<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
[ ] 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: May 8, 2000
-----------
Class - Common Stock Shares Outstanding - 1,425,922
<PAGE> 2
FENTURA BANCORP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 19
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
MARCH 30, DEC 31,
(000's omitted Except Per Share Data) 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 13,911 12,714
Federal funds sold 14,550 900
-------------------------------
Total Cash & Cash Equivalents 28,461 13,614
Interest bearing deposits with banks 0 0
Investment securities-held to maturity,
at cost (market value of $13,536
at March 31, 2000 and $11,695
at December 1999) 13,677 13,922
Investment securities-avail for sale,
at market 52,958 53,964
-------------------------------
Total investment securities 66,635 67,886
Loans:
Commercial 86,265 92,359
Tax exempt development loans 580 537
Real estate loans - mortgage 20,971 21,409
Real estate loans - construction 20,945 12,481
Consumer loans 69,164 64,280
-------------------------------
Total loans 197,925 191,066
Less: Reserve for loan losses (3,046) (2,961)
-------------------------------
Net loans 194,879 188,105
Loans held for sale 195 180
Bank premises and equipment 6,117 5,200
Accrued interest receivable 1,898 1,687
Other assets 6,057 6,949
-------------------------------
Total assets $ 304,242 283,621
===============================
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
LIABILITIES
Deposits:
Non-interest bearing deposits $ 33,380 31,524
Interest bearing deposits 220,604 215,527
-------------------------------
Total deposits 253,984 247,051
Federal Funds Purchased 14,050 0
Other borrowings 1,699 2,529
Accrued taxes, interest and
other liabilities 2,263 2,176
-------------------------------
Total liabilities 271,996 251,756
-------------------------------
STOCKHOLDERS' EQUITY
Common stock - $2.5 par value
1,425,922 shares issued (1,422,045 in 3,565 3,555
Dec.1999)
Surplus 18,474 18,317
Retained earnings 11,594 11,078
Unrealized loss on sec avail for sale (1,387) (1,085)
-------------------------------
Total stockholder's equity 32,246 31,865
-------------------------------
Total liabilities and
stockholder's equity $ 304,242 283,621
===============================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 4,453 4,022
Interest and dividends on
investment securities:
Taxable 840 782
Tax-exempt 171 135
Interest on deposits with banks 0 0
Interest on federal funds sold 75 144
------------------------------------
Total interest income 5,539 5,083
INTEREST EXPENSE
Deposits 2,219 1,923
Short-term borrowings 77 32
------------------------------------
Total interest expense 2,296 1,955
NET INTEREST INCOME 3,243 3,128
Provision for loan losses 169 195
------------------------------------
Net interest income after
Provision for loan losses 3,074 2,933
NON-INTEREST INCOME
Service charges on deposit accounts 467 476
Fiduciary income 162 155
Other operating income 322 369
Investment gains 0 26
------------------------------------
Total non-interest income 951 1,026
NON-INTEREST EXPENSE
Salaries and benefits 1,455 1,328
Occupancy of bank premises 202 193
Equipment expense 373 341
Other operating expenses 852 813
------------------------------------
Total non-interest expense 2,882 2,675
NET INCOME BEFORE TAXES 1,143 1,284
Applicable income taxes 270 398
------------------------------------
NET INCOME $ 873 886
====================================
Per share:
Net income - basic $ 0.51 0.52
Net income - diluted $ 0.51 0.52
Dividends $ 0.21 0.19
Average number of common
shares outstanding 1,707,661 1,691,132
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
- -------------------------------------------------------------------------------------------------------
March 31, March 31,
(000's omitted) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK
Balance, beginning of period $ 3,555 $ 3,521
Issuance of shares under
Director stock purchase plan,
stock purchase plan, and
dividend reinvestment program 10 8
---------------- ---------------
Balance, end of period 3,565 3,529
SURPLUS
Balance, beginning of period 18,317 17,644
Issuance of shares under
director stock purchase plan,
stock purchase plan, and
dividend reinvestment program 157 163
---------------- ---------------
Balance, end of period 18,474 17,807
RETAINED EARNINGS
Balance, beginning of period 11,078 8,664
Net income 873 886
Cash dividends declared (357) (324)
---------------- ---------------
Balance, end of period 11,594 9,226
UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE
Balance, beginning of period (1,085) 193
Change in unrealized gain (loss)
on securities, net of tax (302) (190)
---------------- ---------------
Balance, end of period (1,387) 3
---------------- ---------------
TOTAL SHAREHOLDERS' EQUITY $ 32,246 $ 30,565
================ ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
Fentura Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- ----------------------------------------------------------------------------------------
(000's omitted,
Except Per Share Data) 2000 1999
- ----------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $873 $886
Adjustments to reconcile net income to cash
Provided by Operating Activities:
Depreciation and amortization 246 200
Provision for loan losses 150 195
Amortization (accretion) on securities (12) (4)
Loans originated for sale (641) (1,141)
Loans sold 626 1,057
Gain on investment securities 0 (26)
Decrease (increase) in interest receivable (211) 230
Decrease (increase) in other assets 1,047 (1,445)
Increase (decrease) in accrued taxes,
interest, and other liabilities 87 (433)
------------------------
Total Adjustments 1,292 (1,367)
------------------------
Net Cash Provided By (Used In) Operating Activities 2,165 (481)
------------------------
Cash Flows From Investing Activities:
Net decrease in deposits with other banks 0 0
Proceeds from maturities of investment activities - HTM 20 20
Proceeds from maturities of investment activities - AFS 786 34,291
Purchases of investment securities - HTM 0 0
Purchases of investment securities - AFS 0 (21,893)
Net (increase) in customer loans (6,924) (1,578)
Capital expenditures (1,163) (234)
------------------------
Net Cash Used in Investing Activities (7,281) 10,606
Cash Flows From Financing Activities:
Net increase (decrease) in DDA/SAV deposits 791 (4,639)
Net increase (decrease) in Time deposits 6,142 (4,234)
Net increase (decrease) in borrowing's 13,220 164
Proceeds from stock issuance 167 171
Cash dividends (357) (324)
------------------------
Net Cash Provided By (Used In) Financing Activities 19,963 (8,862)
NET INCREASE IN CASH AND CASH EQUIVALENTS $14,847 $1,263
CASH AND CASH EQUIVALENTS - BEGINNING $13,614 $18,158
CASH AND CASH EQUIVALENTS - ENDING $28,461 $19,421
========================
CASH PAID FOR:
INTEREST $2,186 $2,384
INCOME TAXES $0 $60
</TABLE>
See notes to consolidated financial statements.
