 | $ | 753,706 | $ | 735,159 | ||||||||||
| Total shareholders' equity | $ | 118,759 | $ | 125,500 | $ | 124,720 | $ | 121,235 | $ | 119,034 | ||||||||||
| Total tangible shareholders' equity | $ | 108,862 | $ | 121,933 | $ | 121,120 | $ | 117,567 | $ | 115,298 | ||||||||||
| Earned common shares outstanding | 4,451,607 | 4,520,962 | 4,582,401 | 4,644,833 | 4,664,893 | |||||||||||||||
| Unvested stock grants | 27,466 | 20,671 | 20,671 | 20,671 | 21,922 | |||||||||||||||
| Total common shares outstanding | 4,479,073 | 4,541,633 | 4,603,072 | 4,665,504 | 4,686,815 | |||||||||||||||
| ASSET QUALITY(1) | ||||||||||||||||||||
| Nonperforming loans to gross loans | 0.20 | % | 0.18 | % | 0.82 | % | 0.87 | % | 0.79 | % | ||||||||||
| Nonperforming assets to total assets | 0.19 | % | 0.17 | % | 0.63 | % | 0.66 | % | 0.62 | % | ||||||||||
| Allowance for loan losses to gross loans | 0.97 | % | 0.95 | % | 1.03 | % | 1.09 | % | 1.08 | % | ||||||||||
| Allowance for loan losses to gross loans, net of PPP loans | 0.97 | % | 0.96 | % | 1.04 | % | 1.14 | % | 1.23 | % | ||||||||||
| CAPITAL RATIOS(1) | ||||||||||||||||||||
| Total capital to risk weighted assets | 12.07 | % | 12.22 | % | 13.63 | % | 14.35 | % | 15.02 | % | ||||||||||
| Tier 1 capital to risk weighted assets | 11.13 | % | 11.30 | % | 12.64 | % | 13.27 | % | 13.84 | % | ||||||||||
| CET1 capital to risk weighted assets | 9.94 | % | 10.07 | % | 11.33 | % | 11.87 | % | 12.34 | % | ||||||||||
| Tier 1 leverage ratio | 9.07 | % | 9.13 | % | 10.21 | % | 10.19 | % | 10.31 | % | ||||||||||
| (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 three month periods ended:
| 3/31/2022 | 3/31/2021 | 3/31/2020 | 3/31/2019 | 3/31/2018 | ||||||||||||||||
| INCOME STATEMENT DATA | ||||||||||||||||||||
| Interest income | $ | 12,301 | $ | 11,919 | $ | 11,070 | $ | 10,437 | $ | 8,379 | ||||||||||
| Interest expense | 599 | 676 | 2,145 | 2,090 | 1,031 | |||||||||||||||
| Net interest income | 11,702 | 11,243 | 8,925 | 8,347 | 7,348 | |||||||||||||||
| Provision for loan losses | 502 | 212 | 1,542 | 213 | 275 | |||||||||||||||
| Noninterest income | 2,792 | 3,854 | 4,513 | 1,522 | 1,801 | |||||||||||||||
| Noninterest expenses | 10,151 | 9,031 | 7,686 | 6,509 | 6,279 | |||||||||||||||
| Federal income tax expense | 757 | 1,198 | 858 | 633 | 521 | |||||||||||||||
| Net income | $ | 3,084 | $ | 4,656 | $ | 3,352 | $ | 2,514 | $ | 2,074 | ||||||||||
| PER SHARE | ||||||||||||||||||||
| Earnings | $ | 0.69 | $ | 1.00 | $ | 0.72 | $ | 0.54 | $ | 0.57 | ||||||||||
| Dividends | $ | 0.090 | $ | 0.080 | $ | 0.075 | $ | 0.070 | $ | 0.060 | ||||||||||
| Tangible book value(1) | $ | 24.97 | $ | 24.75 | $ | 21.56 | $ | 18.88 | $ | 15.27 | ||||||||||
| Quoted market value | ||||||||||||||||||||
| High | $ | 29.25 | $ | 24.75 | $ | 26.00 | $ | 21.00 | $ | 20.19 | ||||||||||
| Low | $ | 27.10 | $ | 21.90 | $ | 12.55 | $ | 20.05 | $ | 18.88 | ||||||||||
| Close(1) | $ | 27.90 | $ | 23.30 | $ | 15.50 | $ | 20.89 | $ | 19.75 | ||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Return on average assets | 0.86 | % | 1.50 | % | 1.28 | % | 1.09 | % | 1.07 | % | ||||||||||
| Return on average shareholders' equity | 10.53 | % | 15.86 | % | 13.01 | % | 11.09 | % | 13.99 | % | ||||||||||
| Return on average tangible shareholders' equity | 11.49 | % | 16.38 | % | 13.54 | % | 11.66 | % | 15.28 | % | ||||||||||
| Efficiency ratio | 70.04 | % | 59.82 | % | 57.20 | % | 65.95 | % | 68.63 | % | ||||||||||
| Yield on earning assets (FTE) | 3.70 | % | 4.01 | % | 4.47 | % | 4.77 | % | 4.51 | % | ||||||||||
| Rate on interest bearing liabilities | 0.29 | % | 0.37 | % | 1.28 | % | 1.40 | % | 0.83 | % | ||||||||||
| Net interest margin to earning assets (FTE) | 3.52 | % | 3.79 | % | 3.61 | % | 3.81 | % | 3.90 | % | ||||||||||
| BALANCE SHEET DATA(1) | ||||||||||||||||||||
| Total investment securities | $ | 151,579 | $ | 89,772 | $ | 76,312 | $ | 82,222 | $ | 49,608 | ||||||||||
| Gross loans | $ | 1,139,351 | $ | 1,028,117 | $ | 865,577 | $ | 809,863 | $ | 686,140 | ||||||||||
| Total assets | $ | 1,434,052 | $ | 1,303,175 | $ | 1,071,180 | $ | 946,172 | $ | 789,943 | ||||||||||
| Total deposits | $ | 1,252,892 | $ | 1,122,508 | $ | 883,837 | $ | 789,533 | $ | 683,775 | ||||||||||
| Borrowed funds | $ | 52,000 | $ | 49,000 | $ | 71,500 | $ | 59,000 | $ | 44,600 | ||||||||||
| Total shareholders' equity | $ | 121,346 | $ | 119,360 | $ | 104,828 | $ | 92,236 | $ | 60,621 | ||||||||||
| Net loans to total deposits | 90.06 | % | 90.60 | % | 97.11 | % | 101.97 | % | 99.80 | % | ||||||||||
| Common shares outstanding | 4,459,544 | 4,673,932 | 4,675,499 | 4,647,978 | 3,635,098 | |||||||||||||||
| YTD BALANCE SHEET AVERAGES | ||||||||||||||||||||
| Total assets | $ | 1,448,545 | $ | 1,259,119 | $ | 1,049,245 | $ | 934,078 | $ | 789,391 | ||||||||||
| Earning assets | $ | 1,348,647 | $ | 1,206,411 | $ | 997,089 | $ | 887,974 | $ | 755,281 | ||||||||||
| Interest bearing liabilities | $ | 831,200 | $ | 735,159 | $ | 672,564 | $ | 604,973 | $ | 505,174 | ||||||||||
| Total shareholders' equity | $ | 118,759 | $ | 119,034 | $ | 103,646 | $ | 91,964 | $ | 60,107 | ||||||||||
| Total tangible shareholders' equity | $ | 108,862 | $ | 115,298 | $ | 99,558 | $ | 87,430 | $ | 55,041 | ||||||||||
| Earned common shares outstanding | 4,451,607 | 4,664,893 | 4,659,279 | 4,635,255 | 3,633,093 | |||||||||||||||
| Unvested stock grants | 27,466 | 21,922 | 13,481 | 9,788 | — | |||||||||||||||
| Total common shares outstanding | 4,479,073 | 4,686,815 | 4,672,760 | 4,645,043 | 3,633,093 | |||||||||||||||
| ASSET QUALITY(1) | ||||||||||||||||||||
| Nonperforming loans to gross loans | 0.20 | % | 0.79 | % | 0.10 | % | 0.11 | % | 0.10 | % | ||||||||||
| Nonperforming assets to total assets | 0.19 | % | 0.62 | % | 0.12 | % | 0.09 | % | 0.10 | % | ||||||||||
