<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
--------------- ---------------
Commission file number 0-23550
Fentura Bancorp, Inc.
- - --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Michigan 38-2806518
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One Fenton Sq, P.O. Box 725, Fenton, Michigan 48430
-----------------------------------------------------
(Address of Principal Executive Offices)
(810) 629-2263
---------------------------
(Issuer's telephone number)
None
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
X Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: August 07, 1996
---------------
Class - Common Stock ($5 par value) Shares Outstanding - 667,514
Transitional Small Business Disclosure Format (Check one): Yes ; No X
--- ---
<PAGE> 2
Fentura Bancorp, Inc.
Index to Form 10-QSB
Page
----
Part I - Financial Information
Item 1 - Consolidated Financial Statements 3
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II - Other Information
Item 1 - 6 Miscellaneous Information 14
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
JUNE 30, DEC 31, JUNE 30,
(000's omitted Except Per Share Data) 1996 1995 1995
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 11,122 11,545 10,406
Federal funds sold 6,000 6,300 3,850
----------------------------
Total Cash & Cash Equivalents 17,122 17,845 14,256
Interest bearing deposits with banks 95 190 385
Investment securities-held to maturity,
at cost (market value of $8,060, and
$27,464 at June 30, 1996 and 1995,
respectively) 8,103 9,399 27,389
Investment securities-avail for sale,
at market 39,194 36,431 22,658
----------------------------
Total investment securities 47,297 45,830 50,047
Loans:
Commercial 74,267 69,961 69,982
Tax exempt development loans 1,041 1,130 1,028
Real estate loans - mortgage 15,164 15,820 14,008
Real estate loans - construction 19,286 21,666 16,166
Consumer loans 60,298 58,959 57,143
----------------------------
Total loans 170,056 167,536 158,327
Less: Reserve for loan losses (2,810) (2,618) (2,425)
----------------------------
Net loans 167,246 164,918 155,902
Loans held for sale 881 925 0
Bank premises and equipment 4,706 3,887 4,066
Earned interest receivable 1,816 1,677 1,608
Other assets 2,997 3,287 3,353
----------------------------
Total assets $242,160 238,559 229,617
============================
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
LIABILITIES
Deposits:
Non-interest bearing deposits $ 27,530 27,411 27,207
Interest bearing deposits 186,587 184,074 172,275
----------------------------
Total deposits 214,117 211,485 199,482
Federal Funds Purchased 0 0 0
Other short term borrowings 2,695 2,631 7,500
Accrued taxes, interest and
other liabilities 2,849 2,563 2,184
----------------------------
Total liabilities 219,661 216,679 209,166
----------------------------
SHAREHOLDERS' EQUITY
Common stock - $5 par value
667,514 shares issued (667,079 in Dec., 3,337 3,335 2,901
1995 and 580,269 in June, 1995)
Surplus 15,925 15,910 13,132
Retained Earnings 3,816 2,690 4,822
Unrealized loss on sec avail for sale (579) (55) (404)
----------------------------
Total shareholder's equity 22,499 21,880 20,451
----------------------------
Total liabilities and
shareholder's equity $242,160 238,559 229,617
============================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
- - -----------------------------------------------------------------------------
(000's omitted,
Except Per Share Data) 1996 1995 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 4,283 3,919 $ 8,512 7,462
Interest and dividends on
investment securities:
Taxable 561 647 1,087 1,306
Tax-exempt 121 115 254 238
Int on deposits with banks 4 9 8 17
Interest on federal funds sold 81 15 186 23
----------------- ----------------
Total interest income 5,050 4,705 10,047 9,046
INTEREST EXPENSE
Deposits 2,049 1,850 4,113 3,590
Short-term borrowings 37 131 92 197
----------------- ----------------
Total interest expense 2,086 1,981 4,205 3,787
NET INTEREST INCOME 2,964 2,724 5,842 5,259
Provision for loan losses 150 160 330 240
----------------- ----------------
Net interest income after
provision for loan losses 2,814 2,564 5,512 5,019
NON-INTEREST INCOME
Service chrgs on dep accts 339 332 668 640
Fiduciary income 82 70 153 132
Other operating income 478 433 917 825
Investment gains (losses) (2) (5) (67) (35)
----------------- ----------------
Total non-interest income 897 830 1,671 1,562
NON-INTEREST EXPENSE
Salaries and benefits 1,124 1,088 2,217 2,150
Occupancy of bank premises 157 149 308 290
Equipment expense 330 275 632 550
Other operating expenses 937 906 1,744 1,777