<PAGE> 8
Fentura Bancorp, Inc. and Subsidiaries
Statement of Comprehensive Income
<TABLE>
<CAPTION>
Three Months Ended
(000's Omitted) March 31,
2000 1999
----------------------------
<S> <C> <C>
Net Income $873 $886
Other comprehensive income, net of tax:
Unrealized holding gains arising
during period ($302) ($164)
Less: reclassification adjustment for $0
gains included in net income $0 $26
----------------------------
Other comprehensive income ($302) ($190)
----------------------------
Comprehensive income $571 $696
============================
</TABLE>
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 - 10Q
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 three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2000.
Note 2. Reclassifications
On April 26, 2000 the Corporation declared a 20% stock dividend payable
on May 26, 2000, to the stockholders of record as of April 26, 2000.
Accordingly, the per share amounts for March 31, 1999, and March 31,
2000, have been retroactively adjusted to reflect the effect of the
dividend.
Note 3. On March 13, 2000, Fentura Bancorp's subsidiary The State Bank
spun off two of its existing branches in Davison Michigan to create a
De Novo Bank (Davison State Bank). Davison State Bank is a wholly owned
subsidiary of Fentura Bancorp, Inc. This transaction did not have any
effect on the consolidated financial statements.
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This item provides a narrative discussion and analysis of the consolidated
financial condition and results of operations of Fentura Bancorp, Inc. (the
Corporation), together with its operating subsidiaries, The State Bank and
Davison State Bank (the Banks), for the three months ended March 31, 2000 and
1999. The supplemental financial data included throughout should be read in
conjunction with the primary financial statements presented on pages 3 through
8. It provides a more detailed and comprehensive review of the operating results
and financial position than could be obtained from the financial statements
alone.
<TABLE>
<CAPTION>
Table 1 Selected Financial Data Three Months Ended
March 31,
$ in thousands except per share data
and ratios 2000 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Summary of Consolidated Statements of Earnings:
Interest Income $5,539 $5,083
Interest Expense 2,296 1,955
----------------------------------
Net Interest Income 3,243 3,128
Provision for Possible Credit Losses 169 195
----------------------------------
Net Interest Income after Provision 3,074 2,933
Total Other Operating Income 951 1,026
Total Other Operating Expense 2,882 2,675
----------------------------------
Income Before Income Taxes 1,143 1,284
Provision for Income Taxes 270 398
----------------------------------
Net Income $873 $886
==================================
Net Income Per Share - Basic $0.51 $0.52
Net Income Per Share - Diluted $0.51 $0.52
Summary of Consolidated Statements of Financial Condition:
Assets $304,242 $266,448
Securities 66,635 65,242
Loans 198,120 173,947
Deposits 253,984 232,232
Stockholders' Equity 32,246 30,565
Other Financial and Statistical Data:
Tier 1 Capital to Risk Weighted Assets 13.58% 13.67%
Total Capital to Risk Weighted Assets 14.82% 14.92%
Tier 1 Capital to Average Assets 11.71% 11.38%
Total Cash Dividends $357 $324
Book Value Per Share $18.85 $18.04
Cash Dividends Paid Per Share $0.21 $0.23
Period End Market Price Per Share $28.10 $43.20
Dividend Pay-out Ratio 40.89% 36.57%
Return on Average Stockholders' Equity 10.73% 11.51%
Return on Average Assets 1.22% 1.32%
Net Interest Margin (FTE) 5.01% 5.12%
Total Equity to Assets at Year End 10.60% 11.47%
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
Results of Operations
Table 1 summarizes selected financial data for the three months ended March 31,
2000 and 1999. As indicated earnings for the three months ended March 31, 2000
were $873,000 compared to $886,000 for the same period in 1999. Earnings
decreased slightly as a result of increased operating expenses. Despite this
earnings decline, core banking activities and new opportunities in our current
and surrounding markets remain strong and accordingly, management believes
overall performance will remain strong throughout 2000.
The banking industry uses standard performance indicators to help evaluate the
Corporation's performance. Return on average assets is one of these indicators.
