Fentura Financial, Inc. Announces Third Quarter 2024 Earnings (unaudited)
Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with the September 30, 2024 presentation.
FENTON, Mich., Oct. 25, 2024 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) announces quarterly net income results of $867 and $5,637 for the three and nine months ended September 30, 2024, respectively.
Ronald L. Justice, President and CEO, stated, "We ended the 2024 third quarter with record total assets, deposits, and shareholders' equity. These results are a testament to the continued hard work of our team members, and the local value we provide our Michigan communities. During the third quarter, we announced a merger with ChoiceOne Financial Services, Inc., pursuant to which ChoiceOne and Fentura will merge in an all-stock transaction. Once completed, the combination will create the third largest publicly traded bank in Michigan with approximately $4.3 billion in consolidated total assets and 56 offices in Western, Central and Southeastern Michigan. We continue to expect to close the transaction in the first quarter of 2025, subject to the satisfaction of customary closing conditions and regulatory approvals."
Following is a discussion of our financial performance as of, and for the three and nine months ended September 30, 2024. At the end of this document is a list of abbreviations and acronyms.
Results of Operations (unaudited)The following table outlines our QTD results of operations and provides certain performance measures as of, and for the three months ended:
9/30/2024
6/30/2024
3/31/2024
12/31/2023
9/30/2023
INCOME STATEMENT DATA
Interest income
$
22,194
$
21,487
$
21,541
$
21,033
$
20,416
Interest expense
10,202
9,650
9,315
8,526
7,757
Net interest income
11,992
11,837
12,226
12,507
12,659
Credit loss expense (reversal)
1,203
796
(43
)
(190
)
(309
)
Noninterest income
2,210
2,314
2,355
2,145
2,338
Noninterest expenses
11,974
10,921
11,166
10,121
10,594
Federal income tax expense
158
454
668
937
937
Net income
$
867
$
1,980
$
2,790
$
3,784
$
3,775
PER SHARE
Earnings
$
0.19
$
0.44
$
0.63
$
0.85
$
0.85
Dividends
$
0.11
$
0.11
$
0.11
$
0.10
$
0.10
Tangible book value(1)
$
30.51
$
29.84
$
29.38
$
28.92
$
27.64
Quoted market value
High
$
40.00
$
24.39
$
27.20
$
27.20
$
23.74
Low
$
22.16
$
22.33
$
24.00
$
22.26
$
19.10
Close(1)
$
39.07
$
22.50
$
24.40
$
27.20
$
23.74
PERFORMANCE RATIOS
Return on average assets
0.19
%
0.45
%
0.63
%
0.86
%
0.86
%
Return on average shareholders' equity
2.37
%
5.59
%
7.98
%
11.11
%
11.27
%
Return on average tangible shareholders' equity
2.54
%
5.98
%
8.55
%
11.94
%
12.14
%
Efficiency ratio
84.31
%
77.17
%
76.58
%
69.08
%
70.64
%
Yield on average earning assets (FTE)
5.17
%
5.18
%
5.15
%
5.06
%
4.92
%
Rate on interest bearing liabilities
3.28
%
3.22
%
3.11
%
2.90
%
2.66
%
Net interest margin to average earning assets (FTE)
2.80
%
2.85
%
2.92
%
3.01
%
3.05
%
BALANCE SHEET DATA(1)
Total investment securities
$
99,724
$
100,167
$
103,210
$
107,615
$
109,543
Gross loans
$
1,442,389
$
1,459,929
$
1,461,465
$
1,473,471
$
1,483,720
Allowance for credit losses
$
14,700
$
15,300
$
15,300
$
15,400
$
15,400
Total assets
$
1,807,370
$
1,756,629
$
1,764,629
$
1,738,952
$
1,744,939
Total deposits
$
1,470,586
$
1,427,059
$
1,438,408
$
1,394,182
$
1,401,797
Borrowed funds
$
179,970
$