| Allowance for loan losses to gross loans | 0.97 | % | 1.08 | % | 0.84 | % | 0.59 | % | 0.54 | % | ||||||||||
| Allowance for loan losses to gross loans, net of PPP loans | 0.97 | % | 1.23 | % | 0.84 | % | 0.59 | % | 0.54 | % | ||||||||||
| CAPITAL RATIOS(1) | ||||||||||||||||||||
| Total capital to risk weighted assets | 12.07 | % | 15.02 | % | 14.44 | % | 14.01 | % | 11.03 | % | ||||||||||
| Tier 1 capital to risk weighted assets | 11.13 | % | 13.84 | % | 13.58 | % | 13.38 | % | 10.48 | % | ||||||||||
| CET1 capital to risk weighted assets | 9.94 | % | 12.34 | % | 11.92 | % | 11.55 | % | 8.41 | % | ||||||||||
| Tier 1 leverage ratio | 9.07 | % | 10.31 | % | 10.97 | % | 11.00 | % | 9.01 | % | ||||||||||
| (1)At end of period | ||||||||||||||||||||
Income Statement Breakdown and Analysis
| Quarter to Date | ||||||||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||||||||
| GAAP net income | $ | 3,084 | $ | 3,342 | $ | 3,855 | $ | 4,726 | $ | 4,656 | ||||||||||
| Acquisition related items (net of tax) | ||||||||||||||||||||
| Accretion on purchased loans | (20 | ) | (154 | ) | (152 | ) | (152 | ) | (151 | ) | ||||||||||
| Amortization of core deposit intangibles | 85 | 54 | 54 | 53 | 54 | |||||||||||||||
| Amortization on acquired time deposits | (21 | ) | 2 | 2 | 2 | 2 | ||||||||||||||
| Other acquisition related expenses | 202 | 178 | 51 | — | — | |||||||||||||||
| Total acquisition related items (net of tax) | 246 | 80 | (45 | ) | (97 | ) | (95 | ) | ||||||||||||
| Other nonrecurring items (net of tax) | ||||||||||||||||||||
| Prepayment penalties collected | (162 | ) | (91 | ) | (65 | ) | (33 | ) | (17 | ) | ||||||||||
| Total other nonrecurring items (net of tax) | (162 | ) | (91 | ) | (65 | ) | (33 | ) | (17 | ) | ||||||||||
| Adjusted net income from operations | $ | 3,168 | $ | 3,331 | $ | 3,745 | $ | 4,596 | $ | 4,544 | ||||||||||
| GAAP net interest income | $ | 11,702 | $ | 11,104 | $ | 10,931 | $ | 10,896 | $ | 11,243 | ||||||||||
| Accretion on purchased loans | (25 | ) | (195 | ) | (192 | ) | (192 | ) | (191 | ) | ||||||||||
| Prepayment penalties collected | (205 | ) | (115 | ) | (82 | ) | (42 | ) | (21 | ) | ||||||||||
| Amortization on acquired time deposits | (27 | ) | 3 | 3 | 3 | 3 | ||||||||||||||
| Adjusted net interest income | $ | 11,445 | $ | 10,797 | $ | 10,660 | $ | 10,665 | $ | 11,034 | ||||||||||
| PERFORMANCE RATIOS | ||||||||||||||||||||
| Based on adjusted net income from operations | ||||||||||||||||||||
| Earnings per share | $ | 0.71 | $ | 0.74 | $ | 0.82 | $ | 0.99 | $ | 0.97 | ||||||||||
| Return on average assets | 0.89 | % | 0.98 | % | 1.12 | % | 1.41 | % | 1.46 | % | ||||||||||
| Return on average shareholders' equity | 10.82 | % | 10.53 | % | 11.91 | % | 15.21 | % | 15.48 | % | ||||||||||
| Return on average tangible shareholders' equity | 11.80 | % | 10.84 | % | 12.27 | % | 15.68 | % | 15.98 | % | ||||||||||
| Efficiency ratio | 68.74 | % | 69.56 | % | 68.74 | % | 61.46 | % | 60.20 | % | ||||||||||
| Based on adjusted net interest income | ||||||||||||||||||||
| Yield on earning assets (FTE) | 3.64 | % | 3.61 | % | 3.60 | % | 3.72 | % | 3.94 | % | ||||||||||
| Rate on interest bearing liabilities | 0.30 | % | 0.33 | % | 0.34 | % | 0.40 | % | 0.37 | % | ||||||||||
| Net interest margin to earning assets (FTE) | 3.45 | % | 3.37 | % | 3.40 | % | 3.47 | % | 3.72 | % | ||||||||||
| Year to Date March 31 | Variance | ||||||||||||||
| 2022 | 2021 | Amount | % | ||||||||||||
| GAAP net income | $ | 3,084 | $ | 4,656 | $ | (1,572 | ) | (33.76) | % | ||||||
| Acquisition related items (net of tax) | |||||||||||||||
| Accretion on purchased loans | (20 | ) | (151 | ) | 131 | (86.75) | % | ||||||||
| Amortization of core deposit intangibles | 85 | 54 | 31 | 57.41 | % | ||||||||||
| Amortization on acquired time deposits | (21 | ) | 2 | (23 | ) | (1,150.00) | % | ||||||||
| Other acquisition related expenses | 28 | — | 28 | N/M | |||||||||||
| Total acquisition related items (net of tax) | 72 | (95 | ) | 167 | (175.79) | % | |||||||||
| Other nonrecurring items (net of tax) | |||||||||||||||
| Prepayment penalties collected | (162 | ) | (17 | ) | (145 | ) | 852.94 | % | |||||||
| Total other nonrecurring items (net of tax) | (162 | ) | (17 | ) | (145 | ) | 852.94 | % | |||||||
| Adjusted net income from operations | $ | 2,994 | $ | 4,544 | $ | (1,550 | ) | (34.11) | % | ||||||
| GAAP net interest income | $ | 11,702 | $ | 11,243 | $ | 459 | 4.08 | % | |||||||
| Accretion on purchased loans | (25 | ) | (191 | ) | 166 | (86.91) | % | ||||||||
| Prepayment penalties collected | (205 | ) | (21 | ) | (184 | ) | 876.19 | % | |||||||
| Amortization on acquired time deposits | (27 | ) | 3 | (30 | ) | (1,000.00) | % | ||||||||
| Adjusted net interest income | $ | 11,445 | $ | 11,034 | $ | 411 | 3.72 | % | |||||||
| PERFORMANCE RATIOS | |||||||||||||||
| Based on adjusted net income from operations | |||||||||||||||
| Earnings per share | $ | 0.67 | $ | 0.97 | $ | (0.30 | ) | (30.93) | % | ||||||
| Return on average assets | 0.84 | % | 1.46 | % | (0.62) | % | |||||||||
| Return on average shareholders' equity | 10.22 | % | 15.48 | % | (5.26) | % | |||||||||
| Return on average tangible shareholders' equity | 11.15 | % | 15.98 | % | (4.83) | % | |||||||||
| Efficiency ratio | 70.30 | % | 60.20 | % | 10.10 | % | |||||||||
| Based on adjusted net interest income | |||||||||||||||
| Yield on earning assets (FTE) | 3.64 | % | 3.94 | % | (0.30) | % | |||||||||
| Rate on interest bearing liabilities | 0.30 | % | 0.37 | % | (0.07) | % | |||||||||
| Net interest margin to earning assets (FTE) | 3.45 | % | 3.72 | % | (0.27) | % | |||||||||
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.
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 period-to-period comparisons more meaningful.
| Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||||||||||||||||||||
| 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 | $ | 1,110,755 | $ | 11,739 | 4.29 | % | $ | 1,050,383 | $ | 11,235 | 4.24 | % | $ | 1,074,096 | $ | 11,598 | 4.38 | % | ||||||||||||
| Taxable investment securities | 143,945 | 440 | 1.24 | % | 129,817 | 389 | 1.19 | % | 58,859 | 202 | 1.39 | % | ||||||||||||||||||
| Nontaxable investment securities | 16,711 | 92 | 2.23 | % | 16,876 | 94 | 2.21 | % | 17,165 | 105 | 2.48 | % | ||||||||||||||||||
| Interest earning cash and cash equivalents | 73,669 | 29 | 0.16 | % | 73,022 | 33 | 0.18 | % | 52,803 | 11 | 0.08 | % | ||||||||||||||||||
| Federal Home Loan Bank stock | 3,567 | 20 | 2.27 | % | 3,552 | 18 | 2.01 | % | 3,488 | 25 | 2.91 | % | ||||||||||||||||||
| Total earning assets | 1,348,647 | 12,320 | 3.70 | % | 1,273,650 | 11,769 | 3.67 | % | 1,206,411 | 11,941 | 4.01 | % | ||||||||||||||||||
| Nonearning assets | ||||||||||||||||||||||||||||||
| Allowance for loan losses | (10,509 | ) | (10,773 | ) | (11,143 | ) | ||||||||||||||||||||||||
| Fixed assets | 16,941 | 16,568 | 15,757 | |||||||||||||||||||||||||||
| Accrued income and other assets | 93,466 | 74,249 | 48,094 | |||||||||||||||||||||||||||
| Total assets | $ | 1,448,545 | $ | 1,353,694 | $ | 1,259,119 | ||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||||||||
| Interest bearing demand deposits | $ | 275,856 | $ | 137 | 0.20 | % | $ | 250,327 | $ | 132 | 0.21 | % | $ | 206,565 | $ | 121 | 0.24 | % | ||||||||||||
| Savings deposits | 364,820 | 120 | 0.13 | % | 330,086 | 113 | 0.14 | % | 297,129 | 109 | 0.15 | % | ||||||||||||||||||
| Time deposits | 139,463 | 187 | 0.54 | % | 142,668 | 224 | 0.62 | % | 182,465 | 291 | 0.65 | % | ||||||||||||||||||
| Borrowed funds | 51,061 | 155 | 1.23 | % | 50,001 | 176 | 1.40 | % | 49,000 | 155 | 1.28 | % | ||||||||||||||||||
| Total interest bearing liabilities | 831,200 | 599 | 0.29 | % | 773,082 | 645 | 0.33 | % | 735,159 | 676 | 0.37 | % | ||||||||||||||||||
| Noninterest bearing liabilities | ||||||||||||||||||||||||||||||
| Noninterest bearing deposits | 472,595 | 444,929 | 393,751 | |||||||||||||||||||||||||||
| Accrued interest and other liabilities | 25,991 | 10,183 | 11,175 | |||||||||||||||||||||||||||
| Shareholders' equity | 118,759 | 125,500 | 119,034 | |||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,448,545 | $ | 1,353,694 | $ | 1,259,119 | ||||||||||||||||||||||||
| Net interest income (FTE) | $ | 11,721 | $ | 11,124 | $ | 11,265 | ||||||||||||||||||||||||
| Net interest margin to earning assets (FTE) | 3.52 | % | 3.47 | % | 3.79 | % | ||||||||||||||||||||||||
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 | ||||||||||||||||||||||||
| March 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||
| Compared To | Compared To | ||||||||||||||||||||||||
| December 31, 2021 | March 31, 2021 | ||||||||||||||||||||||||
| Increase (Decrease) Due to | Increase (Decrease) Due to | ||||||||||||||||||||||||
| Volume | Rate | Net | Volume | Rate | Net | ||||||||||||||||||||
| Changes in interest income | |||||||||||||||||||||||||
| Total loans | $ | 418 | $ | 86 | $ | 504 | $ | 1,295 | $ | (1,154 | ) | $ | 141 | ||||||||||||
| Taxable investment securities | 37 | 14 | 51 | 385 | (147 | ) | 238 | ||||||||||||||||||
| Nontaxable investment securities | (5 | ) | 3 | (2 | ) | (3 | ) | (10 | ) | (13 | ) | ||||||||||||||
| Interest earning cash and cash equivalents | 2 | (6 | ) | (4 | ) | 5 | 13 | 18 | |||||||||||||||||
| Federal Home Loan Bank stock | — | 2 | 2 | 3 | (8 | ) | (5 | ) | |||||||||||||||||
| Total changes in interest income | 452 | 99 | 551 | 1,685 | (1,306 | ) | 379 | ||||||||||||||||||
| Changes in interest expense | |||||||||||||||||||||||||
| Interest bearing demand deposits | 38 | (33 | ) | 5 | 121 | (105 | ) | 16 | |||||||||||||||||
| Savings deposits | 44 | (37 | ) | 7 | 82 | (71 | ) | 11 | |||||||||||||||||
| Time deposits | (6 | ) | (31 | ) | (37 | ) | (61 | ) | (43 | ) | (104 | ) | |||||||||||||
| Borrowed funds | 22 | (43 | ) | (21 | ) | 25 | (25 | ) | — | ||||||||||||||||
| Total changes in interest expense | 98 | (144 | ) | (46 | ) | 167 | (244 | ) | (77 | ) | |||||||||||||||
| Net change in net interest income (FTE) | $ | 354 | $ | 243 | $ | 597 | $ | 1,518 | $ | (1,062 | ) | $ | 456 | ||||||||||||
| Average Yield/Rate for the Three Month Periods Ended | |||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Total earning assets | 3.70 | % | 3.67 | % | 3.69 | % | 3.79 | % | 4.01 | % | |||||
| Total interest bearing liabilities | 0.29 | % | 0.33 | % | 0.34 | % | 0.41 | % | 0.37 | % | |||||
| Net interest margin to earning assets (FTE) | 3.52 | % | 3.47 | % | 3.48 | % | 3.55 | % | 3.79 | % | |||||
| Quarter to Date Net Interest Income (FTE) | |||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Interest income | $ | 12,301 | $ | 11,749 | $ | 11,584 | $ | 11,658 | $ | 11,919 | |||||
| FTE adjustment | 19 | 20 | 20 | 21 | 22 | ||||||||||
| Total interest income (FTE) | 12,320 | 11,769 | 11,604 | 11,679 | 11,941 | ||||||||||
| Total interest expense | 599 | 645 | 653 | 762 | 676 | ||||||||||
| Net interest income (FTE) | $ | 11,721 | $ | 11,124 | $ | 10,951 | $ | 10,917 | $ | 11,265 | |||||
Noninterest Income
| Quarter to Date | |||||||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||||||
| Net gain on sales of loans | $ | 483 | $ | 838 | $ | 1,096 | $ | 1,253 | $ | 1,845 | |||||||||
| Service charges and fees | |||||||||||||||||||
| Trust and investment services | 598 | 399 | 562 | 403 | 468 | ||||||||||||||
| ATM and debit card income | 485 | 496 | 495 | 511 | 448 | ||||||||||||||
| Service charges on deposit accounts | 241 | 218 | 199 | 168 | 166 | ||||||||||||||
| Total | 1,324 | 1,113 | 1,256 | 1,082 | 1,082 | ||||||||||||||
| Net mortgage servicing rights income | 319 | 407 | (69 | ) | 1,119 | 138 | |||||||||||||
| Change in fair value of equity investments | (48 | ) | (9 | ) | (4 | ) | 2 | (19 | ) | ||||||||||
| Other | |||||||||||||||||||
| Mortgage servicing fees | 444 | 394 | 369 | 362 | 335 | ||||||||||||||
| Change in cash surrender value of corporate owned life insurance | 166 | 168 | 165 | 237 | 63 | ||||||||||||||
| PPP referral fees | — | — | 6 | 74 | 351 | ||||||||||||||
| Other | 104 | 186 | 80 | 101 | 58 | ||||||||||||||
| Total | 714 | 748 | 620 | 774 | 807 | ||||||||||||||
| Total noninterest income | $ | 2,792 | $ | 3,097 | $ | 2,899 | $ | 4,230 | $ | 3,853 | |||||||||
| Memo items: | |||||||||||||||||||
| Residential mortgage operations | $ | 1,246 | $ | 1,639 | $ | 1,396 | $ | 2,734 | $ | 2,318 | |||||||||
| Year to Date March 31 | Variance | ||||||||||||||
| 2022 | 2021 | Amount | % | ||||||||||||
| Net gain on sales of loans | $ | 483 | $ | 1,845 | $ | (1,362 | ) | (73.82) | % | ||||||
| Service charges and fees | |||||||||||||||
| Trust and investment services | 598 | 468 | 130 | 27.78 | % | ||||||||||
| ATM and debit card income | 485 | 448 | 37 | 8.26 | % | ||||||||||
| Service charges on deposit accounts | 241 | 166 | 75 | 45.18 | % | ||||||||||
| Total | $ | 1,324 | $ | 1,082 | $ | 242 | 22.37 | % | |||||||
| Net mortgage servicing rights income | 319 | 138 | 181 | 131.16 | % | ||||||||||
| Change in fair value of equity investments | (48 | ) | (19 | ) | (29 | ) | 152.63 | % | |||||||
| Other | |||||||||||||||
| Mortgage servicing fees | 444 | 335 | 109 | 32.54 | % | ||||||||||
| Change in cash surrender value of corporate owned life insurance | 166 | 63 | 103 | 163.49 | % | ||||||||||
| PPP referral fees | — | 351 | (351 | ) | (100.00) | % | |||||||||
| Other | 104 | 58 | 46 | 79.31 | % | ||||||||||
| Total | 714 | 807 | (93 | ) | (11.52) | % | |||||||||
| Total noninterest income | $ | 2,792 | $ | 3,853 | $ | (1,061 | ) | (27.54) | % | ||||||
| Memo items: | |||||||||||||||
| Residential mortgage operations | $ | 1,246 | $ | 2,318 | (1,072 | ) | (46.25) | % | |||||||
Residential Mortgage Operations
Residential mortgage operations includes net gains on sales of loans, net mortgage servicing rights income, and mortgage servicing fees.
Net gain on sales of mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. Throughout 2021, the interest rate environment was advantageous for residential mortgage originations and refinancing, resulting in significantly elevated gains from sales of loans. Increases in interest rates and limited inventories have driven gains down in the first quarter of 2022. Residential mortgage originations and refinancing activity are likely to approximate current levels throughout the remainder of 2022 as rates are expected to increase in future periods.
