10-Q 1 e10-q.txt FORM 10-Q 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 June 30, 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: August 08, 2000 Class - Common Stock Shares Outstanding - 1,713,912 2 Fentura Bancorp, Inc. Index to Form 10-Q
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 21
3 PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Fentura Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited)
---------------------------------------------------------------------------------------------------- JUNE 30, DEC. 31, (000's omitted Except Per Share Data) 2000 1999 ---------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 14,154 12,714 Federal funds sold 12,600 900 ------------------------------- Total Cash & Cash Equivalents 26,754 13,614 Interest bearing deposits with banks 0 0 Investment securities-held to maturity, at cost (market value of $13,237, and $13,774 at June 30, 2000 and December 31, 1999, respectively) 13,339 13,922 Investment securities-avail for sale, at market 52,515 53,964 ------------------------------- Total investment securities 65,854 67,886 Loans: Commercial 89,167 92,359 Tax exempt development loans 454 537 Real estate loans - mortgage 21,359 21,409 Real estate loans - construction 21,570 12,481 Consumer loans 68,724 64,280 ------------------------------- Total loans 201,274 191,066 Less: Reserve for loan losses (3,257) (2,961) ------------------------------- Net loans 198,017 188,105 Loans held for sale 204 180 Bank premises and equipment 5,842 5,200 Accrued interest receivable 1,888 1,687 Other assets 5,640 6,949 ------------------------------- Total assets $ 304,199 283,621 ===============================
4 LIABILITIES Deposits: Non-interest bearing deposits $ 35,518 31,524 Interest bearing deposits 217,796 215,527 ------------------------------- Total deposits 253,314 247,051 Federal Funds Purchased 13,300 0 Other borrowings 2,664 2,529 Accrued taxes, interest and other liabilities 2,003 2,176 ------------------------------- Total liabilities 271,281 251,756 ------------------------------- STOCKHOLDERS' EQUITY Common stock - $2.5 par value 1,713,912 shares issued (1,422,045 in December 30, 1999) 4,285 3,555 Surplus 25,824 18,317 Retained Earnings 4,086 11,078 Accumulated other comprehensive income (loss) (1,277) (1,085) ------------------------------- Total stockholders' equity 32,918 31,865 ------------------------------- Total liabilities and stockholders' equity $ 304,199 283,621 ===============================
See notes to consolidated financial statements. 5 Fentura Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $ 4,728 4,320 9,181 8,342 Interest and dividends on investment securities: Taxable 829 706 1,669 1,488 Tax-exempt 165 134 336 269 Interest on federal funds sold 197 213 272 357 ------------------------------------------------------------- Total interest income 5,919 5,373 11,458 10,456 INTEREST EXPENSE Deposits 2,275 1,904 4,494 3,827 Other borrowings 216 11 272 21 Long-term borrowings 21 21 42 43 ------------------------------------------------------------- Total interest expense 2,512 1,936 4,808 3,891 NET INTEREST INCOME 3,407 3,437 6,650 6,565 Provision for loan losses 201 130 370 325 ------------------------------------------------------------- Net interest income after provision for loan losses 3,206 3,307 6,280 6,240 NON-INTEREST INCOME Service charges on dep accts 486 499 953 975 Fiduciary income 159 144 321 299 Other operating income 408 357 730 726 Investment gains 0 0 0 26 ------------------------------------------------------------- Total non-interest income 1,053 1,000 2,004 2,026 NON-INTEREST EXPENSE Salaries and benefits 1,486 1,421 2,941 2,749 Occupancy of bank premises 196 190 398 383 Equipment expense 408 342 781 683 Other operating expenses 986 937 1,838 1,750 ------------------------------------------------------------- Total non-interest expense 3,076 2,890 5,958 5,565 NET INCOME BEFORE TAXES 1,183 1,417 2,326 2,701 Applicable income taxes 353 437 623 835 ------------------------------------------------------------- NET INCOME $ 830 980 1,703 1,866 ============================================================= Per share: Net income - basic........... $ 0.48 0.58 1.00 1.10 Net income - diluted......... $ 0.48 0.58 0.99 1.10 Dividends ................... $ 0.21 0.19 0.42 0.38 Average number of common shares outstanding......... 1,711,525 1,698,764 1,709,593 1,694,970
See notes to consolidated financial statements. 6 Fentura Bancorp, Inc. and Subsidiaries Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