----------------- ----------------
Total non-interest expense 2,548 2,418 4,901 4,767
NET INCOME BEFORE TAXES 1,163 976 2,282 1,814
Applicable income taxes 329 292 668 542
----------------- ----------------
NET INCOME $ 834 684 $ 1,614 1,272
================= ================
Per share: (667,514 shares)
Net income .................. $ 1.25 1.02 $ 2.42 1.91
Dividends ................... $ 0.36 0.33 $ 0.72 0.66
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
June 30,
- - --------------------------------------------------------------------------------
(000's omitted,
Except Per Share Data) 1996 1995
- - --------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,614 $ 1,272
Adjustments to reconcile net inc to cash
Provided by Operating Activities:
Depreciation and amortization 431 374
Provision for loan losses 330 240
Amortization (accretion) on securities 76 39
Mortgages originated for sale (10,965) (8,156)
Mortgages sold 11,009 8,860
Gain on investment securities 67 35
Decrease (increase) in interest receivable (139) (18)
Decrease (increase) in other assets 561 425
Increase (decrease) in accrued taxes,
interest, and other liabilities 286 516
-------------------
Total Adjustments 1,656 2,315
-------------------
Net Cash Provided By (Used In) Operating Activities 3,270 3,587
-------------------
Cash Flows From Investing Activities:
Net decrease in deposits with other banks 95 1
Proceeds from maturities of inv activities - HTM 2,230 3,114
Proceeds from maturities of inv activities - AFS 9,935 9,290
Purchases of investment securities - HTM (995) (89)
Purchases of investment securities - AFS (13,575) (7,041)
Net (increase) in customer loans (2,658) (15,888)
Capital expenditures (1,250) (995)
-------------------
Net Cash Used in Investing Activities (6,218) (11,608)
Cash Flows From Financing Activities:
Net increase (decrease) in DDA/SAV deposits (3,187) (3,968)
Net increase (decrease) in Time deposits 5,819 8,797
Net increase (decr) in short-term borrowing's 64 6,000
Proceeds from stock issuance 17 0
Cash dividends (488) (441)
-------------------
Net Cash Provided By (Used In) Financing Activities 2,225 10,388
NET DECREASE IN CASH AND CASH EQUIVALENTS ($723) $ 2,367
CASH AND CASH EQUIVALENTS - BEGINNING $ 17,845 $ 11,889
CASH AND CASH EQUIVALENTS - ENDING $ 17,122 $ 14,256
===================
CASH PAID FOR:
INTEREST $ 4,176 $ 3,801
INCOME TAXES $ 800 $ 643
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
- - ------------------------------------------------------------------------
June 30, June 30,
(000's omitted) 1996 1995
- - ------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK
Balance, beginning of period $ 3,335 $ 2,901
Issuance of 435 shares under
director stock purchase plan 2 0
Stock dividend 0 0
-------- --------
Balance, end of period 3,337 2,901
-------- --------
SURPLUS
Balance, beginning of period 15,910 13,132
Issuance of 435 shares under
director stock purchase plan 15 0
Stock dividend 0 0
-------- --------
Balance, end of period 15,925 13,132
RETAINED EARNINGS
Balance, beginning of period 2,690 3,991
Net income 1,614 1,272
Cash dividends declared (488) (441)
-------- --------
Balance, end of period 3,816 4,822
UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE
Balance, beginning of period (55) (1,007)
Change in unrealized gain (loss)
on securities, net of tax $336 (524) 603
-------- --------
Balance, end of period (579) (404)
-------- --------
TOTAL SHAREHOLDERS' EQUITY $ 22,499 $ 20,451
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 8
Fentura Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1. Basis of presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions for Form
- 10QSB and Article 9 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six months ended June 30,
1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996.
Note 2. Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year financial statement presentation.
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis is intended to address significant
factors affecting the Corporation's consolidated financial statements during
the six months ended June 30, 1996 and 1995. It provides a more detailed and
comprehensive review of the operating results and financial position than could
be obtained from a review of the balance sheet, income statement, and
supporting schedules alone.
SIX MONTHS, 1996 VERSUS SIX MONTHS, 1995
Net Interest Income
Net interest income, the principal source of earnings, is the amount of
interest income generated by earning assets (investment securities and loans)
less interest expense paid on interest bearing liabilities (largely deposits).