Changes in the fair value of MSR are highly correlated to changes in interest rates. As a significant portion of the serviced loan portfolio has been originated over the past two years at low interest rates, management expects the value of the servicing portfolio to remain strong. In addition, the Corporation continues to see a shift from refinancing activity to purchase activity in mortgage originations, which should positively impact the servicing portfolio value.
Mortgage servicing fees includes the fees earned for servicing loans that have been sold into the secondary market. The annual increase in mortgage servicing fees is directly related to the increase in the size of the serviced portfolio.
All Other Noninterest Income
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 through the wealth management and trust department. Trust services and wealth management fees are subject to market fluctuations and interest rate changes.
ATM and debit card income represents fees earned on ATM and debit card transactions. The Corporation expects these fees to increase moderately into 2022.
Service charges on deposit accounts includes fees earned from deposit customers for transaction-based charges, account maintenance and overdraft services. Service charges on deposit accounts are expected to approximate current levels in 2022.
Change in cash surrender value of corporate owned life insurance increased in 2021 as a result of the purchase of $15,000 in additional corporate owned life insurance policies during the second quarter of 2021. The Corporation expects the change in cash surrender value of corporate owned life insurance to approximate current earnings levels throughout 2022.
PPP referral fees earned in 2021 represent fees the Corporation earned from the second round of the PPP loan program through the SBA. Due to strong portfolio loan demand, management elected to refer the second round of PPP requests to a third party for processing and funding. As such, the associated referral fees were recognized as a component of noninterest income. The Corporation recorded no PPP referral fees in the first quarter of 2022 and no future revenues are anticipated.
Change in fair value of equity investments represents the income earned on equities held in the Corporation's investment portfolio. The Corporation does not anticipate any significant changes in fair value from investment equity sales in the foreseeable future.
Other includes miscellaneous other income items, none of which are individually significant.
Noninterest Expenses
| Quarter to Date | |||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Compensation and benefits | $ | 5,347 | $ | 5,054 | $ | 5,001 | $ | 5,000 | $ | 5,004 | |||||
| Furniture and equipment | 818 | 794 | 761 | 712 | 637 | ||||||||||
| Professional services | 812 | 948 | 790 | 703 | 624 | ||||||||||
| Occupancy | 604 | 491 | 522 | 508 | 495 | ||||||||||
| Data processing | 412 | 622 | 557 | 583 | 509 | ||||||||||
| Advertising and promotional | 278 | 356 | 384 | 304 | 284 | ||||||||||
| Loan and collection | 311 | 286 | 264 | 337 | 406 | ||||||||||
| Other | |||||||||||||||
| Other acquisition related expenses | 256 | 225 | 64 | — | — | ||||||||||
| FDIC insurance premiums | 150 | 138 | 153 | 79 | 155 | ||||||||||
| ATM and debit card | 143 | 158 | 131 | 144 | 122 | ||||||||||
| Amortization of core deposit intangibles | 108 | 68 | 68 | 67 | 67 | ||||||||||
| Telephone and communication | 105 | 96 | 80 | 130 | 94 | ||||||||||
| Other general and administrative | 807 | 721 | 678 | 655 | 633 | ||||||||||
| Total | 1,569 | 1,406 | 1,174 | 1,075 | 1,071 | ||||||||||
| Total noninterest expenses | $ | 10,151 | $ | 9,957 | $ | 9,453 | $ | 9,222 | $ | 9,030 | |||||
| Year to Date March 31 | Variance | ||||||||||||
| 2022 | 2021 | Amount | % | ||||||||||
| Compensation and benefits | $ | 5,347 | $ | 5,004 | $ | 343 | 6.85 | % | |||||
| Furniture and equipment | 818 | 637 | 181 | 28.41 | % | ||||||||
| Professional services | 812 | 624 | 188 | 30.13 | % | ||||||||
| Occupancy | 604 | 495 | 109 | 22.02 | % | ||||||||
| Data processing | 412 | 509 | (97 | ) | (19.06 | )% | |||||||
| Advertising and promotional | 278 | 284 | (6 | ) | (2.11 | )% | |||||||
| Loan and collection | 311 | 406 | (95 | ) | (23.40 | )% | |||||||
| Other | |||||||||||||
| Other acquisition related expenses | 256 | — | 256 | N/M | |||||||||
| FDIC insurance premiums | 150 | 155 | (5 | ) | (3.23 | )% | |||||||
| ATM and debit card | 143 | 122 | 21 | 17.21 | % | ||||||||
| Amortization of core deposit intangibles | 108 | 67 | 41 | 61.19 | % | ||||||||
| Telephone and communication | 105 | 94 | 11 | 11.70 | % | ||||||||
| Other general and administrative | 807 | 633 | 174 | 27.49 | % | ||||||||
| Total | 1,569 | 1,071 | 498 | 46.50 | % | ||||||||
| Total noninterest expenses | $ | 10,151 | $ | 9,030 | $ | 1,121 | 12.41 | % | |||||
Compensation and benefits includes salaries, commissions and incentives, employee benefits, and payroll taxes. Compensation and benefits has increased in 2022 due to an increase in the size of the organization and completion of the acquisition of FSB, as well as annual merit increases.
Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, certain service contracts, and other related items. These expenses are expected to continue 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. The increase in professional services is primarily due to audit and accounting and other outside services. These expenses are expected to continue 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. These expenses are expected to increase with the size and complexity of the Corporation.
Advertising and promotional includes the Corporation's media costs and any donations or sponsorships made on behalf of the Corporation. The annual increase in such expenses is a result of the Corporation enhancing its marketing efforts to attract new and expand existing customer loan and deposit account relationships. Total advertising and promotional expenses are expected to increase with the size and complexity of the Corporation.
Loan and collection includes expenses related to the origination and collection of loans. The increase in expenses in 2021 is a direct result of increased loan volume due to the low interest rate environment.
FDIC insurance premiums typically fluctuate based on the size of the Corporation's balance sheet, capital position, overall risk profile, and examination ratings.
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 approximate current levels in 2022.
Amortization of core deposit intangibles relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and FSB on December 1, 2021. These core deposit intangibles are being amortized based on the sum-of-years-digits method. Amortization of core deposit intangibles is expected to approximate current levels through the remainder of 2022.
Telephone and communication includes expenses relating to the Corporation's communication systems. These expenses are expected to approximate current levels.
Other acquisition related expenses includes expenses relates to the Corporation's acquisition of FSB, which closed in the fourth quarter of 2021. The Corporation incurred expenses related to the acquisition of FSB in the first quarter of 2022, however the Corporation does not expect to incur additional expenses related to the acquisition of FSB through the remainder of 2022.
Other general and administrative includes miscellaneous other expense items, none of which are typically significant. Other general and administrative expenses are expected to approximate current levels into the foreseeable future.