Six Months Six Months Ended Ended ------------------------------------------------------------------------------------------------------- June 30, June 30, (000's omitted) 2000 1999 ------------------------------------------------------------------------------------------------------- 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 17 22 Impact of 20% stock dividend 713 0 ---------------- --------------- Balance, end of period 4,285 3,543 SURPLUS Balance, beginning of period 18,317 17,644 Issuance of shares under director stock purchase plan, stock purchase plan, and dividend reinvestment program 240 437 Impact of 20% stock dividend 7,267 0 ---------------- --------------- Balance, end of period 25,824 18,081 RETAINED EARNINGS Balance, beginning of period 11,078 8,664 Net income 1,703 1,866 Impact of 20% stock dividend (7,980) 0 Cash dividends declared (715) (650) ---------------- --------------- Balance, end of period 4,086 9,880 COMPREHENSIVE INCOME (LOSS) Balance, beginning of period (1,085) 193 Change in unrealized gain (loss) on securities, net of tax (192) (882) ---------------- --------------- Balance, end of period (1,277) (689) ---------------- --------------- TOTAL SHAREHOLDERS' EQUITY $ 32,918 $ 30,815 ================ ===============
See notes to consolidated financial statements. 7 Fentura Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows
Six Months Ended June 30, ---------------------------------------------------------------------------------------- (000's omitted, Except Per Share Data) 2000 1999 ---------------------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income $1,703 $1,866 Adjustments to reconcile net income to cash Provided by Operating Activities: Depreciation and amortization 510 406 Provision for loan losses 370 325 Amortization (accretion) on securities (25) (30) Loans originated for sale (2,995) (5,924) Loans sold 2,971 6,030 Gain on investment securities 0 (26) Decrease (increase) in interest receivable (201) 111 Decrease (increase) in other assets 1,408 (932) Increase (decrease) in accrued taxes, interest, and other liabilities (173) (666) -------------------- Total Adjustments 1,865 (706) -------------------- Net Cash Provided By (Used In) Operating Activities 3,568 1,160 -------------------- Cash Flows From Investing Activities: Net decrease in deposits with other banks 0 0 Proceeds from maturities of investment activities - HTM 248 185 Proceeds from maturities of investment activities - AFS 1,518 56,767 Purchases of investment securities - HTM 0 0 Purchases of investment securities - AFS 0 (51,636) Net (increase) in customer loans (10,282) (2,682) Capital expenditures (net of disposed) (1,152) (1,194) --------------------- Net Cash Used in Investing Activities (9,668) 1,440 Cash Flows From Financing Activities: Net increase (decrease) in DDA/SAV deposits 3,995 533 Net increase (decrease) in Time deposits 2,268 (4,491) Net increase (decrease) in borrowing's 13,435 893 Proceeds from stock issuance 257 458 Cash dividends (715) (650) -------------------- Net Cash Provided By (Used In) Financing Activities 19,240 (3,257) NET INCREASE IN CASH AND CASH EQUIVALENTS $13,140 ($657) CASH AND CASH EQUIVALENTS - BEGINNING $13,614 $18,158 CASH AND CASH EQUIVALENTS - ENDING $26,754 $17,501 ======================== CASH PAID FOR: INTEREST $4,670 $4,305 INCOME TAXES $627 $950
See notes to consolidated financial statements. 8 Fentura Bancorp, Inc. and Subsidiaries Statement of Comprehensive Income (Loss)
Six Months Ended (000's Omitted) June 30, 2000 1999 ---------------------------- Net Income $1,703 $1,866 Other comprehensive income, net of tax: Unrealized holding gains arising during period ($192) ($856) Less: reclassification adjustment for $0 gains included in net income $0 $26 ---------------------------- Other comprehenisive income ($192) ($882) ---------------------------- Comprehensive income $1,511 $984 ============================
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 six months ended June 30, 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 June 30, 1999 and June 30, 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 cosolidated financial statements. 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 and six months ended June 30, 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 1 Selected Financial Data
Six Months Ended June 30, $ in thousands except per share data and ratios 2000 1999 --------------------------------------------------------------------------------------------- Summary of Consolidated Statements of Earnings: Interest Income $11,458 $10,456 Interest Expense 4,808 3,891 ---------------------------------- Net Interest Income 6,650 6,565 Provision for Possible Credit Losses 370 325 ---------------------------------- Net Interest Income after Provision 6,280 6,240 Total Other Operating Income 2,004 2,026 Total Other Operating Expense 5,958 5,565 ---------------------------------- Income Before Income Taxes 2,326 2,701 Provision for Income Taxes 623 835 ---------------------------------- Net Income $1,703 $1,866 ================================== Net Income Per Share - Basic $1.00 $1.10 Net Income Per Share - Diluted $0.99 $1.10 Summary of Consolidated Statements of Financial Condition: Assets $304,199 $272,109 Securities 65,854 71,323 Loans 201,478 174,664 Deposits 253,314 237,147 Stockholders' Equity 32,918 30,815 Other Financial and Statistical Data: Tier 1 Capital to Risk Weighted Assets 13.85% 13.59% Total Capital to Risk Weighted Assets 15.10% 14.84% Tier 1 Capital to Average Assets 12.66% 10.81% Total Cash Dividends $715 $650 Book Value Per Share $19.21 $18.12 Cash Dividends Paid Per Share $0.42 $0.38 Period End Market Price Per Share $30.00 $45.00 Dividend Payout Ratio 41.98% 34.83% Return on Average Stockholders'Equity 10.40% 11.98% Return on Average Assets 1.16% 1.38% Net Interest Margin (FTE) 5.01% 5.35% Total Equity to Assets at Year End 10.82% 11.32%
