Fentura Financial, Inc. Announces Record Earnings

Nachrichtenquelle: globenewswire
29.01.2020, 01:58  |  110   |   |   

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 ...


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