Balance Sheet Breakdown and Analysis
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 80,133 | $ | 83,446 | $ | 112,861 | $ | 132,676 | $ | 121,477 | |||||
| Total investment securities | 151,579 | 164,942 | 138,476 | 129,944 | 89,772 | ||||||||||
| Residential mortgage loans held-for-sale, at fair value | 3,038 | 6,783 | 9,702 | 7,670 | 26,322 | ||||||||||
| Gross loans | 1,139,351 | 1,100,092 | 1,015,177 | 986,358 | 1,028,117 | ||||||||||
| Less allowance for loan losses | 11,000 | 10,500 | 10,500 | 10,800 | 11,100 | ||||||||||
| Net Loans | 1,128,351 | 1,089,592 | 1,004,677 | 975,558 | 1,017,017 | ||||||||||
| All other assets | 70,951 | 73,038 | 63,584 | 63,837 | 48,587 | ||||||||||
| Total assets | $ | 1,434,052 | $ | 1,417,801 | $ | 1,329,300 | $ | 1,309,685 | $ | 1,303,175 | |||||
| LIABILITIES AND SHAREHOLDERS EQUITY | |||||||||||||||
| Total deposits | $ | 1,252,892 | $ | 1,228,298 | $ | 1,144,291 | $ | 1,126,496 | $ | 1,122,508 | |||||
| Total borrowed funds | 52,000 | 50,000 | 50,000 | 49,500 | 49,000 | ||||||||||
| Accrued interest payable and other liabilities | 7,814 | 15,048 | 10,200 | 10,703 | 12,307 | ||||||||||
| Total liabilities | 1,312,706 | 1,293,346 | 1,204,491 | 1,186,699 | 1,183,815 | ||||||||||
| Total shareholders' equity | 121,346 | 124,455 | 124,809 | 122,986 | 119,360 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,434,052 | $ | 1,417,801 | $ | 1,329,300 | $ | 1,309,685 | $ | 1,303,175 | |||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||
| Variance | Variance | |||||||||||||
| Amount | % | Amount | % | |||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ | (3,313 | ) | (3.97 | )% | $ | (41,344 | ) | (34.03 | )% | ||||
| Total investment securities | (13,363 | ) | (8.10 | )% | 61,807 | 68.85 | % | |||||||
| Residential mortgage loans held-for-sale, at fair value | (3,745 | ) | (55.21 | )% | (23,284 | ) | (88.46 | )% | ||||||
| Gross loans | 39,259 | 3.57 | % | 111,234 | 10.82 | % | ||||||||
| Less allowance for loan losses | 500 | 4.76 | % | (100 | ) | (0.90 | )% | |||||||
| Net Loans | 38,759 | 3.56 | % | 111,334 | 10.95 | % | ||||||||
| All other assets | (2,087 | ) | (2.86 | )% | 22,364 | 46.03 | % | |||||||
| Total assets | $ | 16,251 | 1.15 | % | $ | 130,877 | 10.04 | % | ||||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||||||||
| Total deposits | $ | 24,594 | 2.00 | % | $ | 130,384 | 11.62 | % | ||||||
| Total borrowed funds | 2,000 | 4.00 | % | 3,000 | 6.12 | % | ||||||||
| Accrued interest payable and other liabilities | (7,234 | ) | (48.07 | )% | (4,493 | ) | (36.51 | )% | ||||||
| Total liabilities | 19,360 | 1.50 | % | 128,891 | 10.89 | % | ||||||||
| Total shareholders' equity | (3,109 | ) | (2.50 | )% | 1,986 | 1.66 | % | |||||||
| Total liabilities and shareholders' equity | $ | 16,251 | 1.15 | % | $ | 130,877 | 10.04 | % | ||||||
Total investment securities
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||||||
| Available-for-sale | |||||||||||||||||||
| U.S. Government and federal agency | $ | 28,396 | $ | 30,406 | $ | 5,967 | $ | 5,917 | $ | 5,942 | |||||||||
| State and municipal | 24,949 | 25,010 | 25,227 | 23,096 | 17,080 | ||||||||||||||
| Mortgage backed residential | 63,532 | 66,874 | 67,199 | 60,390 | 32,135 | ||||||||||||||
| Certificates of deposit | 9,917 | 10,172 | 4,190 | 4,932 | 4,932 | ||||||||||||||
| Collateralized mortgage obligations - agencies | 28,968 | 30,180 | 31,732 | 31,281 | 25,505 | ||||||||||||||
| Unrealized gain/(loss) on available-for-sale securities | (6,900 | ) | (468 | ) | 1,432 | 1,334 | 1,117 | ||||||||||||
| Total available-for-sale | 148,862 | 162,174 | 135,747 | 126,950 | 86,711 | ||||||||||||||
| Held-to-maturity state and municipal | 1,509 | 1,512 | 1,515 | 1,859 | 1,968 | ||||||||||||||
| Equity securities | 1,208 | 1,256 | 1,214 | 1,135 | 1,093 | ||||||||||||||
| Total investment securities | $ | 151,579 | $ | 164,942 | $ | 138,476 | $ | 129,944 | $ | 89,772 | |||||||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | ||||||||||||||||||
| Variance | Variance | ||||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||||
| Available-for-sale | |||||||||||||||||||
| U.S. Government and federal agency | (2,010 | ) | (6.61 | )% | $ | 22,454 | 377.89 | % | |||||||||||
| State and municipal | (61 | ) | (0.24 | )% | 7,869 | 46.07 | % | ||||||||||||
| Mortgage backed residential | (3,342 | ) | (5.00 | )% | 31,397 | 97.70 | % | ||||||||||||
| Certificates of deposit | (255 | ) | (2.51 | )% | 4,985 | 101.07 | % | ||||||||||||
| Collateralized mortgage obligations - agencies | (1,212 | ) | (4.02 | )% | 3,463 | 13.58 | % | ||||||||||||
| Unrealized gain/(loss) on available-for-sale securities | (6,432 | ) | 1374.36 | % | (8,017 | ) | (717.73 | )% | |||||||||||
| Total available-for-sale | (13,312 | ) | (8.21 | )% | 62,151 | 71.68 | % | ||||||||||||
| Held-to-maturity state and municipal | (3 | ) | (0.20 | )% | (459 | ) | (23.32 | )% | |||||||||||
| Equity securities | (48 | ) | (3.82 | )% | 115 | 10.52 | % | ||||||||||||
| Total investment securities | $ | (13,363 | ) | (8.10 | )% | $ | 61,807 | 68.85 | % | ||||||||||
The amortized cost and fair value of AFS investment securities as of March 31, 2022 were as follows:
| Maturing | ||||||||||||||||||
| Due in One Year or Less | After One Year But Within Five Years | After Five Years But Within Ten Years | After Ten Years | Securities with Variable Monthly Payments or Noncontractual Maturities | Total | |||||||||||||
| U.S. Government and federal agency | $ | 6,003 | $ | 22,393 | $ | — | $ | — | $ | — | $ | 28,396 | ||||||
| State and municipal | 4,140 | 10,908 | 8,264 | 1,637 | — | 24,949 | ||||||||||||
| Mortgage backed residential | — | 63,532 | 63,532 | |||||||||||||||
| Certificates of deposit | 7,194 | 2,723 | — | — | — | 9,917 | ||||||||||||
| Collateralized mortgage obligations - agencies | — | — | — | — | 28,968 | 28,968 | ||||||||||||
| Total amortized cost | $ | 17,337 | $ | 36,024 | $ | 8,264 | $ | 1,637 | $ | 92,500 | $ | 155,762 | ||||||
| Fair value | $ | 17,425 | $ | 34,416 | $ | 7,729 | $ | 1,680 | $ | 87,612 | $ | 148,862 | ||||||
The amortized cost and fair value of HTM investment securities as of March 31, 2022 were as follows:
| Maturing | ||||||||||||||||||
| Due in One Year or Less | After One Year But Within Five Years | After Five Years But Within Ten Years | After Ten Years | Securities with Variable Monthly Payments or Noncontractual Maturities | Total | |||||||||||||
| State and municipal | $ | 623 | $ | 581 | $ | 305 | $ | — | $ | — | $ | 1,509 | ||||||
| Fair value | $ | 625 | $ | 585 | $ | 306 | $ | — | $ | — | $ | 1,516 | ||||||
Throughout 2021, the Corporation expanded its investment portfolio to generate additional interest income. Total investment securities, which increased as a part of the acquisition of FSB on December 1, 2021 in the amount of $35,749, are expected to stabilize through 2022. There were no purchases YTD of investment securities as of March 31, 2022, which has resulted in the reduction of the overall size of the investment portfolio due to maturing securities. Total investment securities also declined in the first quarter of 2022 due to an increase in unrealized losses resulting from recent increases in interest rates.
Residential mortgage loans held-for-sale, at fair value
Loans HFS represent the fair value 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.
