We are encouraged and pleased with our 2012 operating results, which reflect continued improvement in credit quality, the strengthening of capital, and the efforts of our team to build strong client relationships and grow our business.
Fenton, MI (PRWEB) March 20, 2013
Fentura Financial, Inc. reported net income for the three months ended December 31, 2012 of $453,000, compared to the $406,000 operating loss reported for the fourth quarter of 2011. Earnings totaled $811,000 for the nine months ended September 30, 2012. For the year ended December 31, 2012, Fentura recorded net income of $1,264,000 compared to a net operating loss of $1,512,000 for the prior year.
“We are encouraged and pleased with our 2012 operating results, which reflect continued improvement in credit quality, the strengthening of capital, and the efforts of our team to build strong client relationships and grow our business. Additionally, we have a long and rich history of supporting the communities we serve, and the stabilization of our performance allows us to enhance these commitments and to refocus on the business of banking,” noted Ronald Justice, President and CEO.
Total assets increased $4.2 million or 1.4% from the third quarter as loan balances increased by $3.08 million or 1.57% as efforts to grow the portfolio to improve net interest income began to gain traction. During the last quarter of 2012, growth of C&I and residential real estate loans more than offset the modest decline in commercial real estate loans.
During the fourth quarter of 2012, deposits increased $3.5 million or 1.3% from the third quarter primarily due to the seasonal trends of both commercial and public fund clients. Fentura continues to benefit from a solid and loyal core deposit funding base.
Both Fentura Financial and its subsidiary, The State Bank, continue to strengthen capital through earnings. The Company achieved its goal to maintain capital at the Bank consistent with levels considered well capitalized. The Bank’s regulatory capital ratios, as of December 31, 2012, together with the minimum capital standards for well-capitalized banks follow:
Tier 1 Leverage Capital Ratio 8.73%, 5.00%
Tier 1 Risk-Based Capital Ratio 12.06%, 6.00%
Total Risk-Based Capital Ratio 13.34%,10.00%
The Company benefited significantly from improvement in credit quality throughout the year. At December 31, 2012 loan delinquencies to total loans were 1.86% compared to 2.58% at the end of the third quarter, and 8.43% at year end 2011. Substandard assets totaled $13.2 million at year end, down from $18.8 million at the end of the third quarter, and $29.4 at year end 2011. These trends eliminated the need for provisions to the allowance for loan losses in 2012 and additionally, allowed the reversal of a modest of amount of provision from prior years. The allowance for loan losses was $5.0 million or 2.48% of loans at year end 2012.
Net Interest Income
Net interest income of $10.2 million for the year ended December 31, 2012 was consistent with the $10.2 reported for 2011 and included $2.5 million earned in the fourth quarter compared to $2.7 million reported for the third quarter of the year. Interest income declined throughout 2012 as assets matured and re-priced at current market rates which are lower than their previous levels. Offsetting this trend, liabilities matured and re-priced at lower rates as well, resulting in approximately the same level of net interest income for the two years.
Noninterest Income and Expense
Noninterest income was $4.8 million for the year ending December 31, 2012 compared to the $4.9 million reported for 2011. For the fourth quarter 2012, noninterest income was $1.2 million compared to $1.3 million for the third quarter of the year.
Services charges on deposit accounts decreased for the year but were up during the fourth quarter compared to the third quarter. The year to year decline is attributable to higher average balances offsetting fees as well as changes in consumer behavior relating to certain deposit transactions.
Gains on the sale of mortgage loans originated and sold in the secondary market were $961,000 for 2012 compared to $348,000 in 2011. The 2012 income includes $396,000 earned in the fourth quarter compared to the $204,000 for the third quarter of the year. Market interest rates increased refinance activity which contributed to the increase in these gains.
Income from trust and investment services was $1.1 million in 2012 comparing to $1.0 million for 2011. During the fourth quarter, income from these services was $213,000 compared to the $346,000 for the third quarter. The year to year increase is supported by an increase in investment assets under management during the third quarter of 2012.
Noninterest expense was $14.3 million for the year ending December 31, 2012 compared to the $13.8 million reported for 2011. For the fourth quarter 2012, noninterest expense was $3.7 million compared to the $3.5 million reported for the third quarter of the year.
Salary and benefit expense, the largest category of noninterest expense, was $6.8 million for 2012, consistent with the $6.8 million reported for 2011. The 2012 expense includes $1.9 million from the fourth quarter compared to the $1.5 million for the third quarter of the year. During the fourth quarter the company accrued additional required balances for certain retirement agreements and filled previously vacant positions which contributed to the increased fourth quarter expense.
General and administrative expense was $3.0 million during 2012 compared to $2.2 million for 2011. The increase in 2012 occurred from several extraordinary transactions including accrual adjustments for certain required expense and losses from fraud and robberies.
Fentura Financial, Inc is a bank holding company headquartered in Fenton, Michigan. Its subsidiary bank, The State Bank is also headquartered in Fenton with offices serving Fenton, Linden, Holly, and Grand Blanc; and Livingston Community Bank, a division of The State Bank, is headquartered in Brighton and serves the local area.
Fentura Financial, Inc.
Ronald L. Justice
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.