10 Results of Operations Table 1 summarizes selected financial data for the six months ended June 30, 2000 and 1999. As indicated earnings for the six months ended June 30, 2000 were $1,703,000 compared to $1,866,000 for the same period in 1999. Earnings decreased 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 an institution's performance. Return on average assets is one of these indicators. For the six months ended June 30, 2000 the Coporation's return on average assets was 1.16% compared to 1.38% for the same period in 1999. Total assets increased approximately $32,000,000 from June 30, 1999 to $304,199,000 at June 30, 2000. Stockholders' Equity increased approximately $2,100,000 from June 30, 1999 to $32,918,000 at June 30, 2000. The increase in equity will allow the Corporation to continue its growth strategy. Net income per share-basic was $1.00 in the first six months of 2000 compared to $1.10 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 and six months ended June 30, 2000 and 1999 are summarized in Tables 3 and 4, respectively. The effects of changes in average interest rates and average balances are detailed in Table 2 below. Table 2 CHANGES IN NET INTEREST INCOME DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 2000 COMPARED TO 1999 2000 COMPARED TO 1999 INCREASE (DECREASE) INCREASE (DECREASE) DUE TO: DUE TO: ------------------------------------------------------------------------- YIELD/ YIELD/ (000'S OMITTED) VOL RATE TOTAL VOL RATE TOTAL ------------------------------------------------------------------------------------------------------------------------- INTEREST BEARING DEPOSITS IN BANKS 0 0 0 0 0 0 TAXABLE SECURITIES 59 64 123 63 118 181 TAX-EXEMPT SECURITIES 37 (6) 31 78 (11) 67 FEDERAL FUNDS SOLD (56) 40 (16) (147) 62 (85) TOTAL LOANS 907 (320) 587 1,619 (420) 1,199 LOANS HELD FOR SALE (179) 0 (179) (361) 1 (360) ------------------------------------------------------------------------- TOTAL EARNING ASSETS 768 (222) 546 1,252 (250) 1,002 INTEREST BEARING DEMAND DEPOSITS (4) 7 3 (57) 60 3 SAVINGS DEPOSITS 21 110 131 51 232 283 TIME CD'S $100,000 AND OVER 115 80 195 205 106 311 OTHER TIME DEPOSITS (2) 44 42 11 59 70 OTHER BORROWINGS 222 (17) 205 268 (18) 250 ------------------------------------------------------------------------- TOTAL INTEREST BEARING LIABILITIES 352 224 576 478 439 917 ------------------------------------------------------------------------- NET INTEREST INCOME $416 ($446) ($30) $774 ($689) $85 =========================================================================
11 As indicated in Table 2, during the six months ended June 30 2000, net interest income increased over the same period in 1999 principally due to the increase in the yield on earning assets as market interest rates increased. During the three months ended June 30, 2000, net interest income decreased over the same time period in 1999 because of an increase in rates paid on interest bearing deposit liabilities. Net interest income (displayed without consideration of full tax equivalency), average balance sheet amounts, and the corresponding yields for the three months ended June 30, 2000 and 1999 are shown in Table 3. Net interest income for the three months ended June 30, 2000 was $3,407,000 a decrease of $30,000 over the same period in 1999. This represents a decrease of .8%. The primary factors contributing to the net interest income decrease is an increase in interest expense. Interest expense increased because market interest rates rose during the period causing the Corporation to increase interest rates paid on certain deposit liabilities in order to remain competitive. Additionally, the Corporation experienced an increase in federal funds purchased due to the impact on the individual subsidiaries after the spin off transaction, and this also caused an increase in interest expense Net interest income (displayed without consideration of full tax equivalency), average balance sheet amounts, and the corresponding yields for the six months ended June 30, 2000 and 1999 are shown in Table 4. Net interest income for the six months ended June 30, 2000 was 6,650,000 an increase of $85,000 over the same period in 1999. This represents an increase of 1.3%. The primary factor contributing to the net interest income increase is an increase in interest income recognized from growth in loans and investment securities. 