Loans and allowance for loan losses
The following tables outline the composition and changes in the loan portfolio as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||||||||
| Commercial, net of PPP loans | $ | 94,810 | $ | 91,529 | $ | 74,308 | $ | 65,875 | $ | 60,693 | ||||||||||
| PPP loans | 583 | 2,172 | 4,985 | 35,195 | 122,583 | |||||||||||||||
| Commercial real estate | 698,275 | 656,818 | 616,358 | 573,598 | 541,428 | |||||||||||||||
| Total commercial loans | 793,668 | 750,519 | 695,651 | 674,668 | 724,704 | |||||||||||||||
| Residential mortgage | 297,940 | 298,799 | 273,478 | 265,323 | 258,333 | |||||||||||||||
| Home equity | 40,609 | 42,220 | 41,902 | 41,771 | 40,205 | |||||||||||||||
| Total residential real estate loans | 338,549 | 341,019 | 315,380 | 307,094 | 298,538 | |||||||||||||||
| Consumer | 7,134 | 8,554 | 4,146 | 4,596 | 4,875 | |||||||||||||||
| Gross loans | 1,139,351 | 1,100,092 | 1,015,177 | 986,358 | 1,028,117 | |||||||||||||||
| Allowance for loan and lease losses | (11,000 | ) | (10,500 | ) | (10,500 | ) | (10,800 | ) | (11,100 | ) | ||||||||||
| Loans, net | $ | 1,128,351 | $ | 1,089,592 | $ | 1,004,677 | $ | 975,558 | $ | 1,017,017 | ||||||||||
| Memo items: | ||||||||||||||||||||
| Gross loans, net of PPP loans | $ | 1,138,768 | $ | 1,097,920 | $ | 1,010,192 | $ | 951,163 | $ | 905,534 | ||||||||||
| Residential mortgage loans serviced for others | $ | 688,745 | $ | 687,233 | $ | 591,399 | $ | 581,984 | $ | 546,836 | ||||||||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||||||||
| Variance | Variance | |||||||||||||||||||
| Amount | % | Amount | % | |||||||||||||||||
| Commercial, net of PPP loans | $ | 3,281 | 3.58 | % | $ | 34,117 | 56.21 | % | ||||||||||||
| PPP loans | (1,589 | ) | (73.16 | )% | (122,000 | ) | (99.52 | )% | ||||||||||||
| Commercial real estate | 41,457 | 6.31 | % | 156,847 | 28.97 | % | ||||||||||||||
| Total commercial loans | 43,149 | 5.75 | % | 68,964 | 9.52 | % | ||||||||||||||
| Residential mortgage | (859 | ) | (0.29 | )% | 39,607 | 15.33 | % | |||||||||||||
| Home equity | (1,611 | ) | (3.82 | )% | 404 | 1.00 | % | |||||||||||||
| Total residential real estate loans | (2,470 | ) | (0.72 | )% | 40,011 | 13.40 | % | |||||||||||||
| Consumer | (1,420 | ) | (16.60 | )% | 2,259 | 46.34 | % | |||||||||||||
| Gross loans | 39,259 | 3.57 | % | 111,234 | 10.82 | % | ||||||||||||||
| Allowance for loan losses | (500 | ) | 4.76 | % | 100 | (0.90 | )% | |||||||||||||
| Loans, net | $ | 38,759 | 3.56 | % | $ | 111,334 | 10.95 | % | ||||||||||||
| Memo items: | ||||||||||||||||||||
| Gross loans, net of PPP loans | $ | 40,848 | 3.72 | % | $ | 233,234 | 25.76 | % | ||||||||||||
| Residential mortgage loans serviced for others | $ | 1,512 | 0.22 | % | $ | 141,909 | 25.95 | % | ||||||||||||
The following table presents historical loan balances by portfolio segment and impairment evaluation as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Loans collectively evaluated for impairment | |||||||||||||||
| Commercial and industrial | $ | 94,899 | $ | 93,207 | $ | 79,252 | $ | 100,424 | $ | 183,203 | |||||
| Commercial real estate | 698,275 | 656,818 | 609,382 | 564,781 | 532,294 | ||||||||||
| Residential mortgage | 296,883 | 297,626 | 272,463 | 264,448 | 257,543 | ||||||||||
| Home equity | 40,568 | 42,138 | 41,840 | 41,708 | 40,141 | ||||||||||
| Consumer | 7,134 | 8,554 | 4,146 | 4,596 | 4,875 | ||||||||||
| Subtotal | 1,137,759 | 1,098,343 | 1,007,083 | 975,957 | 1,018,056 | ||||||||||
| Loans individually evaluated for impairment | |||||||||||||||
| Commercial and industrial | 494 | 494 | 41 | 646 | 73 | ||||||||||
| Commercial real estate | — | — | 6,976 | 8,817 | 9,134 | ||||||||||
| Residential mortgage | 1,057 | 1,173 | 1,015 | 875 | 790 | ||||||||||
| Home equity | 41 | 82 | 62 | 63 | 64 | ||||||||||
| Consumer | — | — | — | — | — | ||||||||||
| Subtotal | 1,592 | 1,749 | 8,094 | 10,401 | 10,061 | ||||||||||
| Gross Loans | $ | 1,139,351 | $ | 1,100,092 | $ | 1,015,177 | $ | 986,358 | $ | 1,028,117 | |||||
The following table presents historical allowance for loan losses allocations by portfolio segment and impairment evaluation as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Loans collectively evaluated for impairment | |||||||||||||||
| Commercial and industrial | $ | 837 | $ | 743 | $ | 613 | $ | 585 | $ | 626 | |||||
| Commercial real estate | 6,716 | 6,350 | 6,104 | 6,264 | 6,026 | ||||||||||
| Residential mortgage | 3,007 | 2,940 | 3,066 | 2,814 | 3,280 | ||||||||||
| Home equity | 364 | 379 | 410 | 440 | 453 | ||||||||||
| Consumer | 63 | 77 | 53 | 85 | 92 | ||||||||||
| Unallocated | — | — | — | — | — | ||||||||||
| Subtotal | 10,987 | 10,489 | 10,246 | 10,188 | 10,477 | ||||||||||
| Loans individually evaluated for impairment | |||||||||||||||
| Commercial and industrial | — | — | — | 42 | — | ||||||||||
| Commercial real estate | — | — | 250 | 566 | 619 | ||||||||||
| Residential mortgage | 13 | 11 | 4 | 4 | 4 | ||||||||||
| Home equity | — | — | — | — | — | ||||||||||
| Consumer | — | — | — | — | — | ||||||||||
| Unallocated | — | — | — | — | — | ||||||||||
| Subtotal | 13 | 11 | 254 | 612 | 623 | ||||||||||
| Allowance for loan losses | $ | 11,000 | $ | 10,500 | $ | 10,500 | $ | 10,800 | $ | 11,100 | |||||
| Commercial and industrial | $ | 837 | $ | 743 | $ | 613 | $ | 627 | $ | 626 | |||||
| Commercial real estate | 6,716 | 6,350 | 6,354 | 6,830 | 6,645 | ||||||||||
| Residential mortgage | 3,020 | 2,951 | 3,070 | 2,818 | 3,284 | ||||||||||
| Home equity | 364 | 379 | 410 | 440 | 453 | ||||||||||
| Consumer | 63 | 77 | 53 | 85 | 92 | ||||||||||
| Unallocated | — | — | — | — | — | ||||||||||
| Allowance for loan losses | $ | 11,000 | $ | 10,500 | $ | 10,500 | $ | 10,800 | $ | 11,100 | |||||
The following table summarizes the Corporation's current, past due, and nonaccrual loans as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Accruing interest | |||||||||||||||
| Current | $ | 1,132,961 | $ | 1,094,141 | $ | 1,004,220 | $ | 976,852 | $ | 1,018,343 | |||||
| Past due 30-89 days | 4,099 | 3,971 | 2,596 | 923 | 1,636 | ||||||||||
| Past due 90 days or more | 284 | 276 | 364 | 36 | 120 | ||||||||||
| Total accruing interest | 1,137,344 | 1,098,388 | 1,007,180 | 977,811 | 1,020,099 | ||||||||||
| Nonaccrual | 2,007 | 1,704 | 7,997 | 8,547 | 8,018 | ||||||||||
| Total loans | $ | 1,139,351 | $ | 1,100,092 | $ | 1,015,177 | $ | 986,358 | $ | 1,028,117 | |||||
| Total loans past due and in nonaccrual status | $ | 6,390 | $ | 5,951 | $ | 10,957 | $ | 9,506 | $ | 9,774 | |||||
The following table summarizes the Corporation's nonperforming assets as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Nonaccrual loans | $ | 2,007 | $ | 1,704 | $ | 7,997 | $ | 8,547 | $ | 8,018 | |||||
| Accruing loans past due 90 days or more | 284 | 276 | 364 | 36 | 120 | ||||||||||
| Total nonperforming loans | 2,291 | 1,980 | 8,361 | 8,583 | 8,138 | ||||||||||
| Other real estate owned | 383 | 383 | — | — | — | ||||||||||
| Total nonperforming assets | $ | 2,674 | $ | 2,363 | $ | 8,361 | $ | 8,583 | $ | 8,138 | |||||
The following table summarizes the Corporation's primary asset quality measures as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Nonperforming loans to gross loans | 0.20 | % | 0.18 | % | 0.82 | % | 0.87 | % | 0.79 | % | |||||
| Nonperforming assets to total assets | 0.19 | % | 0.17 | % | 0.63 | % | 0.66 | % | 0.62 | % | |||||
| Allowance for loan losses to gross loans | 0.97 | % | 0.95 | % | 1.03 | % | 1.09 | % | 1.08 | % | |||||
| Allowance for loan losses to gross loans, net of PPP loans | 0.97 | % | 0.96 | % | 1.04 | % | 1.14 | % | 1.23 | % | |||||
The following table summarizes the balance of net unamortized discounts on purchased loans as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Net unamortized discount on purchased loans | $ | 76 | $ | 101 | $ | 196 | $ | 388 | $ | 580 | |||||
The following table summarizes the average loan size as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Commercial and industrial | $ | 264 | $ | 192 | $ | 217 | $ | 168 | $ | 206 | |||||
| Commercial real estate | 756 | 715 | 791 | 761 | 727 | ||||||||||
| Total commercial loans | 618 | 533 | 608 | 498 | 444 | ||||||||||
| Residential mortgage | 205 | 188 | 203 | 199 | 183 | ||||||||||
| Home equity | 50 | 38 | 47 | 47 | 46 | ||||||||||
| Total residential real estate loans | 139 | 126 | 141 | 138 | 131 | ||||||||||
| Consumer | 14 | 15 | 25 | 24 | 22 | ||||||||||
| Gross loans | $ | 271 | $ | 235 | $ | 287 | $ | 262 | $ | 249 | |||||
COVID-19, CARES Act and SBA activity
The communities which the Corporation serves are not immune to the fallout of the COVID-19 pandemic. The Corporation has committed significant resources to work with customers through temporary loan modifications and participation in the PPP loan program through the SBA.
