FENTON, Mich., April 26, 2024 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX:FETM) announces quarterly net income results of $2,790 for the three months ended March 31, 2024. Ronald L. Justice, President and CEO, stated, "I am pleased with the progress we continue to make navigating a difficult operating environment as a result of challenges created by a multi-decades high increase in short-term interest rates over the last twenty-four months and a historically long and deep inversion of the yield curve. While this has impacted the level of profitability we experienced prior to this period, we ended the first quarter with record total assets and shareholders' equity. I believe these positive trends demonstrate our long-standing commitment to provide our local communities with leading financial solutions, as well as our efforts to maintain excellent asset quality. In fact, our tangible book value per share increased 10.3% to a record of $29.38 per share at March 31, 2024, representing our continued success growing shareholder capital." Mr. Justice continued, "We expect the economic and interest rate environment to remain challenging throughout 2024. We remain focused on strengthening our balance sheet by reducing our reliance of borrowed funds and increasing our cash and investment portfolio, while also benefiting from historically high asset quality. As a result of these efforts over the past twelve months, we reduced borrowings by $80.6 million, increased our cash and investment portfolio by $12.1 million, and we have experienced little to no net charge-offs over the last five consecutive quarters. In addition, I am encouraged by the progress we are making enhancing our loan-to-deposit ratio, which improved from 104.58% at December 31, 2023, to 100.54% at March 31, 2024. As you can see, our business model remains adaptable, resilient, and positioned to deliver solid financial results throughout various economic and interest rate cycles." Following is a discussion of our financial performance as of, and for the three months ended March 31, 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:     3/31/2024   12/31/2023   9/30/2023   6/30/2023   3/31/2023 INCOME STATEMENT DATA                     Interest income   $ 21,541     $ 21,033     $ 20,416     $ 19,553     $ 18,679   Interest expense     9,315       8,526       7,757       6,469       5,335   Net interest income     12,226       12,507       12,659       13,084       13,344   Credit loss expense (reversal)     (43 )     (190 )     (309 )     205       236   Noninterest income     2,355       2,145       2,338       2,460       2,328   Noninterest expenses     11,166       10,121       10,594       11,320       10,633   Federal income tax expense     668       937       937       793       959   Net income   $ 2,790     $ 3,784     $ 3,775     $ 3,226     $ 3,844   PER SHARE                     Earnings   $ 0.63     $ 0.85     $ 0.85     $ 0.73     $ 0.87   Dividends   $ 0.11     $ 0.10     $ 0.10     $ 0.10     $ 0.10   Tangible book value(1)   $ 29.38     $ 28.92     $ 27.64     $ 27.16     $ 26.64   Quoted market value                     High   $ 27.20     $ 27.20     $ 23.74     $ 21.21     $ 24.10   Low   $ 24.00     $ 22.26     $ 19.10     $ 18.70     $ 21.10   Close(1)   $ 24.40     $ 27.20     $ 23.74     $ 19.35     $ 21.31   PERFORMANCE RATIOS                     Return on average assets     0.63 %     0.86 %     0.86 %     0.76 %     0.92 % Return on average shareholders' equity     7.98 %     11.11 %     11.27 %     9.89 %     12.32 % Return on average tangible shareholders' equity     8.55 %     11.94 %     12.14 %     10.67 %     13.34 % Efficiency ratio     76.58 %     69.08 %     70.64 %     72.83 %     67.85 % Yield on average earning assets (FTE)     5.15 %     5.06 %     4.92 %     4.85 %     4.75 % Rate on interest bearing liabilities     3.11 %     2.90 %     2.66 %     2.35 %     2.02 % Net interest margin to average earning assets (FTE)     2.92 %     3.01 %     3.05 %     3.25 %     3.40 % BALANCE SHEET DATA(1)                     Total investment securities   $ 103,210     $ 107,615     $ 109,543     $ 117,563     $ 122,995   Gross loans   $ 1,461,465     $ 1,473,471     $ 1,483,720     $ 1,472,288     $ 1,457,173   Allowance for credit losses   $ 15,300     $ 15,400     $ 15,400     $ 15,400     $ 15,220   Total assets   $ 1,764,629     $ 1,738,952     $ 1,744,939     $ 1,718,819     $ 1,749,073   Total deposits   $ 1,438,408     $ 1,394,182     $ 1,401,797     $ 1,380,192     $ 1,353,918   Borrowed funds   $ 178,500     $ 198,500     $ 201,050     $ 200,550     $ 259,050   Total shareholders' equity   $ 141,074     $ 138,702     $ 132,902     $ 130,690     $ 128,247   Net loans to total deposits     100.54 %     104.58 %     104.75 %     105.56 %     106.50 % Common shares outstanding     4,484,447       4,470,871       4,466,221       4,460,053       4,453,951   QTD BALANCE SHEET AVERAGES                     Total assets   $ 1,771,614     $ 1,740,526     $ 1,739,510     $ 1,706,147     $ 1,687,175   Earning assets   $ 1,683,708     $ 1,649,091     $ 1,646,848     $ 1,617,593     $ 1,595,605   Interest bearing liabilities   $ 1,205,162     $ 1,165,064     $ 1,156,835     $ 1,105,807     $ 1,072,417   Total shareholders' equity   $ 140,574     $ 135,157     $ 132,860     $ 130,860     $ 126,495   Total tangible shareholders' equity   $ 131,204     $ 125,723     $ 123,349     $ 121,274     $ 116,834   Earned common shares outstanding     4,449,376       4,443,463       4,437,415       4,427,890       4,421,584   Unvested stock grants     31,821       26,018       26,668       29,916       29,007   Total common shares outstanding     4,481,197       4,469,481       4,464,083       4,457,806       4,450,591   ASSET QUALITY                     Nonperforming loans to gross loans(1)     0.39 %     0.38 %     0.24 %     0.16 %     0.19 % Nonperforming assets to total assets(1)     0.34 %     0.35 %     0.23 %     0.16 %     0.17 % Allowance for credit losses to gross loans(1)     1.05 %     1.05 %     1.04 %     1.05 %     1.04 % Net charge-offs (recoveries) to QTD average gross loans     — %     (0.01 )%     (0.03 )%     — %     — % Credit loss expense (reversal) to QTD average gross loans     — %     (0.01 )%     (0.02 )%     0.01 %     0.02 % CAPITAL RATIOS(1)                     Total capital to risk weighted assets     12.27 %     11.91 %     11.59 %     11.31 %     11.08 % Tier 1 capital to risk weighted assets     11.17 %     10.82 %     10.51 %     10.23 %     10.02 % CET1 capital to risk weighted assets     10.17 %     9.83 %     9.53 %     9.25 %     9.04 % Tier 1 leverage ratio     8.78 %     8.77 %     8.58 %     8.55 %     8.47 %                       (1)At end of period                                           The following table outlines our YTD results of operations and provides certain performance measures as of, and for the three months ended (unaudited):     3/31/2024   3/31/2023   3/31/2022   3/31/2021   3/31/2020 INCOME STATEMENT DATA                     Interest income   $ 21,541     $ 18,679     $ 12,301     $ 11,919     $ 11,070   Interest expense     9,315       5,335       599       676       2,145   Net interest income     12,226       13,344       11,702       11,243       8,925   Credit loss expense (reversal)     (43 )     236       502       212       1,542   Noninterest income     2,355       2,328       2,808       3,906       4,575   Noninterest expenses     11,166       10,633       10,167       9,083       7,748   Federal income tax expense     668       959       757       1,198       858   Net income   $ 2,790     $ 3,844     $ 3,084     $ 4,656     $ 3,352   PER SHARE                     Earnings   $ 0.63     $ 0.87     $ 0.69     $ 1.00     $ 0.72   Dividends   $ 0.11     $ 0.10     $ 0.09     $ 0.08     $ 0.08   Tangible book value(1)   $ 29.38     $ 26.64     $ 24.97     $ 24.75     $ 21.56   Quoted market value                     High   $ 27.20     $ 24.10     $ 29.25     $ 24.75     $ 26.00   Low   $ 24.00     $ 21.10     $ 27.10     $ 21.90     $ 12.55   Close(1)   $ 24.40     $ 21.31     $ 27.90     $ 23.30     $ 15.50   PERFORMANCE RATIOS                     Return on average assets     0.63 %     0.92 %     0.86 %     1.50 %     1.28 % Return on average shareholders' equity     7.98 %     12.32 %     10.53 %     15.86 %     13.01 % Return on average tangible shareholders' equity     8.55 %     13.34 %     11.49 %     16.38 %     13.54 % Efficiency ratio     76.58 %     67.85 %     70.07 %     59.96 %     57.39 % Yield on average earning assets (FTE)     5.15 %     4.75 %     3.70 %     4.01 %     4.47 % Rate on interest bearing liabilities     3.11 %     2.02 %     0.29 %     0.37 %     1.28 % Net interest margin to average earning assets (FTE)     2.92 %     3.40 %     3.52 %     3.79 %     3.61 % BALANCE SHEET DATA(1)                     Total investment securities   $ 103,210     $ 122,995     $ 151,579     $ 89,772     $ 76,312   Gross loans   $ 1,461,465     $ 1,457,173     $ 1,139,351     $ 1,028,117     $ 865,577   Allowance for credit losses   $ 15,300     $ 15,220     $ 11,000     $ 11,100     $ 7,250   Total assets   $ 1,764,629     $ 1,749,073     $ 1,435,485     $ 1,303,175     $ 1,071,181   Total deposits   $ 1,438,408     $ 1,353,918     $ 1,252,892     $ 1,122,508     $ 883,837   Borrowed funds   $ 178,500     $ 259,050     $ 52,000     $ 49,000     $ 71,500   Total shareholders' equity   $ 141,074     $ 128,247     $ 121,346     $ 119,360     $ 104,829   Net loans to total deposits     100.54 %     106.50 %     90.06 %     90.60 %     97.11 % Common shares outstanding     4,484,447       4,453,951       4,459,544       4,673,914       4,675,499   YTD BALANCE SHEET AVERAGES                     Total assets   $ 1,771,614     $ 1,687,175     $ 1,448,545     $ 1,259,119     $ 1,049,245   Earning assets   $ 1,683,708     $ 1,595,605     $ 1,348,647     $ 1,206,411     $ 997,089   Interest bearing liabilities   $ 1,205,162     $ 1,072,417     $ 831,200     $ 735,159     $ 672,564   Total shareholders' equity   $ 140,574     $ 126,495     $ 118,759     $ 119,034     $ 103,646   Total tangible shareholders' equity   $ 131,204     $ 116,834     $ 108,862     $ 115,298     $ 99,558   Earned common shares outstanding     4,449,376       4,421,584       4,451,607       4,664,893       4,659,279   Unvested stock grants     31,821       29,007       27,466       21,922       13,481   Total common shares outstanding     4,481,197       4,450,591       4,479,073       4,686,815       4,672,760   ASSET QUALITY                     Nonperforming loans to gross loans(1)     0.39 %     0.19 %     0.20 %     0.79 %     0.10 % Nonperforming assets to total assets(1)     0.34 %     0.17 %     0.19 %     0.62 %     0.12 % Allowance for credit losses to gross loans(1)     1.05 %     1.04 %     0.97 %     1.08 %     0.84 % Net charge-offs (recoveries) to YTD average gross loans     — %     — %     — %     — %     0.01 % Credit loss expense (reversal) to YTD average gross loans     — %     0.02 %     0.05 %     0.02 %     0.18 % CAPITAL RATIOS(1)                     Total capital to risk weighted assets     12.27 %     11.08 %     12.07 %     15.02 %     14.44 % Tier 1 capital to risk weighted assets     11.17 %     10.02 %     11.13 %     13.84 %     13.58 % CET1 capital to risk weighted assets     10.17 %     9.04 %     9.94 %     12.34 %     11.92 % Tier 1 leverage ratio     8.78 %     8.47 %     9.07 %     10.31 %     10.97 %                       (1)At end of period                                           Income Statement Breakdown and Analysis     Quarter to Date     3/31/2024   12/31/2023   9/30/2023   6/30/2023   3/31/2023 Net income   $ 2,790     $ 3,784     $ 3,775     $ 3,226     $ 3,844   Acquisition related items (net of tax)                     Amortization of core deposit intangibles     36       60       60       60       60   Total acquisition related items (net of tax)     36       60       60       60       60   Other nonrecurring items (net of tax)                     Proxy contest related expenses     —       —       —       413       —   Prepayment penalties collected     (58 )     (85 )     (29 )     (95 )     (9 ) Total other nonrecurring items (net of tax)     (58 )     (85 )     (29 )     318       (9 ) Adjusted net income from operations   $ 2,768     $ 3,759     $ 3,806     $ 3,604     $ 3,895                         Net interest income   $ 12,226     $ 12,507     $ 12,659     $ 13,084     $ 13,344   Prepayment penalties collected     (73 )     (107 )     (37 )     (120 )     (12 ) Adjusted net interest income   $ 12,153     $ 12,400     $ 12,622     $ 12,964     $ 13,332                         PERFORMANCE RATIOS                     Based on adjusted net income from operations                     Earnings per share   $ 0.62     $ 0.85     $ 0.86     $ 0.81     $ 0.88   Return on average assets     0.63 %     0.86 %     0.87 %     0.85 %     0.94 % Return on average shareholders' equity     7.92 %     11.03 %     11.37 %     11.05 %     12.49 % Return on average tangible shareholders' equity     8.49 %     11.86 %     12.24 %     11.92 %     13.52 % Efficiency ratio     76.65 %     69.06 %     70.31 %     69.51 %     67.41 %                       Based on adjusted net interest income                     Yield on average earning assets (FTE)     5.13 %     5.03 %     4.91 %     4.82 %     4.75 % Rate on interest bearing liabilities     3.11 %     2.90 %     2.66 %     2.35 %     2.02 % Net interest margin to average earning assets (FTE)     2.90 %     2.98 %     3.04 %     3.22 %     3.40 %     Year to Date March 31   Variance       2024       2023     Amount   % Net income   $ 2,790     $ 3,844     $ (1,054 )   (27.42 )% Acquisition related items (net of tax)                 Amortization of core deposit intangibles     36       60       (24 )   (40.00 )% Total acquisition related items (net of tax)     36       60       (24 )   (40.00 )% Other nonrecurring items (net of tax)                 Proxy contest related expenses     —       —       —     N/M Prepayment penalties collected     (58 )     (9 )     (49 )   544.44 % Total other nonrecurring items (net of tax)     (58 )     (9 )     (49 )   544.44 % Adjusted net income from operations   $ 2,768     $ 3,895     $ (1,127 )   (28.93 )%                   Net interest