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 and 4, for the three and six months ended June 30, 2000, the Corporation's net interest margin (without consideration of full tax equivalency) was 4.89% compared with 5.47% and 5.27%, respectively for the same periods in 1999. These declines are attributable to an increase in the overall cost of funds within deposits. The Corporation's cost of funds increased along with increases in market interest rates. Average earning assets increased 8.8% or approximately $22,000,000 comparing the first half of 2000 to the same time period in 1999. Loans, the highest yielding component of earning assets, represented 72.2% on average earning assets in the six months ended June 30, 2000 compared to 65.3% for the same time period in 1999. Average interest bearing liabilities increased 8.8% or $18,400,000 comparing the first half of 2000 to the same time period in 1999. Non-interest bearing deposits amounted to 12.3% of average earning assets in the first half of 2000 compared with 11.2% 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 change in 2000, corresponding changes in funding costs would 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". 12 Table 3
AVERAGE BALANCES AND RATES THREE MONTHS ENDED JUNE 30, 2000 1999 -------------------------------- -------------------------------- (dollars in thousands) AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ ASSETS BALANCE EXPENSE RATE BALANCE EXPENSE RATE ------------------------------------------------------------------- Investment securities: U.S. Treasury and Government Agencies 50,635 814 6.47% 46,389 690 5.97% State and Political 14,398 165 4.61% 11,248 134 4.78% Other 1,077 15 5.60% 1,297 16 4.95% -------------------------------- -------------------------------- Total Investment Securities 66,110 994 6.05% 58,934 840 5.72% Fed Funds Sold 13,224 197 5.99% 17,969 213 4.75% Loans: Commercial 104,528 2,517 9.68% 88,849 2,330 10.52% Tax Free 548 7 5.14% 286 4 5.61% Real Estate-Mortgage 26,205 583 8.95% 13,808 324 9.41% Consumer 69,679 1,617 9.33% 61,779 1,479 9.60% -------------------------------- -------------------------------- Total loans 200,960 4,724 9.45% 164,722 4,137 10.07% Allowance for Loan Loss (3,156) (2,896) Net Loans 197,804 4,724 9.61% 161,826 4,137 10.25% -------------------------------- -------------------------------- Loans Held for Sale 201 4 8.00% 10,496 183 6.99% -------------------------------- -------------------------------- TOTAL EARNING ASSETS $280,495 $5,919 8.49% $252,121 $5,373 8.55% ------------------------------------------------------------------- Cash Due from Banks 11,251 10,099 All Other Assets 13,048 11,047 ----------- ----------- TOTAL ASSETS $301,638 $270,371 ----------- ----------- LIABILITIES & SHAREHOLDERS' EQUITY: Deposits: Non-Interest bearing - DDA $34,776 $28,588 Interest bearing - DDA 41,660 183 1.77% 42,533 180 1.70% Savings Deposits 68,122 585 3.45% 65,102 454 2.80% Time CD's $100,000 and Over 33,263 514 6.22% 24,431 319 5.24% Other Time CD's 74,302 993 5.38% 74,453 951 5.12% -------------------------------- -------------------------------- Total Deposits 252,123 2,275 3.63% 235,107 1,904 3.25% Other Borrowings 14,816 237 6.43% 1,860 32 6.90% -------------------------------- -------------------------------- INTEREST BEARING LIABILITIES $232,163 $2,512 4.35% $208,379 $1,936 3.73% ------------------------------------------------------------------- All Other Liabilities 1,277 1,900 Shareholders Equity 33,422 31,504 ----------- ----------- TOTAL LIABILITIES and S/H EQUITY $301,638 $270,371 ----------- --------- ----------- ---------- Net Interest Rate Spread 4.14% 4.82% Impact of Non-Int Bearing Funds on Margin 0.75% 0.65% --------- ---------- Net Interest Income/Margin $3,407 4.89% $3,437 5.47% ===================== =====================
13 Table 4
AVERAGE BALANCES AND RATES SIX MONTHS ENDED JUNE 30, 2000 1999 -------------------------------- --------------------------------- (dollars in thousands) AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ ASSETS BALANCE EXPENSE RATE BALANCE EXPENSE RATE -------------------------------------------------------------------- Investment securities: U.S. Treasury and Government Agencies 51,182 1,638 6.44% 48,873 1,457 6.01% State and Political 14,580 336 4.63% 11,304 269 4.80% Other 1,077 31 5.79% 1,281 31 4.88% -------------------------------- --------------------------------- Total Investment Securities 66,839 2,005 6.03% 61,458 1,757 5.77% Fed Funds Sold 8,984 272 6.09% 15,263 357 4.72% Loans: Commercial 103,273 4,885 9.51% 87,297 4,293 9.92% Tax Free 568 16 5.66% 291 8 5.54% Real Estate-Mortgage 25,761 1,118 8.73% 14,783 712 9.71% Consumer 67,747 3,155 9.37% 61,764 2,962 9.67% -------------------------------- --------------------------------- Total