The Corporation considered the modification type on a loan-by-loan basis. Most modifications for loans held within the Corporation's loan portfolio resulted in the deferment of principal and interest payments for 6 months or less.
The Corporation also provided a variety of accommodations for loans that the Corporation services for FHLMC including providing mortgage forbearance for up to 12 months, waiving assessments of penalties and late fees, halting foreclosure actions and evictions, and offering loan modification options that lower payments or keep payments the same after the forbearance period.
The majority of the Corporation's portfolio and serviced loans have returned to normal principal and interest payments. The balance of those loans with deferrals are actively monitored and specific reserves have been established where appropriate.
The tables below summarize total PPP fee income for the periods ended:
| Quarter to Date | |||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| PPP fees recognized | $ | 24 | $ | 56 | $ | 376 | $ | 999 | $ | 1,777 | |||||
| PPP referral fee income | — | — | 6 | 74 | 351 | ||||||||||
| Total PPP fees recognized | $ | 24 | $ | 56 | $ | 382 | $ | 1,073 | $ | 2,128 | |||||
| Year to Date March 31 | Variance | ||||||||||||
| 2022 | 2021 | Amount | % | ||||||||||
| PPP fees recognized | $ | 24 | $ | 1,777 | $ | (1,753 | ) | (98.65 | )% | ||||
| PPP referral fee income | — | 351 | (351 | ) | (100.00 | )% | |||||||
| Total PPP fees recognized | $ | 24 | $ | 2,128 | $ | (2,104 | ) | (98.87 | )% | ||||
All other assets
The following tables outline the composition and changes in other assets as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Premises and equipment, net | $ | 16,696 | $ | 16,957 | $ | 16,330 | $ | 16,231 | $ | 15,969 | |||||
| Federal Home Loan Bank stock | 3,337 | 3,708 | 3,488 | 3,488 | 3,488 | ||||||||||
| Corporate owned life insurance | 26,136 | 25,970 | 25,803 | 25,638 | 10,354 | ||||||||||
| Mortgage servicing rights | 8,155 | 7,836 | 6,454 | 6,523 | 5,404 | ||||||||||
| Accrued interest receivable | 2,784 | 2,817 | 2,776 | 3,040 | 4,032 | ||||||||||
| Goodwill | 8,853 | 8,853 | 3,219 | 3,219 | 3,219 | ||||||||||
| Other assets | |||||||||||||||
| Core deposit intangibles | 1,158 | 1,266 | 338 | 406 | 474 | ||||||||||
| Right-of-use assets | 1,110 | 1,150 | 1,241 | 1,364 | 1,139 | ||||||||||
| Other real estate owned | 383 | 383 | — | — | — | ||||||||||
| Derivatives | 164 | 156 | 320 | 601 | 1,009 | ||||||||||
| Other | 2,175 | 3,942 | 3,615 | 3,327 | 3,499 | ||||||||||
| Total | 4,990 | 6,897 | 5,514 | 5,698 | 6,121 | ||||||||||
| All other assets | $ | 70,951 | $ | 73,038 | $ | 63,584 | $ | 63,837 | $ | 48,587 | |||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||||
| Variance | Variance | |||||||||||||||
| Amount | % | Amount | % | |||||||||||||
| Premises and equipment, net | $ | (261 | ) | (1.54 | )% | $ | 727 | 4.55 | % | |||||||
| Federal Home Loan Bank stock | (371 | ) | (10.01 | )% | (151 | ) | (4.33 | )% | ||||||||
| Corporate owned life insurance | 166 | 0.64 | % | 15,782 | 152.42 | % | ||||||||||
| Mortgage servicing rights | 319 | 4.07 | % | 2,751 | 50.91 | % | ||||||||||
| Accrued interest receivable | (33 | ) | (1.17 | )% | (1,248 | ) | (30.95 | )% | ||||||||
| Goodwill | — | — | % | 5,634 | 175.02 | % | ||||||||||
| Other assets | ||||||||||||||||
| Core deposit intangibles | (108 | ) | (8.53 | )% | 684 | 144.30 | % | |||||||||
| Right-of-use assets | (40 | ) | (3.48 | )% | (29 | ) | (2.55 | )% | ||||||||
| Other real estate owned | — | — | % | 383 | N/M | |||||||||||
| Derivatives | 8 | 5.13 | % | (845 | ) | (83.75 | )% | |||||||||
| Other | (1,767 | ) | (44.82 | )% | (1,324 | ) | (37.84 | )% | ||||||||
| Total | (1,907 | ) | (27.65 | )% | (1,131 | ) | (18.48 | )% | ||||||||
| All other assets | $ | (2,087 | ) | (2.86 | )% | $ | 22,364 | 46.03 | % | |||||||
Federal Home Loan Bank stock is a capital stock requirement based on total assets of the Corporation. The FHLB recalculates the minimum stock requirement on an annual basis. The FHLB capital plan establishes an automatic repurchase of excess stock in cases where FHLB reaches a month-end regulatory capital ratio of 6%, in which case the FHLB would automatically repurchase sufficient excess stock to reduce the regulatory capital ratio to less than or equal to 5.75%.
Corporate owned life insurance represents the cash surrender value of life insurance policies owned by the Corporation on the lives of key members of management. The increase in Corporate owned life insurance in the second quarter of 2021 was due to the purchase of $15,000 in additional policies.
Goodwill represents the premium paid over the fair market value for a company the Corporation purchases in merger and acquisition activity. The acquisition of FSB in the fourth quarter of 2021 generated an additional $5,634 of goodwill.
The increase in core deposit intangibles in the fourth quarter of 2021 relates to the acquisition of FSB. As a part of the transaction, a core deposit intangible of $995 was recorded by the Corporation. Core deposit intangibles are being amortized using the sum-of-the-years digits method.
Total deposits
The following tables outline the composition and changes in the deposit portfolio as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||||||
| Noninterest bearing demand | $ | 480,230 | $ | 459,254 | $ | 442,358 | $ | 435,588 | $ | 422,013 | |||||||||
| Interest bearing | |||||||||||||||||||
| Savings | 377,170 | 360,204 | 320,724 | 305,409 | 309,454 | ||||||||||||||
| Money market demand | 135,051 | 125,391 | 119,719 | 113,088 | 109,101 | ||||||||||||||
| NOW | 126,461 | 141,480 | 115,114 | 102,046 | 103,342 | ||||||||||||||
| Time deposits | 133,980 | 141,969 | 146,376 | 170,365 | 178,598 | ||||||||||||||
| Total deposits | $ | 1,252,892 | $ | 1,228,298 | $ | 1,144,291 | $ | 1,126,496 | $ | 1,122,508 | |||||||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | ||||||||||||||||||
| Variance | Variance | ||||||||||||||||||
| Amount | % | Amount | % | ||||||||||||||||
| Noninterest bearing demand | $ | 20,976 | 4.57 | % | $ | 58,217 | 13.80 | % | |||||||||||
| Interest bearing | |||||||||||||||||||
| Savings | 16,966 | 4.71 | % | 67,716 | 21.88 | % | |||||||||||||
| Money market demand | 9,660 | 7.70 | % | 25,950 | 23.79 | % | |||||||||||||
| NOW | (15,019 | ) | (10.62 | )% | 23,119 | 22.37 | % | ||||||||||||
| Time deposits | (7,989 | ) | (5.63 | )% | (44,618 | ) | (24.98 | )% | |||||||||||
| Total deposits | $ | 24,594 | 2.00 | % | $ | 130,384 | 11.62 | % | |||||||||||
Cash and cash equivalents
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | ||||||||||||||
| Cash and due from banks | ||||||||||||||||||
| Noninterest bearing | $ | 23,715 | $ | 28,475 | $ | 25,693 | $ | 22,454 | $ | 25,698 | ||||||||
| Interest bearing | 56,418 | 54,971 | 87,168 | 110,222 | 95,779 | |||||||||||||
| Total | $ | 80,133 | $ | 83,446 | $ | 112,861 | $ | 132,676 | $ | 121,477 | ||||||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||||||
| Variance | Variance | |||||||||||||||||
| Amount | % | Amount | % | |||||||||||||||
| Cash and due from banks | ||||||||||||||||||
| Noninterest bearing | $ | (4,760 | ) | (16.72 | )% | $ | (1,983 | ) | (7.72)% | |||||||||
| Interest bearing | 1,447 | 2.63 | % | (39,361 | ) | (41.10)% | ||||||||||||
| Total | $ | (3,313 | ) | (3.97 | )% | $ | (41,344 | ) | (34.03)% | |||||||||
Primary and secondary liquidity sources
While the Corporation continues to maintain a strong liquidity position, it is important to monitor all liquidity sources. The following table outlines the Corporation's primary and secondary sources of liquidity as of:
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Cash and cash equivalents | $ | 80,133 | $ | 83,446 | $ | 112,861 | $ | 132,676 | $ | 121,477 | |||||