178,397
$
178,500
$
198,500
$
201,050
Total shareholders' equity
$
146,398
$
143,301
$
141,074
$
138,702
$
132,902
Net loans to total deposits
97.08
%
101.23
%
100.54
%
104.58
%
104.75
%
Common shares outstanding
4,495,005
4,490,087
4,484,447
4,470,871
4,466,221
QTD BALANCE SHEET AVERAGES
Total assets
$
1,797,307
$
1,762,651
$
1,771,614
$
1,740,526
$
1,739,510
Earning assets
$
1,708,177
$
1,669,862
$
1,683,708
$
1,649,091
$
1,646,848
Interest bearing liabilities
$
1,237,665
$
1,204,370
$
1,205,162
$
1,165,064
$
1,156,835
Total shareholders' equity
$
145,240
$
142,577
$
140,574
$
135,157
$
132,860
Total tangible shareholders' equity
$
135,959
$
133,252
$
131,204
$
125,723
$
123,349
Earned common shares outstanding
4,466,951
4,461,580
4,449,376
4,443,463
4,437,415
Unvested stock grants
26,500
26,500
31,821
26,018
26,668
Total common shares outstanding
4,493,451
4,488,080
4,481,197
4,469,481
4,464,083
ASSET QUALITY
Nonperforming loans to gross loans (1)
0.71
%
0.66
%
0.39
%
0.38
%
0.24
%
Nonperforming assets to total assets (1)
0.58
%
0.56
%
0.34
%
0.35
%
0.23
%
Allowance for credit losses to gross loans (1)
1.02
%
1.05
%
1.05
%
1.05
%
1.04
%
Net charge-offs (recoveries) to QTD average gross loans
0.12
%
0.05
%
—
%
(0.01)%
(0.03)%
Credit loss expense (reversal) to QTD average gross loans
0.08
%
0.05
%
—
%
(0.01)%
(0.02)%
CAPITAL RATIOS(1)
Total capital to risk weighted assets
12.48
%
12.38
%
12.27
%
11.91
%
11.59
%
Tier 1 capital to risk weighted assets
11.42
%
11.28
%
11.17
%
10.82
%
10.51
%
CET1 capital to risk weighted assets
10.40
%
10.28
%
10.17
%
9.83
%
9.53
%
Tier 1 leverage ratio
8.78
%
8.92
%
8.78
%
8.77
%
8.58
%
(1)At end of period
The following table outlines our YTD results of operations and provides certain performance measures as of, and for the nine months ended (unaudited):
9/30/2024
9/30/2023
9/30/2022
9/30/2021
9/30/2020
INCOME STATEMENT DATA
Interest income
$
65,222
$
58,648
$
41,438
$
35,161
$
34,355
Interest expense
29,167
19,561
3,122
2,091
4,952
Net interest income
36,055
39,087
38,316
33,070
29,403
Credit loss expense (reversal)
1,956
132
2,258
(218
)
4,652
Noninterest income
6,879
7,126
7,997
11,092
15,190
Noninterest expenses
34,061
32,547
30,870
27,815
23,939
Federal income tax expense
1,280
2,689
2,616
3,328
3,271
Net income
$
5,637
$
10,845
$
10,569
$
13,237
$
12,731
PER SHARE
Earnings
$
1.26
$
2.45
$
2.39
$
2.86
$
2.73
Dividends
$
0.33
$
0.3
$
0.27
$
0.24
$
0.225
Tangible book value(1)
$
30.51
$
27.64
$
25.22
$
26.53
$
23.50
Quoted market value
High
$
40.00
$
24.10
$
29.25
$
27.40
$
26.00
Low
$
22.16
$
18.70
$
23.00
$
21.90
$
12.55
Close(1)
$
39.07
$
23.74
$
23.00
$
25.75
$
16.93
PERFORMANCE RATIOS
Return on average assets
0.42
%
0.85
%
0.95
%
1.36
%
1.45
%
Return on average shareholders' equity
5.27
%
11.15
%
11.71
%
14.55
%
15.79
%
Return on average tangible shareholders' equity
5.64
%
12.03
%
12.75
%
15.00
%
16.40
%
Efficiency ratio
79.33
%
70.43
%
66.66
%
62.98
%
53.68
%
Yield on average earning assets (FTE)
5.17
%
4.84
%
3.99
%
3.83
%
4.12
%
Rate on interest bearing liabilities
3.20
%
2.35
%
0.49
%
0.37
%
0.93
%
Net interest margin to average earning assets (FTE)
2.86
%
3.23
%
3.69
%
3.60
%
3.52
%
BALANCE SHEET DATA(1)
Total investment securities
$
99,724
$
109,543
$
129,886
$
138,476
$
78,179
Gross loans
$
1,442,389
$
1,483,720
$
1,350,851
$
1,015,177
$