For the three months ended March 31, 2000 the Corporation's return on average
assets was 1.22% compared to 1.32% for the same period in 1999. Total assets
increased approximately $38,000,000 from March 31, 1999 to $304,242,000 at March
31, 2000. Stockholders' Equity increased approximately $1,700,000 from March 31,
1999 to $32,246,000 at March 31, 2000. The increase in equity will allow the
Corporation to continue its growth strategy. Net income per share-basic was $.51
in the first three months of 2000 compared to $.52 for the same period in 1999.
Net Interest Income
Net interest income and average balances and yields on major categories of
interest-earning assets and interest-bearing liabilities for the three months
ended March 31, 2000 and 1999 are summarized in Table 3. The effects of changes
in average interest rates and average balances are detailed in Table 2 below.
<TABLE>
<CAPTION>
Table 2 CHANGES IN NET INTEREST INCOME
DUE TO CHANGES IN AVERAGE VOLUME
AND INTEREST RATES
THREE MONTHS ENDED MARCH 31, THREE MONTHS ENDED MARCH 31,
2000 COMPARED TO 1999 1999 COMPARED TO 1998
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO: DUE TO:
-------------------------------------------------------------------------
YIELD/ YIELD/
(000'S OMITTED) VOL RATE TOTAL VOL RATE TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST BEARING DEPOSITS IN BANKS 0 0 0 (1) 0 (1)
TAXABLE SECURITIES 3 55 58 126 (16) 110
TAX-EXEMPT SECURITIES 41 (5) 36 19 (3) 16
FEDERAL FUNDS SOLD (90) 21 (69) 126 (30) 96
TOTAL LOANS 716 (104) 612 (337) (180) (517)
LOANS HELD FOR SALE (182) 1 (181) 108 (25) 83
-------------------------------------------------------------------------
TOTAL EARNING ASSETS 488 (32) 456 41 (254) (213)
INTEREST BEARING DEMAND DEPOSITS (9) 9 0 40 (55) (15)
SAVINGS DEPOSITS 33 119 152 34 (69) (35)
TIME CD'S $100,000 AND OVER 87 29 116 (1) (44) (45)
OTHER TIME DEPOSITS 15 13 28 (62) (82) (144)
OTHER BORROWINGS 43 2 45 (12) (2) (14)
-------------------------------------------------------------------------
TOTAL INTEREST BEARING LIABILITIES 169 172 341 (1) (252) (253)
-------------------------------------------------------------------------
NET INTEREST INCOME $319 ($204) $115 $42 ($2) $40
=========================================================================
</TABLE>
<PAGE> 11
As indicated in Table 2, during the three months ended March 31, 2000, net
interest income increased over the same period in 1999, principally due to the
increase in interest income from loan growth.
Net interest income (displayed without consideration of full tax equivalency),
average balance sheet amounts, and the corresponding yields for the three months
ended March 31, 2000 and 1999 are shown in Table 3. Net interest income for the
three months ended March 31, 2000 was 3,243,000 an increase of $115,000 over the
same period in 1999. This represents an increase of 3.7%. The primary factor
contributing to the net interest income increase is an increase in interest
income from loan growth. Also indicated in Table 3, for the three months ended
March 31, 1999 net interest income was $3,128,000. This is an increase of
$40,000 or 1.3% over the same period in 1998. The increase in 1999 is
attributable to the reduction of interest expense due to lower rates paid on
savings, interest bearing checking deposits, and time deposits.
Management expects a continued strong local economy throughout 2000 and because
of this believes loan demand will remain strong. Accordingly, the Corporation
will aggressively seek out new loan opportunities while continuing to maintain
sound credit quality. Management also believes that continued loan growth will
increase net interest income in 2000.
As indicated in Table 3, for the three months ended March 31, 2000, the
Corporation's net interest margin (without consideration of full tax
equivalency) was 4.90% compared with 5.06% for the same period in 1999. This
decline is attributable to an increase in the overall cost of funds within
deposits. The Corporation's cost of funds was increased along with increases in
market interest rates.
Average earning assets increased 6.2% or approximately $15,651,000 comparing the
first quarter of 2000 to the same time period in 1999. Loans, the highest
yielding component of earning assets, represented 72.8% of earning assets in
2000 compared to 69.5% in 1999. Average interest bearing liabilities increased
6.2% or $13,000,000 comparing the first quarter of 2000 to the same time period
in 1999. Non-interest bearing deposits amounted to 12.1% of average earning
assets in the first quarter of 2000 compared with 11.0% in the same time period
on 1999.
Management continually monitors the Corporation's balance sheet to insulate net
interest income from significant swings caused by interest rate volatility. If
market rates continue to change in 2000, corresponding changes in funding costs
will be considered to avoid any potential negative impact on net interest
income. The Corporation's policies in this regard are further discussed in the
section titled "Interest Rate Risk".