As indicated in the income statement on page 5 interest income for the six
months ended June 30, 1996 was $10,047 thousand compared to $9,046 thousand for
the same period in 1995. This represents an increase of 11.1%. The primary
factors contributing to the interest income increase are substantial growth in
the Company's loan portfolio (the largest group of earning assets). Also
indicated in the income statement, interest expense for the six months ended
June 30, 1996 was $4,205 thousand compared to $3,787 thousand for the same
period in 1995. This represents an increase of 11.0%. Increases in the
Company's certificate of deposit balances, short term borrowings and interest
rates caused the increase in interest expense. Balances increased due to
greater market penetration in existing markets, growth in new market areas, and
a change in consumer behavior toward certificates as market interest rates
increased.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses (ALL) reflects management's judgment as to the
level considered appropriate to absorb potential losses inherent in the loan
portfolio. Fentura's subsidiary, The State Bank's, methodology in determining
the adequacy of the ALL includes a review of individual loans and off-balance
sheet arrangements, historical loss experience, current economic conditions,
portfolio trends, and other pertinent factors. Although reserves have been
allocated to various portfolio segments, the ALL is general in nature and is
available for the portfolio in its entirety. At June 30, 1996, the ALL was
$2,810 thousand, or 1.65% of total loans. This compares with $2,425 thousand,
or 1.53%, at June 30, 1995.
The provision for loan losses was $330 thousand for the first six months of
1996 and $240 thousand for the same period in 1995. The primary reason for
increasing the provision was to maintain an adequate allowance in light of
substantial loan growth from June 30, 1995 to June 30, 1996.
NON-INTEREST INCOME
Non-interest income was $1,671 thousand in the first half of 1996 and $1,562
thousand in the same period of 1995. This figure represents an increase of
7.0% in 1996. Table 1 provides a more detailed breakdown of the components of
non-interest income than can be found in the income statement on page 5.
The most significant category of non-interest income is service charges on
deposit accounts. These fees were $668 thousand in the first half of 1996 and
$640 thousand in the same period of 1995. This represents an increase of 4.4%.
The increase occurred from the deposit growth the company experienced in its
existing and new markets from June 30, 1995 to June 30, 1996.
<PAGE> 10
Gain on the sale of mortgage loans originated by the bank and sold in the
secondary market were $71 thousand in the first six months of 1996 and $107
thousand in the same period in 1995. This 33.6% decrease occurred because
management restructured interest rates and points on new mortgage loans in
order to increase competitiveness.
In the first half of 1996, the Company experienced a loss on security
transactions of $67 thousand compared to $35 thousand for the same period in
1995. The losses were associated with the sale of investment securities which
the Company sold in order to reinvest in issues with higher interest rates.
Other operating income, which includes income from the sale of checks, safe
deposit box rent, mortgage servicing rights income, and other miscellaneous
income items, was $509 thousand in the first six months of 1996 compared to
$385 thousand in the same period of 1995. This increase of 32.2% is primarily
attributable to mortgage servicing rights income. In the first quarter of 1996
the Company implemented procedures to insure compliance with Statement of
Financial Accounting Standards (SFAS) No. 122. Accordingly, the Company began
recognizing income for the value of mortgage servicing rights (MSR). MSR
income for the six months ended June 30, 1996 was $117 thousand.
TABLE 1
<TABLE>
<CAPTION>
SIX Months Ended
Analysis of Non-Interest Income June 30,
- - ------------------------------------------------------------
(000's omitted)
1996 1995
- - ------------------------------------------------------------
<S> <C> <C>
Service Charges on Deposit Accounts $ 668 $ 640
Gain on Sale of Mortgages 71 107
Gain on Security Transactions (67) (35)
Gain on Sale of Real Estate Owned 140 139
Mortgage Servicing Fees 197 194
Fiduciary Income 153 132
Other Operating Income 509 385
------ ------
Total Non-Interest Income $1,671 $1,562
====== ======
</TABLE>
Non-Interest Expense
Total non-interest expense was $4,901 thousand in the first half of 1996
compared with $4,767 thousand in the same period of 1995. This is an increase
of 2.8%.
Salary and benefit costs, Fentura's largest non-interest expense category, were
$2,217 thousand in the first six months of 1996, compared with $2,150 thousand
for the first six months of 1995. 1996 salary costs represent an increase of
3.1% over 1995. Increased costs are a result of additional staff to more
effectively develop and sell product lines to the Company's customers and an
increase in incentives and commissions earned by Company employees.