| Fair value of unpledged investment securities | 132,364 | 143,431 | 127,913 | 118,019 | 76,384 | ||||||||||
| FHLB borrowing availability | 140,000 | 140,000 | 140,000 | 140,000 | 140,000 | ||||||||||
| Federal funds purchased lines of credit | 21,500 | 21,500 | 21,500 | 21,500 | 21,500 | ||||||||||
| Funds available through the Fed Discount Window | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 | ||||||||||
| Parent company line of credit | 5,000 | 7,000 | 7,000 | 7,500 | 8,000 | ||||||||||
| PPPLF | 583 | 2,172 | 4,985 | 35,195 | 122,583 | ||||||||||
| Total liquidity sources | $ | 389,580 | $ | 407,549 | $ | 424,259 | $ | 464,890 | $ | 499,944 | |||||
Total borrowed funds
The following tables outline the composition and changes in borrowed funds as of:
| 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | |||||||||||
| Federal Home Loan Bank borrowings | $ | 35,000 | $ | 35,000 | $ | 35,000 | $ | 35,000 | $ | 35,000 | |||||
| Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | ||||||||||
| Other borrowings | 3,000 | 1,000 | 1,000 | 500 | — | ||||||||||
| Total borrowed funds | $ | 52,000 | $ | 50,000 | $ | 50,000 | $ | 49,500 | $ | 49,000 | |||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||
| Variance | Variance | |||||||||||||
| Amount | % | Amount | % | |||||||||||
| Federal Home Loan Bank borrowings | $ | — | — | % | $ | — | — | % | ||||||
| Subordinated debentures | — | — | % | — | — | % | ||||||||
| Other borrowings | 2,000 | 200.00 | % | 3,000 | N/M | |||||||||
| Total borrowed funds | $ | 2,000 | 4.00 | % | $ | 3,000 | 6.12 | % | ||||||
Wholesale funding sources
The following tables outline the composition and changes in wholesale funding sources as of:
| 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | |||||||||||
| Federal Home Loan Bank borrowings | $ | 35,000 | $ | 35,000 | $ | 35,000 | $ | 35,000 | $ | 35,000 | |||||
| Subordinated debentures | 14,000 | 14,000 | 14,000 | 14,000 | 14,000 | ||||||||||
| Other borrowings | 3,000 | 1,000 | 1,000 | 500 | — | ||||||||||
| Brokered time deposits | 20,000 | 20,000 | 20,000 | 20,000 | 20,234 | ||||||||||
| Internet time deposits | 1,743 | 1,743 | 2,739 | 2,739 | 2,739 | ||||||||||
| Total wholesale funds | $ | 73,743 | $ | 71,743 | $ | 72,739 | $ | 72,239 | $ | 71,973 | |||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | ||||||||||||||
| Variance | Variance | ||||||||||||||
| Amount | % | Amount | % | ||||||||||||
| Federal Home Loan Bank borrowings | $ | — | — | % | — | — | % | ||||||||
| Subordinated debentures | — | — | % | — | — | % | |||||||||
| Other borrowings | 2,000 | 200.00 | % | 3,000 | N/M | ||||||||||
| Brokered time deposits | — | — | % | (234 | ) | (1.16 | )% | ||||||||
| Internet time deposits | — | — | % | (996 | ) | (36.36 | )% | ||||||||
| Total wholesale funds | $ | 2,000 | 2.79 | % | $ | 1,770 | 2.46 | % | |||||||
Accrued interest payable and other liabilities
Accrued interest payable 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).
Total shareholders' equity
The following tables outline the composition and changes in shareholders equity as of:
| 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | |||||||||||||
| Common stock, no par value; 10,000,000 shares authorized | $ | 74,132 | $ | 75,366 | $ | 77,418 | $ | 79,215 | $ | 80,150 | |||||||
| Retained earnings | 52,393 | 49,714 | 46,735 | 43,250 | 38,898 | ||||||||||||
| Accumulated other comprehensive (loss) income | (5,179 | ) | (625 | ) | 656 | 521 | 312 | ||||||||||
| Total shareholders' equity | $ | 121,346 | $ | 124,455 | $ | 124,809 | $ | 122,986 | $ | 119,360 | |||||||
| 3/31/2022 vs 12/31/2021 | 3/31/2022 vs 3/31/2021 | |||||||||||||||
| Variance | Variance | |||||||||||||||
| Amount | % | Amount | % | |||||||||||||
| Common stock, no par value; 10,000,000 shares authorized | $ | (1,234 | ) | (1.64 | )% | $ | (6,018 | ) | (7.51 | )% | ||||||
| Retained earnings | 2,679 | 5.39 | % | 13,495 | 34.69 | % | ||||||||||
| Accumulated other comprehensive (loss) income | (4,554 | ) | 728.64 | % | (5,491 | ) | (1759.94 | )% | ||||||||
| Total shareholders' equity | $ | (3,109 | ) | (2.50 | )% | $ | 1,986 | 1.66 | % | |||||||
In November 2021, the Corporation's Board of Directors approved an amendment to the Corporation's common stock repurchase program, initially authorized in April 2020 to repurchase up to $5,000 of the Corporation's common stock. The amendment allows the Corporation to repurchase up to $10,000 in aggregate of the currently outstanding shares of the Corporation's common stock. As of March 31, 2022, the Corporation has $2,328 of common stock available to repurchase. The following tables outline the number of shares, dollar amount and weighted average share price associated with the Corporation's common stock repurchase plan for the following periods:
| Quarter to Date | |||||||||||||||
| 3/31/2022 | 12/31/2021 | 9/30/2021 | 6/30/2021 | 3/31/2021 | |||||||||||
| Number of Shares Repurchased | 51,461 | 78,285 | 73,714 | 40,383 | 37,315 | ||||||||||
| Dollar Amount of Shares Repurchased | $ | 1,501 | $ | 2,193 | $ | 1,929 | $ | 1,059 | $ | 880 | |||||
| Weighted Average Share Price | $ | 29.17 | $ | 28.01 | $ | 26.17 | $ | 26.22 | $ | 23.58 | |||||
| Year to Date March 31 | ||||||
| 2022 | 2021 | |||||
| Number of Shares Repurchased | 51,461 | 37,315 | ||||
| Dollar Amount of Shares Repurchased | $ | 1,501 | $ | 880 | ||
| Weighted Average Share Price | $ | 29.17 | $ | 23.58 | ||
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: 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 March 31, 2017 and all dividends were reinvested.
The graph accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/c931272f-3ac8-45b5-99d3-879df2a49120
| Date | FETM | ABAQ Index | ||
| 3/31/2017 | 100.00 | 100.00 | ||
| 3/31/2018 | 110.89 | 105.93 | ||
| 3/31/2019 | 118.61 | 93.15 | ||
| 3/31/2020 | 90.28 | 66.36 | ||
| 3/31/2021 | 135.28 | 112.85 | ||
| 3/31/2022 | 162.67 | 113.97 |
Abbreviations and Acronyms
| ABA: American Bankers Association | HFS: Held-for-sale |
| AFS: Available-for-sale | HTM: Held-to-maturity |
| ALLL: Allowance for loan and lease losses | IRA: Individual retirement account |
| AOCI: Accumulated other comprehensive income | ITM: Interactive teller machine |
| ASC: Accounting Standards Codification | MSR: Mortgage servicing rights |
| ASU: Accounting Standards Update | N/M: Not meaningful |
| ATM: Automated teller machine | NASDAQ: National Association of Securities Dealers Automated Quotations |
| CARES Act: Coronavirus Aid, Relief, and Economic Security Act | NOW: Negotiable order of withdrawal |
| CET1: Common equity tier 1 | NSF: Non-sufficient funds |
| COVID-19: Coronavirus Disease 2019 | OREO: Other real estate owned |
| FASB: Financial Accounting Standards Board | PPP: Paycheck Protection Program |
| FDIC: Federal Deposit Insurance Corporation | PPPLF: Paycheck Protection Program Liquidity Facility |
| FHLB: Federal Home Loan Bank | QTD: Quarter-to-date |
| FHLMC: Federal Home Loan Mortgage Corporation | SAB: Staff Accounting Bulletin |
| FRB: Federal Reserve Bank | SBA: U.S. Small Business Administration |
| FSB: Farmers State Bank of Munith | USDA: United States Department of Agriculture |
| FTE: Fully taxable equivalent | YTD: Year-to-date |
| GAAP: Generally Accepted Accounting Principles |
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 has been recognized as one of the Top 50 performing stocks 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 19 full-service branches in Genesee, Ingham, Jackson, Livingston, Oakland, Saginaw, and Shiawassee Counties. 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 | ||
| ron.justice@thestatebank.com | aaron.wirsing@thestatebank.com |