<PAGE> 12
<TABLE>
<CAPTION>
Table 3 THREE MONTHS ENDED MARCH 31,
AVERAGE BALANCES AND RATES 2000 1999
(000'S omitted) AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
ASSETS BALANCE EXPENSE RATE BALANCE EXPENSE RATE
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits in Banks $0 $0 0.00% $0 $0 0.00%
Investment securities:
U.S. Treasury and Government Agencies 51,728 824 6.41% 51,357 767 6.06%
State and Political 14,764 171 4.66% 11,360 135 4.82%
Other 1,077 16 5.98% 1,264 15 4.81%
-------------------------------- --------------------------------
Total Investment Securities 67,569 1,011 6.02% 63,981 917 5.81%
Fed Funds Sold 4,745 75 6.36% 12,556 144 4.65%
Loans:
Commercial 102,018 2,368 9.34% 85,745 1,963 9.28%
Tax Free 588 9 6.16% 296 4 5.48%
Real Estate-Mortgage 25,316 535 8.50% 15,731 388 10.00%
Consumer 65,816 1,538 9.40% 61,727 1,483 9.74%
-------------------------------- --------------------------------
Total loans 193,738 4,450 9.24% 163,499 3,838 9.52%
Allowance for Loan Loss (2,984) (2,828)
Net Loans 190,754 4,450 9.38% 160,671 3,838 9.69%
-------------------------------- --------------------------------
Loans Held for Sale 184 3 6.56% 10,549 184 7.07%
-------------------------------- --------------------------------
TOTAL EARNING ASSETS $266,236 $5,539 8.37% $250,585 $5,083 8.23%
-------------------------------------------------------------------
Cash Due from Banks 10,732 9,960
All Other Assets 13,190 10,959
----------- -----------
TOTAL ASSETS $287,174 $268,676
----------- -----------
LIABILITIES & SHAREHOLDERS' EQUITY:
Deposits:
Non-Interest bearing - DDA $32,174 $27,625
Interest bearing - DDA 41,030 187 1.83% 43,024 187 1.76%
Savings Deposits 67,777 576 3.42% 62,881 424 2.73%
Time CD's $100,000 and Over 31,926 450 5.67% 25,384 334 5.34%
Other Time CD's 76,040 1,006 5.32% 74,896 978 5.30%
-------------------------------- --------------------------------
Total Deposits 248,947 2,219 3.59% 233,810 1,923 3.34%
Other Borrowings 4,230 77 7.32% 1,818 32 7.14%
-------------------------------- --------------------------------
INTEREST BEARING LIABILITIES $221,003 $2,296 4.18% $208,003 $1,955 3.81%
-------------------------------------------------------------------
All Other Liabilities 1,446 2,255
Shareholders Equity 32,551 30,793
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $287,174 $268,676
----------- --------- ----------- ---------
Net Interest Rate Spread 4.19% 4.41%
Impact of Non-Interest Bearing Funds on Margin 0.71% 0.65%
--------- ---------
Net Interest Income/Margin $3,243 4.90% $3,128 5.06%
===================== =====================
</TABLE>
<PAGE> 13
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 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 March 31, 2000, the ALL was $3,046,000, or
1.54% of total loans, including those loans held for sale. This compares with
$2,850,000, or 1.64%, at March 31, 1999. The reduction of the ALL as a
percentage of total loans reflects improved overall asset quality and increased
loan totals.
The provision for possible credit losses was $169,000 in the first three months
of 2000 and $195,000 for the same time period in 1999. The Bank decreased the
provision in 2000 comparing to 1999 because of an overall improvement in asset
quality and a reduction in loans charged-off.
Table 4 summarizes loan losses and recoveries from the first quarter of 1999 and
2000. During the first three months of 2000 the Corporation experienced net
charge-offs of $84,000, compared with net charge-offs of $128,000 for the same
time period in 1999. Accordingly, the net charge-off ratio for the first quarter
of 2000 was .04% compared to .08% for the same time period in 1999. The net
charge-off ratio decreased in 2000 due to an increase in overall asset quality
and increased loan totals.
The Corporation maintains formal policies and procedures to control and monitor
credit risk. Management believes the allowance for possible credit losses is
adequate to meet normal credit risks in the loan portfolio. The Corporation's
loan portfolio has no significant concentrations in any one industry nor any
exposure in foreign loans. The Corporation has not extended credit to finance
highly leveraged transactions nor does it intend to do so in the future.
Employment levels and other economic conditions in the Corporation's local
markets may have a significant impact on the level of credit losses. Management
continues to identify and devote attention to credits that may not be performing
as agreed. Therefore, in light of the aforementioned, and strong economic
conditions and asset quality, management expects a modest reduction to the
allowance for loan losses as a percentage to gross loans in 2000. Non-performing
loans are discussed further in the section titled "Non-Performing Assets".