Occupancy expenses associated with the Company's facilities were $308 thousand
in the first half of 1996 compared to $290 thousand in the same period of
1995. This represents an increase of 6.2%. The primary reason for the
substantial increase is that additional dollars were spent remodeling and
equipping facilities and costs associated with opening a new branch in June of
1996.
Equipment expenses increased substantially. During the first six months of
1996 equipment expenses were $632 thousand compared to $550 thousand for the
same period in 1995, an increase of 14.9%. Equipment (mostly computer hardware
and software) for the new branch and increased costs for maintenance contracts
are the primary reasons for the increase in equipment costs.
<PAGE> 11
Loan and collection expense decreased 22.5% in the first six months of 1996
compared to the same period in 1995. A decline in legal expenses associated
with collections and dealer reserve fees paid for indirect lending activities
account for most of the decrease.
FDIC assessment expense was $1 thousand in the first six months of 1996
compared to $213 thousand in the same period of 1995. The dramatic decrease is
attributable to the FDIC's revision of required assessments.
Office supplies expense were $127 thousand in the first half of 1996 compared
to $107 thousand in the same period of 1995. This represents and increase of
18.7%. Several large purchases of stationery items and brochures account for
the increase.
Other operating expenses were $1,249 thousand in the first half of 1996
compared to $1,064 thousand in the first half of 1995. The largest increase
within other operating expenses was a loss of $125 thousand. This loss was a
litigation settlement.
TABLE 2
<TABLE>
<CAPTION>
Six Months Ended
Analysis of Non-Interest Expense June 30,
- - -------------------------------------------------------------------
(000's omitted)
1996 1995
- - -------------------------------------------------------------------
<S> <C> <C>
Salaries and Benefits $2,217 $2,150
Equipment 632 550
Net Occupancy 308 290
FDIC Assessment 1 213
Office Supplies 127 107
Loan & Collection Expense 186 240
Advertising 181 153
Other Operating Expense 1,249 1,064
------ ------
Total Non-Interest Expense $4,901 $4,767
====== ======
</TABLE>
LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Asset/Liability management procedures are designed to assure liquidity and
reduce interest rate risks. The goal in managing interest rate risk is to
maintain a strong and relatively stable net interest margin. It is the
responsibility of the Asset/Liability Management Committee (ALCO) to set policy
guidelines and to establish short-term and long-term strategies with respect to
interest rate exposure and liquidity. ALCO, which is comprised of key members
of management, meets regularly to review Fentura's financial performance and
soundness, including interest rate risk and liquidity exposure in relation to
present and perspective markets, business conditions, and product lines.
Accordingly, the committee adopts funding and balance sheet management
strategies that are intended to assure earnings, liquidity, and growth rates
consistent with policy and prudent business standards.
Along with its solid capital base and strong earnings performance, liquidity
maintenance remains a key objective. Fentura's liquidity is derived from a
strong deposit base comprised of individual and business deposits. Deposit
accounts of customers in the mature market represent a substantial portion of
deposits of individuals. Fentura's deposit base plus other funding sources
(federal funds purchased, other liabilities and shareholders' equity) provided
primarily all funding needs in the first six months of 1996 and 1995.
As indicated in the consolidated balance sheets on page 4, the Company had
short term borrowings of $2,695 thousand at June 30, 1996 and $7,500 thousand
at June 30, 1995. The $4,805 thousand decrease was a borrowing from the
Federal Home Loan Bank. The borrowing was performed because throughout 1994
the Company experienced substantial loan growth. This growth was achieved by
an increased Management emphasis on lending activities and strong consumer
demand within the Company's local markets. However, deposit growth during this
<PAGE> 12
period did not increase commensurately. Accordingly, the Company experienced a
shift from excess funds in 1994 to borrowing funds at the end of the second
quarter of 1995 in order to fund the loan growth. During 1996 the Company
experienced deposit growth adequate to repay this borrowing.
Interest rate risk is managed by controlling and limiting the level of earnings
volatility arising from rate movements. Fentura continually performs reviews
and analysis of those factors impacting interest rate risk. Factors include
maturity and re-pricing frequency of balance sheet components, impact of rate
changes on interest margin and prepayment speeds, market value impacts of rate
changes, and other issues. Both actual and projected performance are reviewed,
analyzed, and compared to policy and objectives to assure present and future
financial viability.