loans 197,349 9,174 9.35% 164,135 7,975 9.80% Allowance for Loan Loss (3,070) (2,862) Net Loans 194,279 9,174 9.50% 161,273 7,975 9.97% -------------------------------- --------------------------------- Loans Held for Sale 192 7 7.33% 10,498 367 7.05% -------------------------------- --------------------------------- TOTAL EARNING ASSETS $273,364 $11,458 8.43% $251,354 $10,456 8.39% -------------------------------------------------------------------- Cash Due from Banks 10,991 10,030 All Other Assets 13,119 11,003 ----------- ----------- TOTAL ASSETS $294,404 $269,525 ----------- ----------- LIABILITIES & SHAREHOLDERS' EQUITY: Deposits: Non-Interest bearing - DDA $33,718 $28,106 Interest bearing - DDA 41,449 370 1.80% 42,649 367 1.74% Savings Deposits 67,848 1,161 3.44% 64,122 878 2.76% Time CD's $100,000 and Over 32,586 964 5.95% 24,818 653 5.31% Other Time CD's 75,180 1,999 5.35% 74,764 1,929 5.20% -------------------------------- --------------------------------- Total Deposits 250,781 4,494 3.60% 234,459 3,827 3.29% Other Borrowings 9,517 314 6.63% 1,839 64 7.02% -------------------------------- --------------------------------- INTEREST BEARING LIABILITIES $226,580 $4,808 4.27% $208,192 $3,891 3.77% -------------------------------------------------------------------- All Other Liabilities 1,368 2,078 Shareholders Equity 32,738 31,149 ----------- ----------- TOTAL LIABILITIES and S/H EQUITY $294,404 $269,525 ----------- --------- ----------- ----------- Net Interest Rate Spread 4.16% 4.62% Impact of Non-Int Bearing Funds on Margin 0.73% 0.65% --------- ----------- Net Interest Income/Margin $6,650 4.89% $6,565 5.27% ===================== ======================
14 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 June 30, 2000, the ALL was $3,257,000, or 1.62% of total loans, including those loans held for sale. This compares with $2,920,000, or 1.67%, at June 30, 1999. The decrease in the ALL percentage of total loans is a result of the increase in loan balances. The provision for loan losses was $201,000 and $370,000 for the three and six months, respectively, ended June 30, 2000 and $130,000 and $325,000 for the same periods in 1999. The primary reason for increasing the provision in 2000 was to increase the allowance for loan losses because of the increase in loan balances and the increase in non-accrual loans. Table 5 ANALYSIS OF THE ALLOWANCE FOR POSSIBLE CREDIT LOSSES
Three Months Ended Six Months Ended (000's omitted) June 30, June 30, 2000 1999 2000 1999 ---------------------------------------------- Balance at Beginning of Period $3,046 $2,850 $2,961 $2,783 ---------------------------------------------- Charge-Offs: Domestic: Commercial, Financial and Agriculture 0 0 (9) (72) Real Estate-Mortgage 0 0 0 (2) Installment Loans to Individuals (77) (83) (176) (171) Lease Financing 0 0 0 0 ---------------------------------------------- Total Charge-Offs (77) (83) (185) (245) ---------------------------------------------- Recoveries: Domestic: Commercial, Financial and Agriculture 70 4 71 10 Real Estate-Mortgage 0 0 0 0 Installment Loans to Individuals 17 19 40 47 Lease Financing 0 0 0 0 ---------------------------------------------- Total Recoveries 87 23 111 57 ---------------------------------------------- Net Charge-Offs 10 (60) (74) (188) ---------------------------------------------- Provision 201 130 370 325 ---------------------------------------------- Balance at End of Period $3,257 $2,920 $3,257 $2,920 ============================================== Ratio of Net Charge-Offs During the Period 0.00% 0.14% 0.04% 0.22% ==============================================
NON-INTEREST INCOME TABLE 6
Three Months Ended Six Months Ended Analysis of Non-Interest Income June 30, June 30, ------------------------------------------------------------------------------------------------- (000's omitted) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------- Service Charges on Deposit Accounts $486 $499 $953 $975 Gain on Sale of Mortgages $52 $31 $65 $83 Mortgage Servicing Fees $63 $72 $128 $148 Fiduciary Income $159 $144 $321 $299 Other Operating Income $293 $254 $537 $495 Investment Gains $0 $0 $0 $26 ------------------------------------------------ Total Non-Interest Income $1,053 $1,000 $2,004 $2,026 ================================================