1,060,885
Allowance for credit losses
$
14,700
$
15,400
$
12,200
$
10,500
$
10,100
Total assets
$
1,807,370
$
1,744,939
$
1,588,592
$
1,329,300
$
1,284,845
Total deposits
$
1,470,586
$
1,401,797
$
1,345,209
$
1,144,291
$
1,061,470
Borrowed funds
$
179,970
$
201,050
$
116,600
$
50,000
$
96,217
Total shareholders' equity
$
146,398
$
132,902
$
121,630
$
124,809
$
114,081
Net loans to total deposits
97.08
%
104.75
%
99.51
%
87.80
%
98.99
%
Common shares outstanding
4,495,005
4,466,221
4,434,937
4,569,935
4,691,142
YTD BALANCE SHEET AVERAGES
Total assets
$
1,777,188
$
1,710,941
$
1,485,489
$
1,297,657
$
1,171,415
Earning assets
$
1,687,249
$
1,620,015
$
1,391,179
$
1,230,553
$
1,116,861
Interest bearing liabilities
$
1,215,731
$
1,111,687
$
858,600
$
748,472
$
711,449
Total shareholders' equity
$
142,796
$
130,068
$
120,704
$
121,659
$
107,711
Total tangible shareholders' equity
$
133,470
$
120,482
$
110,792
$
117,991
$
103,712
Earned common shares outstanding
4,459,303
4,428,963
4,425,818
4,630,709
4,665,951
Unvested stock grants
28,274
28,530
25,462
21,088
13,966
Total common shares outstanding
4,487,577
4,457,493
4,451,280
4,651,797
4,679,917
ASSET QUALITY
Nonperforming loans to gross loans (1)
0.71
%
0.24
%
0.12
%
0.82
%
0.07
%
Nonperforming assets to total assets (1)
0.58
%
0.23
%
0.12
%
0.63
%
0.06
%
Allowance for credit losses to gross loans (1)
1.02
%
1.04
%
0.90
%
1.03
%
0.95
%
Net charge-offs (recoveries) to YTD average gross loans
0.18
%
(0.03)%
0.05
%
0.02
%
0.03
%
Credit loss expense (reversal) to YTD average gross loans
0.13
%
0.01
%
0.19
%
(0.02)%
0.44
%
CAPITAL RATIOS(1)
Total capital to risk weighted assets
12.48
%
11.59
%
10.96
%
13.63
%
15.57
%
Tier 1 capital to risk weighted assets
11.42
%
10.51
%
10.07
%
12.64
%
14.40
%
CET1 capital to risk weighted assets
10.40
%
9.53
%
9.04
%
11.33
%
12.77
%
Tier 1 leverage ratio
8.78
%
8.58
%
8.91
%
10.21
%
9.86
%
(1)At end of period
Income Statement Breakdown and Analysis
Quarter to Date
9/30/2024
6/30/2024
3/31/2024
12/31/2023
9/30/2023
Net income
$
867
$
1,980
$
2,790
$
3,784
$
3,775
Acquisition related items (net of tax)
Other acquisition related expenses
753
—
—
—
—
Amortization of core deposit intangibles
35
34
36
60
60
Total acquisition related items (net of tax)
788
34
36
60
60
Other nonrecurring items (net of tax)
Proxy contest related expenses
—
—
—
—
—
Prepayment penalties collected
(24
)
(40
)
(58
)
(85
)
(29
)
Total other nonrecurring items (net of tax)
(24
)
(40
)
(58
)
(85
)
(29
)
Adjusted net income from operations
$
1,631
$
1,974
$
2,768
$
3,759
$
3,806
Net interest income
$
11,992
$
11,837
$
12,226
$
12,507
$
12,659
Prepayment penalties collected
(31
)
(51
)
(73
)
(107
)
(37
)
Adjusted net interest income
$
11,961
$
11,786
$
12,153
$
12,400
$
12,622
PERFORMANCE RATIOS
Based on adjusted net income from operations
Earnings per share
$
0.37
$
0.44
$
0.62
$
0.85
$
0.86
Return on average assets
0.36
%
0.45
%
0.63
%
0.86
%
0.87
%
Return on average shareholders' equity
4.47
%
5.57
%
7.92
%
11.03
%
11.37
%
Return on average tangible shareholders' equity
4.77
%
5.96
%
8.49
%
11.86
%
12.24
%
Efficiency ratio
77.45
%
77.15
%
76.65
%
69.06
%
70.31
%
Based on adjusted net interest income
Yield on average earning assets (FTE)
5.16
%
5.17
%
5.13
%
5.03
%
4.91
%
Rate on interest bearing liabilities
3.28
%
3.22
%
3.11
%
2.90
%