Table 4 ANALYSIS OF THE ALLOWANCE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
Three Months Ended
(000's omitted) March 31,
2000 1999
------------------------------
<S> <C> <C>
Balance at Beginning of Period $2,961 $2,783
------------------------------
Charge-Offs:
Commercial, Financial and Agriculture (9) (72)
Real Estate-Mortgage 0 (2)
Installment Loans to Individuals (99) (88)
Lease Financing 0 0
------------------------------
Total Charge-Offs (108) (162)
------------------------------
Recoveries:
Commercial, Financial and Agriculture 1 6
Real Estate-Mortgage 0 0
Installment Loans to Individuals 23 28
Lease Financing 0 0
------------------------------
Total Recoveries 24 34
------------------------------
Net Charge-Offs (84) (128)
------------------------------
Provision 169 195
------------------------------
Balance at End of Period $3,046 $2,850
==============================
Ratio of Net Charge-Offs During the Period 0.04% 0.08%
==============================
</TABLE>
<PAGE> 14
NON-INTEREST INCOME
TABLE 5
<TABLE>
<CAPTION>
Three Months Ended
Analysis of Non-Interest Income March 31,
- -------------------------------------------------------------------------
(000's omitted)
2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
Service Charges on Deposit Accounts $467 $476
Gain on Sale of Mortgages $13 $52
Mortgage Servicing Fees $65 $76
Fiduciary Income $162 $155
Other Operating Income $244 $241
Investment Gains $0 $26
------------------------
Total Non-Interest Income $951 $1,026
========================
</TABLE>
Non-interest income decreased in the three months ended March 31, 2000 as
compared to the same period in 1999, due to an decrease in the gain on sale of
mortgage loans, a decrease in service charges on deposit accounts, and a
decrease in investment gains. Overall non-interest income was $951,000 in the
three months ended March 31, 2000 compared to $951,000 for the same period in
1999. These figures represent an decrease of 7.3%. Table 5 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 $467,000 in the three months ended March 31,
2000 compared to $476,000 for the same period of 1999. This represents an
decrease of 1.9%. An increase in average balances maintained in savings accounts
offsetting service charges, is the primary reason for the decline.
Gains on the sale of mortgage loans originated by the bank and sold in the
secondary market were $13,000 in the quarter ended March 31, 2000 and $52,000 in
the same period in 1999. The decrease occurred because of a decrease in
residential mortgage refinance activity and new loan volumes due to the upward
movement of market interest rates.
Mortgage servicing fees were $65,000 in the three months ended March 31, 2000
compared to $76,000 in the same time period in 1999. This is a decline of
$11,000 or 14.5%. The decline is attributable to lower serviced loan balances in
2000 due to payoffs throughout 1999 of serviced loans and the Corporation's
retention of certain new mortgages as opposed to selling those loans and
recognizing servicing fees during the same time period.
Fiduciary income increased $7,000 in the three months ended March 31, 2000
comparing to the same time period in the prior year. This 4.5% increase in fees
is attributed to growth in the assets under management within the Corporation's
Investment Trust Department.
Gains on the sale of investments were $26,000 in the first quarter of 1999.
These gains occurred from sales of investments which had lower yield potential
and longer maturities in connection with forecasts relating to yield curve
movements and the expected impact on market rates. Proceeds from these
transactions are being used to invest in other securities with stronger yields
within certain maturity horizons. During the first quarter of 2000 there were no
sales transactions of investment securities.
<PAGE> 15
Non-Interest Expense
TABLE 6
<TABLE>
<CAPTION>
Three Months Ended
Analysis of Non-Interest Expense March 31,
- -------------------------------------------------------------------------
(000's omitted)
2000 1999
- -------------------------------------------------------------------------
<S> <C> <C>
Salaries and Benefits $1,455 $1,328
Equipment $373 $341
Net Occupancy $202 $193
FDIC Assessment $12 $7
Office Supplies $74 $65
Loan & Collection Expense $121 $60
Advertising $55 $52
Other Operating Expense $590 $629
------------------------
Total Non-Interest Expense $2,882 $2,675
========================
</TABLE>
Total non-interest expense was $2,882,000 in the three months ended March 31,
2000 compared with $2,675,000 in the same period of 1999. This is a increase of
7.7%. This increase is largely attributable to an increase in salary and
benefits expense and an increase in loan and collection expenses.
Salary and benefit costs, Fentura's largest non-interest expense category, were
$1,455,000 in the three months ended March 31, 2000, compared with $1,328,000,
or an increase of 9.6%, for the same time period in 1999. Increased costs are
primarily a result of a change in the mix of full time and part time employees,
normal annual salary increases, and an increase in payroll taxes.
During the three months ended March 31, 2000 equipment expenses were $373,000
compared to $341,000 for the same period in 1999, an increase of 9.4%. The
increase in expense is attributable to equipment depreciation which increased
due to new equipment purchases including a new mainframe computer system.
Occupancy expenses at $202,000 increased in the three months ended March 31,
2000 comparing to the same period in 1999 by $9,000 or 4.7%. The increase is
attributable to increases in facility repairs and maintenance contracts expense.
During the three months ended March 31, 2000 office supplies expense at $74,000
increased $9,000 comparing to the $65,000 in expense for the same period in
1999. This increase is attributable to volume increases of regular office
supplies and preprinted forms in 2000.
Loan and collection expenses, at $121,000, were up $61,000 during the three
months ended March 31, 2000 comparing to the same time period in 1999. This
increase is primarily attributable to increases in dealer service fees paid in
connection with indirect lending and an increase in legal expenses in connection
with collection efforts.
Other operating expenses were $590,000 in the three months ended March 31, 2000
compared to $629,000 in the same time period in 1999, a decrease of $39,000 or
6.2%. The decrease is attributable to a decrease in deposit account charge-offs
and losses and a decrease in the Michigan Single Business Tax (SBT) accrual.
Deposit account losses were down in 2000 because of enhanced monitoring
procedures. The SBT accrual is lower in 2000 due to slightly lower earnings, an
increase in the capital acquisition deduction in connection with the purchase of
the mainframe computer system.