15 Non-interest income increased in the three months ended June 30, 2000 as compared to the same period in 1999 due to increases in other operating income and the gain on sale of mortgages. For the six months ended June 30, 2000 comparing to the same period in 1999 non-interest income decreased. This decline is primarily attributable to a decrease in service charges on deposit accounts and investment security gains. Overall non-interest income was $1,053,000 and $2,004,000 in the three and six months, respectively, ended June 30, 2000 compared to $1,000,000 and $2,026,000 for the same periods in 1999. Table 6 provides a more detailed breakdown of the components of non-interest income and the following discussion provides a detailed analysis of the changes from each period. The most significant category of non-interest income is service charges on deposit accounts. These fees were $486,000 in the three months ended June 30, 2000 and $953,000 in the six months ended June 30, 2000 compared to $499,000 and $975,000, respectively, for the same periods of 1999. These represent decreases of 2.6% and 2.3%, respectively. An increase in average balances maintained in savings accounts, offsetting service charges is the primary reason for the declines in 2000. Gains on the sale of mortgage loans originated by the bank and sold in the secondary market were $52,000 in the quarter ended June 30, 2000 and $31,000 in the same period in 1999. These gains were $65,000 in the six months ended June 30, 2000 and $83,000 in the same period of 1999. The increase in the quarter ended June 30, 2000 compared to 1999 is attributable to an increase in per loan profit margin on sold loans. Profit margins per loan increased because the Corporation began to sell loans in the secondary market with servicing released. For the six months end June 30, 2000, gains on sale of mortgage loans declined due to a reduction in the volume of loans sold during the period. Mortgage servicing fees were $63,000 and $128,000 for the three and six months ended June 30, 2000, respectively compared to $72,000 and $148,000 for the same periods, respectively, in 1999. The declines are attributable to lower serviced loan balances in 2000 due to payoffs throughout 1999 and the first half of 2000 and the Corporation's retention of certain new mortgages as opposed to selling those loans and recognizing servicing fees. Fiduciary income increased $15,000 in the three months ended June 30, 2000 and increased $22,000 in the six months ended June 30, 2000 comparing to the same time periods in the prior year. These 10.4% and 7.4%, respectively, increases in fees is attributed to growth in the assets under management within the Corporation's Investment Trust Department. Other operating income includes income from the sale of checks, safe deposit box rent, merchant account income, ATM income, and other miscellaneous income items. Other operating income was $293,000 for the three months ended June 30, 2000 and $254,000 for the same period in 1999. This is a increase of 15.4% compared to the same time period in 1999. For the six months ended June 30, 2000 other income was $537,000 compared to $495,000 to the same period in 1999. This is an increase of 8.5%. These increases occurred primarily because of an increase in fees paid to one subsidiary for support services. Gains on the sale of investments were $26,000 in the first half 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 half of 2000 there were no sales transactions of investment securities. 16 Non-Interest Expense TABLE 7
Three Months Ended Six Months Ended Analysis of Non-Interest Expense June 30, June 30, ------------------------------------------------------------------------------------------------- (000's omitted) 2000 1999 2000 1999 ------------------------------------------------------------------------------------------------- Salaries and Benefits $1,486 $1,421 $2,941 $2,749 Equipment $408 $342 $781 $683 Net Occupancy $196 $190 $398 $383 FDIC Assessment $13 $7 $25 $14 Office Supplies $87 $68 $161 $133 Loan & Collection Expense $85 $103 $206 $163 Advertising $71 $108 $126 $160 Other Operating Expense $730 $651 $1,320 $1,280 ------------------------------------------------ Total Non-Interest Expense $3,076 $2,890 $5,958 $5,565 ================================================
Total non-interest expense was $3,076,000 in the three months ended June 30, 2000 compared with $2,890,000 in the same period of 1999. This is an increase of 6.4%. For the six months ended June 30, 2000 non-interest expenses were $5,958,000 compared to $5,565,000 in the same time period of 1999, an increase of 7.1%. These increases occurred due to increases in salaries and benefits, equipment, and other operating expenses. Salary and benefit costs, Fentura's largest non-interest expense category, were $1,486,000 in the quarter ended June 30, 2000, compared with $1,421,000, or an increase of 4.6%, for the same time period in 1999. These costs were $2,941,000 in the six months ended June 30, 2000, and $2,749,000, or an increase of 7.0%, 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 June 30, 2000 equipment expenses were $408,000 compared to $342,000 for the same period in 1999, an increase of 19.3%. For the six months ended June 30, 2000 these expenses were $781,000 compared to $683,000 for the same time period in 1999, a increase of 14.3%. These increases in expense are attributable to an increase in equipment depreciation. Depreciation