2.66
%
Net interest margin to average earning assets (FTE)
2.79
%
2.84
%
2.90
%
2.98
%
3.04
%
Year to Date September 30
Variance
2024
2023
Amount
%
Net income
$
5,637
$
10,845
$
(5,208
)
(48.02)%
Acquisition related items (net of tax)
Other acquisition related expenses
753
—
753
N/M
Amortization of core deposit intangibles
105
180
(75
)
(41.67)%
Total acquisition related items (net of tax)
858
180
678
376.67
%
Other nonrecurring items (net of tax)
Proxy contest related expenses
—
413
(413
)
(100.00)%
Prepayment penalties collected
(122
)
(133
)
11
(8.27)%
Total other nonrecurring items (net of tax)
(122
)
280
(402
)
(143.57)%
Adjusted net income from operations
$
6,373
$
11,305
$
(4,932
)
(43.63)%
Net interest income
$
36,055
$
39,087
$
(3,032
)
(7.76)%
Prepayment penalties collected
(155
)
(169
)
14
(8.28)%
Adjusted net interest income
$
35,900
$
38,918
$
(3,018
)
(7.75)%
PERFORMANCE RATIOS
Based on adjusted net income from operations
Earnings per share
$
1.43
$
2.55
$
(1.12
)
(43.92)%
Return on average assets
0.48
%
0.88
%
(0.40)%
Return on average shareholders' equity
5.96
%
11.62
%
(5.66)%
Return on average tangible shareholders' equity
6.38
%
12.55
%
(6.17)%
Efficiency ratio
77.08
%
69.06
%
8.02
%
Based on adjusted net interest income
Yield on average earning assets (FTE)
5.16
%
4.83
%
0.33
%
Rate on interest bearing liabilities
3.20
%
2.35
%
0.85
%
Net interest margin to average earning assets (FTE)
2.85
%
3.22
%
(0.37)%
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. We exert 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
September 30, 2024
June 30, 2024
September 30, 2023
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
$
1,450,371
$
19,599
5.38
%
$
1,462,362
$
19,550
5.38
%
$
1,477,343
$
19,170
5.15
%
Taxable investment securities
89,175
335
1.49
%
89,751
350
1.57
%
101,549
397
1.55
%
Nontaxable investment securities
10,580
57
2.14
%
11,059
62
2.25
%
12,670
70
2.19
%
Interest earning cash and cash equivalents
148,872
2,023
5.41
%
97,511
1,331
5.49
%
43,865
594
5.37
%
Federal Home Loan Bank stock
9,179
192
8.32
%
9,179
207
9.07
%
11,421
199
6.91
%
Total earning assets
1,708,177
22,206
5.17
%
1,669,862
21,500
5.18
%
1,646,848
20,430
4.92
%
Nonearning assets
Allowance for credit losses
(15,282
)
(15,300
)
(15,503
)
Premises and equipment, net
13,514
13,964
15,210
Accrued income and other assets
90,898
94,125
92,955
Total assets
$
1,797,307
$
1,762,651
$
1,739,510
Interest bearing liabilities
Interest bearing demand deposits
$
460,256
$
4,054
3.50
%
$
429,141
$
3,745
3.51
%
$
416,500
$
3,230
3.08
%
Savings deposits
261,620
416
0.63
%
266,731
408
0.62
%
290,939
429
0.59
%
Time deposits
336,570
3,865
4.57
%
330,024
3,756
4.58
%
248,389
2,280
3.64
%
Borrowed funds
179,219
1,867
4.14
%
178,474
1,741
3.92
%
201,007
1,818
3.59
%
Total interest bearing liabilities
1,237,665
10,202
3.28
%
1,204,370
9,650
3.22
%
1,156,835
7,757
2.66
%
Noninterest bearing liabilities
Noninterest bearing deposits
402,274
405,985
435,398
Accrued interest and other liabilities
12,128
9,719
14,417
Shareholders' equity
145,240
142,577
132,860
Total liabilities and shareholders' equity
$
1,797,307
$
1,762,651
$
1,739,510
Net interest income (FTE)
$
12,004
$
11,850
$
12,673
Net interest margin to earning assets (FTE)
2.80
%
2.85
%
3.05
%
Nine Months Ended
September 30, 2024
September 30, 2023