income   $ 12,226     $ 13,344     $ (1,118 )   (8.38 )% Prepayment penalties collected     (73 )     (12 )     (61 )   508.33 % Adjusted net interest income   $ 12,153     $ 13,332     $ (1,179 )   (8.84 )%                   PERFORMANCE RATIOS                 Based on adjusted net income from operations                 Earnings per share   $ 0.62     $ 0.88     $ (0.26 )   (29.55 )% Return on average assets     0.63 %     0.94 %       (0.31 )% Return on average shareholders' equity     7.92 %     12.49 %       (4.57 )% Return on average tangible shareholders' equity     8.49 %     13.52 %       (5.03 )% Efficiency ratio     76.65 %     67.41 %       9.24 %                   Based on adjusted net interest income                 Yield on average earning assets (FTE)     5.13 %     4.75 %       0.38 % Rate on interest bearing liabilities     3.11 %     2.02 %       1.09 % Net interest margin to average earning assets (FTE)     2.90 %     3.40 %       (0.50 )%                   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     March 31, 2024   December 31, 2023   March 31, 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   $ 1,471,130     $ 19,609     5.36 %   $ 1,477,899     $ 19,633     5.27 %   $ 1,447,375     $ 17,854     5.00 % Taxable investment securities     94,199       359     1.53 %     95,263       374     1.56 %     109,671       435     1.61 % Nontaxable investment securities     11,963       67     2.25 %     12,166       68     2.22 %     14,287       81     2.30 % Interest earning cash and cash equivalents     97,237       1,319     5.46 %     54,584       760     5.52 %     14,035       153     4.42 % Federal Home Loan Bank stock     9,179       201     8.81 %     9,179       212     9.16 %     10,237       173     6.85 % Total earning assets     1,683,708       21,555     5.15 %     1,649,091       21,047     5.06 %     1,595,605       18,696     4.75 %                                       Nonearning assets                                     Allowance for credit losses     (15,400 )             (15,444 )             (15,145 )         Premises and equipment, net     14,392               14,875               15,453           Accrued income and other assets     88,914               92,004               91,262           Total assets   $ 1,771,614             $ 1,740,526             $ 1,687,175                                                 Interest bearing liabilities                                     Interest bearing demand deposits   $ 421,597     $ 3,559     3.40 %   $ 413,681     $ 3,540     3.40 %   $ 359,223     $ 2,078     2.35 % Savings deposits     272,296       413     0.61 %     279,197       421     0.60 %     341,154       473     0.56 % Time deposits     326,747       3,644     4.49 %     271,375       2,709     3.96 %     166,518       1,012     2.46 % Borrowed funds     184,522       1,699     3.70 %     200,811       1,856     3.67 %     205,522       1,772     3.50 % Total interest bearing liabilities     1,205,162       9,315     3.11 %     1,165,064       8,526     2.90 %     1,072,417       5,335     2.02 %                                       Noninterest bearing liabilities                                     Noninterest bearing deposits     417,089               424,859               474,686           Accrued interest and other liabilities     8,789               15,446               13,577           Shareholders' equity     140,574               135,157               126,495           Total liabilities and shareholders' equity   $ 1,771,614             $ 1,740,526             $ 1,687,175           Net interest income (FTE)       $ 12,240             $ 12,521             $ 13,361       Net interest margin to earning assets (FTE)           2.92 %           3.01 %           3.40 %                                       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, 2024   March 31, 2024     Compared To   Compared To     December 31, 2023   March 31, 2023     Increase (Decrease) Due to   Increase (Decrease) Due to     Volume   Rate   Net   Volume   Rate   Net Changes in interest income                         Total loans   $ (568 )   $ 544     $ (24 )   $ 326     $ 1,429     $ 1,755   Taxable investment securities     (6 )     (9 )     (15 )     (56 )     (20 )     (76 ) Nontaxable investment securities     (5 )     4       (1 )     (12 )     (2 )     (14 ) Interest earning cash and cash equivalents     616       (57 )     559       1,121       45       1,166   Federal Home Loan Bank stock     —       (11 )     (11 )     (99 )     127       28   Total changes in interest income     37       471       508       1,280       1,579       2,859                             Changes in interest expense                         Interest bearing demand deposits     19       —