increased due to new equipment purchases including a new mainframe computer system. Occupancy expenses increased in both the three and six months ended June 30, 2000 comparing to the same periods in 1999. These expenses were $196,000 and $398,000 in the three and six months ended June 30, 2000, respectively, and $190,000 and $383,000 in the same periods, respectively, in 1999. This is a 3.2% increase in the three months ended June 30, 2000 compared to the same period in 1999, and a 3.9% increase in the six months ended June 30, 2000 compared to the same period in 1999. These modest increases are attributable to increases in facility repairs and maintenance contracts expenses. As indicated in Table 7, during the three and six months ended June 30, 2000 office supplies expense increased to $87,000 and $161,000, respectively, comparing to the same periods in 1999. These increases are attributable to volume increases of regular office supplies and preprinted forms including creating the initial supply of office products for the De Novo Bank. Loan and collection expenses decreased $18,000 to $85,000 in the three months ended June 30, 2000 an increase of 17.5% comparing to $103,000 for the same time period in 1999. This decrease is attributable to a decrease in dealer service fees paid in connection with indirect auto lending in the second quarter of 2000. For the six months ended June 30, 2000, loan and collection expenses were $206,000 compared to $163,000 for the same time period in 1999. This $43,000 decrease, or 26.4%, is attributable to an increase in dealer service fees paid in connection with indirect auto lending in the first quarter of 2000. 17 Advertising expenses were $71,000 and $126,000 for the three and six months ended June 30, 2000, respectively, compared to $108,000 and $160,000 for the same periods in 1999, respectively. This is an decrease of 34.3% for the three months ended June 30, 2000 comparing to the same period in 1999, and a decrease of 27.0% for the six months ended June 30, 2000 comparing to the same period in 1999. These decreases are attributable to an effort to control costs in shareholder communications, promotional activities, advertising expenses, and expenses connected with our senior citizens programs. Other operating expenses were $1,320,000 in the six months ended June 30, 2000 compared to $1,280,000 in the same time period in 1999, an increase of 3.1%. These expenses increased comparing the two periods primarily because of increases in fees paid for professional and support services. Professional fees in 2000 have included expenses to create and open the De Novo Bank subsidiary. 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 8 displays the levels of these assets at June 30, 2000 and 1999. Non-performing assets increased modestly at June 30, 2000 compared to June 30, 1999. This increase is attributable to an increase in non-accrual loans. Non-accrual loans increased due to one commercial account relationship. Agreements are in process that require specific action plans, collateral pledges, and related performance expectations for this relationship. The relationship will be closely monitored. While the non-accrual loan increase is of concern, overall asset quality remains strong. 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 8 Non-Performing Assets and Past Due Loans
June 30, 2000 1999 ------------------------------ Non-Performing Loans: Loans Past Due 90 Days or More & Still Accruing $172,000 $264,000 Non-Accrual Loans 1,058,000 359,000 Renegotiated Loans 0 6,000 ------------------------------ Total Non-Performing Loans 1,230,000 629,000 ------------------------------ Other Non-Performing Assets: Other Real Estate 89,000 172,000 REO in Redemption 0 182,000 Other Non-Performing Assets 24,000 4,000 ------------------------------ Total Other Non-Performing Assets 113,000 358,000 ------------------------------ Total Non-Performing Assets $1,343,000 $987,000 ============================== Non-Performing Loans as a % of Total Loans 0.61% 0.36% Non-Performing Assets as a % of Total Loans and Other Real Estate 0.67% 0.56% Allowance for Loan Losses as a % of Non-Performing Loans 264.80% 464.23% Allowance for Loan Losses, Other Real Estate, and In-Substance Foreclosures as a % of Non-Performing Assets 249.14% 331.71% Accruing Loans Past Due 90 Days or More to Loans 0.09% 0.15% Non-performing Assets as a % of Total Assets 0.44% 0.36%