NONPERFORMING ASSETS
Non-performing assets include loans on which interest accruals have ceased,
loans which have been renegotiated, and real estate acquired through
foreclosure. Past due loans are loans which were delinquent 90 days or more, but
have not been placed on non-accrual status. Table 7 represents the levels of
these assets at March 31, 2000 and 1999.
<PAGE> 16
Non-performing assets increased modestly at March 31, 2000 compared to March 31,
1999. This increase is attributable to an increase in other real estate owned.
Other real estate owned has increased primarily due to a property acquired
through a relocation compensation agreement.
The level and composition of non-performing assets are affected by economic
conditions in the Corporation's local markets. Non-performing assets,
charge-offs, and provisions for possible credit losses tend to decline in a
strong economy and increase in a weak economy, potentially impacting the
Corporation's operating results. In addition to non-performing loans, management
carefully monitors other credits that are current in terms of principal and
interest payments but, in management's opinion, may deteriorate in quality if
economic conditions change.
Table 7
Non-Performing Assets and Past Due Loans
<TABLE>
<CAPTION>
March 31,
2000 1999
------------------------------
<S> <C> <C>
Non-Performing Loans:
Loans Past Due 90 Days or More & Still
Accruing $184,000 $182,000
Non-Accrual Loans 925,000 1,032,000
Renegotiated Loans 0 7,000
------------------------------
Total Non-Performing Loans 1,109,000 1,221,000
------------------------------
Other Non-Performing Assets:
Other Real Estate 377,000 172,000
REO in Redemption 0 96,000
Other Non-Performing Assets 73,000 30,000
------------------------------
Total Other Non-Performing Assets 450,000 298,000
------------------------------
Total Non-Performing Assets $1,559,000 $1,519,000
==============================
Non-Performing Loans as a % of
Total Loans 0.56% 0.75%
Non-Performing Assets as a % of
Total Loans and Other Real Estate 0.79% 0.93%
Allowance for Loan Losses as a % of
Non-Performing Loans 274.66% 233.42%
Allowance for Loan Losses, Other Real
Estate, and In-Substance Foreclosures
as a % of Non-Performing Assets 219.56% 198.95%
Accruing Loans Past Due 90 Days or
More to Total Loans 0.09% 0.11%
Non-performing Assets as a % of
Total Assets 0.51% 0.57%
</TABLE>
LIQUIDITY AND INTEREST RATE RISK MANAGEMENT
Asset/Liability management is 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. The ALCO, which is comprised of key members of
management, meets regularly to review 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 maintain earnings, liquidity, and growth rates consistent with
policy and prudent business standards.
Liquidity maintenance together with a solid capital base and strong earnings
performance are key objectives of the Corporation. The Corporation'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. The Bank's deposit base plus
other funding sources (federal funds purchased, other liabilities and
shareholders' equity) provided primarily all funding needs in the first three
months of 2000 and 1999. While these
<PAGE> 17
sources of funds are expected to continue to be available to provide funds in
the future, the mix and availability of funds will depend upon future economic
conditions. The Corporation does not foresee any difficulty in meeting its
funding requirements.
Primary liquidity is provided through short-term investments or borrowings
(including federal funds sold and purchased) while secondary liquidity is
provided by the investment portfolio. As of March 30, 2000 federal funds sold
represented 2.9% of total assets, compared to 3.6% at March 30, 1998. The
Corporation regularly monitors liquidity to ensure adequate cash flows to cover
unanticipated reductions in the availability of funding sources.
Interest rate risk is managed by controlling and limiting the level of earnings
volatility arising from rate movements. The Corporation regularly 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 is
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 increased $19,963,000 in first three months of 2000 due to the
increase in deposits and borrowings. Comparatively, in the first three months of
1999, cash flows from financing activities decreased $8,862,000 because of
decreases in deposit totals. Outward cash flows from investing activities were
$7,281,000 during the first three months of 2000. The increase in investing
activities at the end of the first quarter of 2000, were to fund new loan
growth.
CAPITAL MANAGEMENT
Total shareholders' equity rose 5.59% to $32,246,000 at March 31, 2000 compared
with $30,565,000 at March 31, 1999. The Company's equity to asset ratio was
10.6% at March 31, 2000 and 11.5% at March 31, 1999. The increase in the amount
of capital was obtained through retained earnings and the proceeds from the
issuance of new shares. In the first three months of 2000, the Corporation
increased its cash dividends by 10.5% to $.21 per share compared with $.19 in
the same time period in 1999.
As indicated on the balance sheet on page 4, at March 31, 1999 the Company had
an unrealized loss on securities available for sale (AFS) of $1,387,000 compared
to an unrealized gain at March 31, 1999 of $3,000. This decrease to an
unrecognized loss position is attributable to the upward movement of market
interest rates and the interest rate structures on those securities held in the
AFS portfolio.
Regulatory Capital Requirements
Bank holding companies and their bank subsidiaries are required by banking
industry regulators to meet certain levels of capital adequacy. These are
expressed in the form of certain ratios. Capital is separated into two levels,
Tier I capital (essentially total common stockholders' equity less goodwill) and
Tier II capital (essentially the reserve for loan losses limited to 1.25% of
gross risk-weighted assets). These ratios are based on the degree of credit risk
in the Corporation's assets. All assets and off-balance sheet items such as
outstanding loan commitments are assigned risk factors to create an overall risk
weighted asset total. Capital levels are then measured as a percentage of total
risk weighted assets. The regulatory minimum for Tier I capital to risk weighted
assets is 4% and the minimum for Total capital (Tier I plus Tier II) to risk
weighted assets is 8%. The Tier I leverage ratio measures Tier I capital to
average assets and must be a minimum of 4%. As reflected in Table 8, at March
31, 1999 and 2000, the Corporation was well in excess of the minimum capital and
leverage requirements necessary to be considered a "well capitalized" banking
company.