As indicated in the statement of cash flows, cash flows from financing
activities have increased due to growth in Time deposits. In the first six
months of 1996 borrowings increased $64 thousand and Time deposits increased
$5,819 thousand. In 1995, cash flows from financing activities were
principally growth in Time deposits and increases in short term borrowings
which increased $8,797 thousand and $6,000 thousand respectively in the first
six months. Cash flows from investing activities were ($6,218) thousand
during the first six months of 1996 and ($11,608) thousand in the same period
of 1995. The primary reason for the decrease in investing activities was a
decline in the growth rate within the Company's loan portfolio.
CAPITAL MANAGEMENT
Total shareholders' equity rose 10.0% to $22,499 thousand at June 30, 1996
compared with $20,451 thousand at June 30, 1995. The Company's equity to
asset ratio was 9.3% at June 30, 1996 and 8.9% at June 30, 1995. The increase
in the amount of capital was obtained through retained earnings. In the first
half of 1996, the Company increased its cash dividends by 9.1% to $.72 per
share compared with $.66 in the first half of 1995.
As indicated on the balance sheet on page 4, at June 30, 1996 the Company had
an unrealized loss on securities available for sale (AFS) of $579 thousand
compared to an unrealized loss at June 30, 1995 of $404 thousand. This
increase in unrealized loss is attributable to market interest rates and the
interest rate structures on those securities held in the Company's AFS
portfolio.
SECOND QUARTER, 1996 VERSUS SECOND QUARTER, 1995
Net Interest Income
Net interest income, the principal source of earnings, is the amount of
interest income generated by earning assets (investment securities and loans)
less interest expense paid on interest bearing liabilities (largely deposits).
As indicated in the income statement on page 5 interest income for the three
months ended June 30, 1996 was $5,050 thousand compared to $4,705 thousand for
the same period in 1995. This represents an increase of 7.3%. The primary
factors contributing to the interest income increase are substantial growth in
the Company's loan portfolio (the largest group of earning assets). Also
indicated in the income statement, interest expense for the three months ended
June 30, 1996 was $2,086 thousand compared to $1,981 thousand for the same
period in 1995. This represents an increase of 5.3%. Increases in the
Company's certificate of deposit balances and interest rates caused the
increase in interest expense. Balances increased due to greater market
penetration in existing markets, growth in new market areas, and a change in
consumer behavior toward certificates as market interest rates increased.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $150 thousand for the three months ended June
30, 1996 and $160 thousand for the same period in 1995.
<PAGE> 13
NON-INTEREST INCOME
Non-interest income was $897 thousand in the second quarter of 1996 and $830
thousand in the same period of 1995. This figure represents an increase of
8.1% in 1996. Table 3 provides a more detailed breakdown of the components of
non-interest income than can be found in the income statement on page 5.
The most significant increase in non-interest income was other operating
income. This income was $232 thousand in the second quarter 1996 and $165
thousand in the same period of 1995. The increase is primarily attributable
to mortgage servicing rights income. In the second quarter of 1996 income from
mortgage servicing rights was $59 thousand and $0 in the second quarter of
1995.
The most significant category of non-interest income is service charges on
deposit accounts. These fees were $339 thousand in the second quarter of 1996
and $332 thousand in the same period of 1995. This represents an increase of
2.1%. The increase occurred from the deposit growth the company experienced in
its existing and new markets throughout the last year.
Gain on the sale of mortgage loans originated by the bank and sold in the
secondary market were $7 thousand in the three months ended June 30, 1996 and
$52 thousand in the same period in 1995. This 86.5% decrease occurred because
management restructured interest rates and points on new mortgage loans in
order to increase competitiveness.
In the second quarter of 1996, the Company experienced a loss on security
transactions of $2 thousand compared to a $5 thousand loss for the same period
in 1995. The losses were associated with the sale of investment securities
which the Company sold in order to reinvest in issues with higher interest
rates.
TABLE 3
<TABLE>
<CAPTION>
Three Months Ended
Analysis of Non-Interest Income June 30,
- - ----------------------------------------------------------------
(000's omitted)
1996 1995
- - ----------------------------------------------------------------
<S> <C> <C>
Service Charges on Deposit Accounts $339 $332
Gain on Sale of Mortgages 7 52
Gain on Security Transactions (2) (5)
Gain on Sale of Real Estate Owned 140 119
Mortgage Servicing Fees 99 97
Fiduciary Income 82 70
Other Operating Income 232 165
---- ----
Total Non-Interest Income $897 $830
==== ====
</TABLE>
Non-Interest Expense
Total non-interest expense was $2,548 thousand in the second quarter of 1996
compared with $2,418 thousand in the same period of 1995. This is an increase
of 5.4%.