18 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 determine that earnings, liquidity, and growth rates are 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 Bank'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 six months of 2000 and 1999. While these 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) and secondary liquidity is provided by the investment portfolio. As of June 30, 2000 federal funds sold represented 4.1% of total assets. 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 have increased in 2000 due to a increase in deposits and borrowings. Comparatively, in the first six months of 1999, cash flows from financing activities decreased because of a decrease in time deposit balances. Cash flows from investing activities were $9,668,000 during the first six months of 2000 and an inflow of $1,440,000 in the same period of 1999. The primary reason for the increase in investing activities in 2000 was growth of loan balances. In 1999 there was an inflow because investment maturities exceeded new investment purchases and growth of loan balances. CAPITAL MANAGEMENT Total shareholders' equity rose 6.8% to $32,918,000 at June 30, 2000 compared with $30,815,000 at June 30, 1999. The Company's equity to asset ratio was 10.8% at June 30, 2000 and 11.3% at June 30, 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 half of 2000, the Corporation increased its cash dividends per share by 10.5% to $.42 per share compared with $.38 in the first half of 1999. These per share amounts have been adjusted for the stock dividend in 2000. As indicated on the balance sheet on page 4, at June 30, 2000 the Company had an unrealized loss on securities available for sale (AFS) of $1,277,000 compared to an unrealized loss at June 30, 1999 of $689,000 reflected as accumulated other comprehensive losses. The increase in unrealized loss is attributable to market interest rates and the interest rate structures on those securities held in the AFS portfolio. 19 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 out-standing 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 June 30, 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. 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 9
----------------------------------------------------------------------------------------- Capital Ratios Regulatory Minimum For "Well June 30, December 31, June 30, Capitalization" 2000 1999 1999 ----------------------------------------------------------------------------------------- Risk Based Capital: Total Capital 10% 15.10% 14.55% 14.84% Tier 1 6% 13.85% 13.30% 13.59% Tier 1 Leverage 5% 12.66% 12.03% 10.81%
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 10 sets forth the distribution of re-pricing of the Corporation's earning assets and interest bearing liabilities as of June 30, 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. 20
Table 10 GAP ANALYSIS JUNE 30, 2000 (000's Omitted) Within Three One to After Three Months- Five Five Months One Year Years Years Total Earning Assets: Interest Bearing Bank Deposits $0 $0 $0 $0 0 Federal Funds Sold 12,600 0 0 0 12,600 Investment Securities 3,774 557 31,951 29,572 65,854 Loans 72,881 6,616 80,295 41,482 201,274 Loans Held for Sale 204 0 0 0 204 ------------------------------------------------------------ Total Earning Assets $89,459 $7,173 $112,246 $71,054 $279,932 ============================================================ Interest Bearing Liabilities: Interest Bearing Demand Deposits $40,280 $0 $0 $0 $40,280 Savings Deposits 23,685 0 0 46,628 70,313 Time Deposits Less than $100,000 13,414 36,508 23,845 64 73,831 Time Deposits Greater than $100,000 16,937 13,273 3,162 0 33,372 Federal Funds Purchased 13,300 0 0 0 13,300 Other Borrowings 1,500 0 40 1,124 2,664 ------------------------------------------------------------ Total Interest Bearing Liabilities $109,116 $49,781 $27,047 $47,816 $233,760 ============================================================ Interest Rate Sensitivity GAP ($19,657) ($42,608) $85,199 $23,238 $46,172 Cumulative Interest Rate Sensitivity GAP ($19,657) ($62,265) $22,934 $46,172 Interest Rate Sensitivity GAP -0.82 -0.14 4.15 1.49 Cumulative Interest Rate Sensitivity GAP Ratio -0.82 -0.61 1.12 1.20
As indicated in Table 10, 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 rate 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. 21 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, 2000. 22 FENTURA BANCORP, INC. 2000 Quarterly Report on Form 10Q EXHIBIT INDEX
Exhibit No. Exhibit Location ------- -------------------------------------------------------------------- ------------ 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 ***** 10.18 Executive Stock Bonus Plan *****
23 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 Agreements between the registrant and Donald L. Grill and Richard A. Bagnall dated March 20, 1997 ******* 27.0 Financial Data Schedule
* 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 from 10Q-SB filed May 12, 1997 24 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 10, 2000 By /s/ Donald L. Grill --------------- -------------------- Donald L. Grill Director President & CEO Date August 10, 2000 By /s/ Ronald L. Justice --------------- ---------------------- Ronald L. Justice Vice President (Authorized Signer) Chief Financial Officer Cashier 25 Exhibit Index Exhibit No. Description 27 Financial Data Schedule