The FDIC has adopted a risk-based insurance premium system based in part on a
corporation's capital adequacy. Under this system a depository institution is
classified as well capitalized, adequately capitalized, or undercapitalized
according to its regulatory capital levels.
<PAGE> 18
Subsequently, a financial institution's premium levels are based on these
classifications and its regulatory supervisory rating (the higher the
classification the lower the premium). It is the Corporation's goal to maintain
capital levels sufficient to receive a designation of "well capitalized".
<TABLE>
<CAPTION>
Table 8 Capital Ratios
Regulatory Minimum For March 31, December 31, March 31,
"Well Capitalization" 2000 1999 1999
<S> <C> <C> <C> <C>
Risk Based Capital:
Total Capital 10% 14.82% 14.55% 14.92%
Tier 1 6% 13.58% 13.30% 13.67%
Tier 1 Leverage 5% 11.71% 12.03% 11.38%
</TABLE>
INTEREST RATE SENSITIVITY MANAGEMENT
Interest rate sensitivity management seeks to maximize net interest income as a
result of changing interest rates, within prudent ranges of risk. The
Corporation attempts to accomplish this objective by structuring the balance
sheet so that re-pricing opportunities exist for both assets and liabilities in
roughly equivalent amounts at approximately the same time intervals. Imbalances
in these re-pricing opportunities at any point in time constitute a bank's
interest rate sensitivity. The Corporation currently does not utilize
derivatives in managing interest rate risk.
An indicator of the interest rate sensitivity structure of a financial
institution's balance sheet is the difference between rate sensitive assets and
rate sensitive liabilities, and is referred to as "GAP".
Table 9 sets forth the distribution of re-pricing of the Corporation's earning
assets and interest bearing liabilities as of March 31, 2000, the interest rate
sensitivity GAP, as defined above, the cumulative interest rate sensitivity GAP,
the interest rate sensitivity GAP ratio (i.e. interest rate sensitive assets
divided by interest rate sensitive liabilities) and the cumulative sensitivity
GAP ratio. The table also sets forth the time periods in which earning assets
and liabilities will mature or may re-price in accordance with their contractual
terms.
<TABLE>
<CAPTION>
Table 9 GAP ANALYSIS MARCH 31, 2000
(000's Omitted) Within Three One to After
Three Months- Five Five
Months One Year Years Years Total
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earning Assets:
Interest Bearing Bank Deposits $0 $0 $0 $0 0
Federal Funds Sold 14,550 0 0 0 14,550
Investment Securities 1,778 3,663 31,649 29,545 66,635
Loans 63,634 10,527 82,801 40,963 197,925
Loans Held for Sale 195 0 0 0 195
------------------------------------------------------------
Total Earning Assets $80,157 $14,190 $114,450 $70,508 $279,305
============================================================
Interest Bearing Liabilities:
Interest Bearing Demand Deposits $39,911 $0 $0 $0 $39,911
Savings Deposits 24,613 0 0 45,857 70,470
Time Deposits Less than $100,000 17,828 35,871 21,869 63 75,631
Time Deposits Greater than $100,000 17,165 14,538 2,889 0 34,592
Federal Funds Purchased 14,050
Other Borrowings 546 0 40 1,113 1,699
------------------------------------------------------------
Total Interest Bearing Liabilities $114,113 $50,409 $24,798 $47,033 $222,303
============================================================
Interest Rate Sensitivity GAP ($33,956) ($36,219) $89,652 $23,475 $57,002
Cumulative Interest Rate
Sensitivity GAP ($33,956) ($70,175) $19,477 $42,952
Interest Rate Sensitivity GAP -0.70 -0.28 4.62 1.50
Cumulative Interest Rate
Sensitivity GAP Ratio -0.70 -0.57 1.10 1.18
</TABLE>
<PAGE> 19
As indicated in Table 9, the short-term (one year and less) cumulative interest
rate sensitivity gap is negative. Accordingly, if market interest rates
increase, this negative gap position would have a short- term negative impact on
interest margin. However, gap analysis is limited and may not provide an
accurate indication of the impact of general interest rate movements on the net
interest margin since the re-pricing of various categories of assets and
liabilities is subject to the Corporation's needs, competitive pressures, and
the needs of the Corporation's customers. In addition, various assets and
liabilities indicated as re-pricing within the same period may in fact re-price
at different times within such period and at different rates indices.
Additionally, simulation modeling, which measures the impact of upward and
downward movements of interest rates on interest margin and the market value of
equity, indicates that an upward movement of interest rates would not
significantly reduce net interest income.