Salary and benefit costs, Fentura's largest non-interest expense category, were
$1,124 thousand in the quarter ended June 30, 1996, compared with $1,088
thousand for the same period in 1995. 1996 salary costs represent an increase
of 3.3% over 1995. Increased costs are a result of additional staff to more
effectively develop and sell product lines to the Company's customers and an
increase in incentives and commissions earned by Company employees.
Occupancy expenses associated with the Company's facilities were $157 thousand
in the second quarter of 1996 compared to $149 thousand in the same period of
1995. This represents an
<PAGE> 14
increase of 5.4%. The primary reason for the increase is that additional
dollars were spent upgrading existing facilities.
During the second quarter of 1996 equipment expenses were $330 thousand
compared to $275 thousand for the same period in 1995, an increase of 20.0%.
Equipment (mostly computer hardware and software) for the new branch and
increased costs for maintenance contracts are the primary reasons for the
increase in equipment expense costs.
Other operating expenses were $676 thousand in the second quarter of 1996
compared to $551 thousand in the second quarter of 1995. The largest increase
within other operating expenses was a loss of $125 thousand. This loss was a
litigation settlement.
TABLE 4
<TABLE>
<CAPTION>
Three Months Ended
Analysis of Non-Interest Expense June 30,
- - ----------------------------------------------------------
(000's omitted)
1996 1995
- - ----------------------------------------------------------
<S> <C> <C>
Salaries and Benefits $1,124 $1,088
Equipment 330 275
Net Occupancy 157 149
FDIC Assessment 0 106
Office Supplies 69 60
Loan & Collection Expense 95 114
Advertising 97 75
Other Operating Expense 676 551
------ ------
Total Non-Interest Expense $2,548 $2,418
====== ======
</TABLE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
The exhibits listed on the "Exhibit Index" on page 15 of this report are
incorporated herein by reference.
b. Report on Form 8-k
No reports on Form 8-k were filed for the quarter ended June 30, 1996.
c. Exhibit 27
Financial Data Schedule
<PAGE> 15
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Fentura Bancorp, Inc.
Date August 8, 1996 By /s/ Richard A. Bagnall
-------------- -------------------------------
Richard A. Bagnall
Executive Vice President
Date August 8, 1996 By /s/ Ronald L. Justice
-------------- -------------------------------
Ronald L. Justice
Vice President & Chief Financial
Officer
<PAGE> 16
FENTURA BANCORP, INC.
1996 Quarterly Report on Form 10-QSB
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Location
- - ----- ------- ---------
<S> <C> <C>
10.1 Equipment Sale Agreement between The State Bank and ITI, Inc.
dated December 23, 1994 ***
10.2 Master Equipment Lease Agreement between The State Bank and
MFP Technology Services Inc. dated December 23, 1994 ***
10.3 Software License Agreement between The State Bank and ITI, Inc.
dated October 29, 1994 ***
10.4 Lease of Site for Automated Teller Machines between The State
Bank and Bryce Felch dated November 6, 1986 *
10.5 Lease of Site for Automated Teller Machines between The State
Bank and VG's Food Center, Inc. dated January 1, 1992 *
10.6 Lease of Holly Branch Bank Site between The State Bank and Inter
Lakes Associates dated March 26, 1991 *
10.7 Lease of Davison Branch Bank Site between The State Bank and VG's
Food Center, Inc. dated April 27, 1993 *
10.8 Severance Compensation Agreement between the registrant and
Robert L. Cole dated January 17, 1991 *
10.9 Severance Compensation Agreement between the registrant and
Richard A. Bagnall dated January 17, 1991 *
10.10 Lease of Clarkston Branch Site between The State Bank and Waldon
Properties, Inc. dated January 24, 1994 **
10.11 Lease of Site for Automated Teller Machines between The State
Bank and Russell and Joy Manser dated December 1, 1994 **
10.12 License and Service Agreement between The State Bank and
Unisys Corporation dated October 29, 1994 ***
10.13 Lease of Fenton Owen Road Branch Site between The State Bank and
VG'S Food Centers dated March 26, 1996 ****
27 Financial Data Schedule
* Incorporated by reference to form 10-SB registration number 0-23550
** Incorporated by reference to form 10-K filed March 29, 1995
*** Incorporated by reference to form 10-QSB filed May 12, 1995
**** Incorporated by reference to form 10-QSB filed May 2, 1996
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