FORWARD LOOKING STATEMENT
This discussion and analysis of financial condition and results of operations,
and other sections of the Financial Statements, contain forward looking
statements that are based on management's beliefs, assumptions, current
expectations, estimates and projections about the financial services industry,
the economy, and about the Corporation itself. Words such as "anticipates,"
"believes," "estimates," "expects," "forecasts," "intends," "is likely,"
"plans," "projects," variations of such words and similar expressions are
intended to identify such forward looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions ("Future Factors") which are difficult to predict with regard to
timing, extent, likelihood and degree of occurrence. Therefore, actual results
and outcomes may materially differ from what may be expressed or forecast in
such forward looking statements. The Corporation undertakes no obligation to
update, amend or clarify forward looking statements as a result of new
information, future events, or otherwise.
Future Factors that could cause a difference between an ultimate actual outcome
and a preceding forward looking statement include, but are not limited to,
changes in interest rate and interest rate relationships, demands for products
and services, the degree of competition by traditional and non-traditional
competitors, changes in banking laws or regulations, changes in tax laws, change
in prices, the impact of technological advances, government and regulatory
policy changes, the outcome of pending and future litigation and contingencies,
trends in customer's behaviors as well as their ability to repay loans, and the
local economy.
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 4
No reports on Form 8-k were filed for the quarter ended March 31, 2000.
<PAGE> 20
FENTURA BANCORP, INC.
2000 Quarterly Report on Form 10Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Location
- -------- -------------------------------------------------------------------------- ---------
<S> <C> <C>
3(I) Articles of Incorporation of Fentura Bancorp, Inc. *
3(ii) Bylaws of Fentura Bancorp, Inc. *
4.1 Dividend Reinvestment Plan *****
10.1 Equipment Sale Agreement between The State Bank and ITI, Inc. dated May 31, 1989 *
10.2 Master Equipment Lease Agreement between The State Bank and
Unisys Finance Corporation dated September 6, 1989 *
10.3 Software License Agreement between The State Bank and ITI, Inc.
dated July 3, 1989 *
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 Lease of Clarkston Branch Site between The State Bank and Waldon
Properties, Inc. dated January 24, 1994 ***
10.9 Lease of Site for Automated Teller Machines between The State Bank and
Russell and Joy Manser dated December 1, 1994 ***
10.10 Lease of Fenton Silver Parkway Branch site between The State Bank and
VG's Food Centers dated March 26, 1996 ****
10.11 Lease of Davison (second) Branch site between The State Bank and
VG'S Food Centers dated November 12, 1996 ******
10.12 Directors Stock Purchase Plan *****
10.13 Non-Employee Director Stock Option Plan *****
10.14 Form of Non-Employee Director Stock Option Agreement *****
10.15 Retainer Stock Plan for Directors *****
10.16 Employee Stock Option Plan *****
10.17 Form of Employee Stock Option Plan Agreement *****
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C>
10.18 Executive Stock Bonus Plan *****
10.19 Stock Purchase Plan between The State Bank and Donald E.
Johnson, Jr., Mary Alice J. Heaton, and Linda J. LeMieux dated
November 27, 1996 ******
10.20 Severance Compensation Agreement between the registrant and *******
Donald L. Grill dated March 20, 1997
13.00 Rule 14a-3 Annual Report to Security Holders
21.1 Subsidiaries of the Registrant
27.0 Financial Data Schedule
</TABLE>
* Incorporated by reference to form 10-SB registration number 0-23550
** Incorporated by reference to form 8-K filed July 8, 1994
*** Incorporated by reference to form 10K-SB filed March 20, 1995
**** Incorporated by reference to form 10Q-SB filed May 2, 1996
***** Incorporated by reference to form 10K-SB filed March 27, 1996
****** Incorporated by reference to form 10K-SB filed March 20, 1997
******* Incorporated by reference to form 10Q-SB filed May 12, 1997
<PAGE> 22
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 May 12, 2000 By /s/ Donald L. Grill
------------ --------------------
Donald L. Grill
Director
President & CEO
Date May 12, 2000 By /s/ Ronald L. Justice
------------ -----------------------
Ronald L. Justice
Senior Vice President (Authorized Signer)
Chief Financial Officer
Cashier
<PAGE> 23
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 13,911
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,958
<INVESTMENTS-CARRYING> 13,677
<INVESTMENTS-MARKET> 13,536
<LOANS> 198,120
<ALLOWANCE> 3,046
<TOTAL-ASSETS> 304,242
<DEPOSITS> 253,984
<SHORT-TERM> 14,586
<LIABILITIES-OTHER> 2,263
<LONG-TERM> 1,163
0
0
<COMMON> 3,565
<OTHER-SE> 28,681
<TOTAL-LIABILITIES-AND-EQUITY> 304,242
<INTEREST-LOAN> 4,453
<INTEREST-INVEST> 1,011
<INTEREST-OTHER> 75
<INTEREST-TOTAL> 5,539
<INTEREST-DEPOSIT> 2,219
<INTEREST-EXPENSE> 2,296
<INTEREST-INCOME-NET> 3,243
<LOAN-LOSSES> 169
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,882
<INCOME-PRETAX> 1,143
<INCOME-PRE-EXTRAORDINARY> 1,143
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 873
<EPS-BASIC> .51
<EPS-DILUTED> .51
<YIELD-ACTUAL> 8.37
<LOANS-NON> 925
<LOANS-PAST> 184
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,961
<CHARGE-OFFS> 108
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 3,046
<ALLOWANCE-DOMESTIC> 3,046
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
