Press Release

Fentura Financial, Inc. Announces Second Quarter 2019 Earnings

Company Release - 7/25/2019 4:32 PM ET

Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with June 30, 2019 presentation.

FENTON, Mich., July 25, 2019 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces continued strong earnings with net income of $3,097 and $5,611 for the three and six month periods ended June 30, 2019, respectively.

  • 22.99% increase in net income over the second quarter of 2018
  • 15.01% increase in gross loans since June 30, 2018
  • 12.89% increase in total deposits since June 30, 2018
  • 20.28% increase in tangible book value per share since June 30, 2018

Ronald L. Justice, President and CEO said, “I am pleased to report another quarter of strong earnings. This continued growth emphasizes our team's ability to execute our community focused growth strategy. I continue to be extremely proud of our team and their hard work and dedication towards expanding in the communities we serve.”

Following is a discussion and detailed analysis as of, and for the quarter ended, June 30, 2019. At the end of this document is a list of abbreviations and acronyms.

Results of Operations
The following table outlines the Corporation's QTD results of operations and provides certain performance measures as of, and for the three month periods ended:

 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
INCOME STATEMENT DATA         
Interest income$10,788  $10,437  $9,931  $9,311  $8,729 
Interest expense2,195  2,090  1,926  1,638  1,232 
Net interest income8,593  8,347  8,005  7,673  7,497 
Provision for loan losses264  213  290  191  301 
Noninterest income2,250  1,522  1,703  2,760  2,013 
Noninterest expenses6,691  6,509  6,907  6,075  6,049 
Federal income tax expense791  633  502  654  642 
Net income$3,097  $2,514  $2,009  $3,513  $2,518 
PER SHARE         
Earnings$0.67  $0.54  $0.46  $0.96  $0.69 
Dividends$0.07  $0.07  $0.06  $0.06  $0.06 
Tangible book value(1)$20.28  $19.58  $19.01  $17.75  $16.86 
Quoted market value         
High$20.90  $21.00  $22.02  $22.50  $21.15 
Low$20.45  $20.05  $20.94  $20.60  $19.32 
Close(1)$20.60  $20.89  $21.00  $21.15  $21.10 
PERFORMANCE RATIOS         
Return on average assets1.31% 1.09% 0.87% 1.61% 1.25%
Return on average shareholders' equity13.14% 11.09% 9.87% 21.27% 16.20%
Return on average tangible shareholders' equity14.36% 12.13% 10.96% 24.27% 18.62%
Efficiency ratio61.71% 65.95% 71.15% 58.23% 63.61%
Yield on earning assets (FTE)4.81% 4.77% 4.54% 4.53% 4.62%
Rate on interest bearing liabilities1.46% 1.40% 1.29% 1.15% 0.96%
Net interest margin to earning assets (FTE)3.83% 3.82% 3.66% 3.73% 3.97%
BALANCE SHEET DATA(1)         
Total investment securities$73,285  $82,222  $94,721  $79,531  $49,110 
Gross loans$813,547  $809,863  $772,227  $728,302  $707,364 
Total assets$949,790  $946,172  $926,450  $909,901  $841,459 
Total deposits$792,555  $789,533  $763,124  $766,587  $702,035 
Borrowed funds$54,000  $59,000  $69,000  $74,000  $74,000 
Total shareholders' equity$95,504  $92,236  $89,516  $66,340  $63,078 
Net loans to total deposits102.02% 101.97% 100.60% 94.46% 100.18%
Common shares outstanding4,653,343  4,647,978  4,636,455  3,645,402  3,640,060 
QTD BALANCE SHEET AVERAGES         
Total assets$947,095  $934,078  $917,242  $866,253  $805,794 
Earning assets$900,738  $887,974  $868,498  $817,110  $759,746 
Interest bearing liabilities$603,965  $604,973  $592,878  $565,908  $514,012 
Total shareholders' equity$94,519  $91,964  $80,781  $65,541  $62,333 
Total tangible shareholders' equity$86,478  $84,025  $72,742  $57,419  $54,254 
Earned common shares outstanding4,641,161  4,635,255  4,332,665  3,643,151  3,637,799 
Unvested stock grants9,967  9,788  3,022     
Total common shares outstanding4,651,128  4,645,043  4,335,687  3,643,151  3,637,799 
ASSET QUALITY(1)         
Nonperforming loans to gross loans0.13% 0.15% 0.14% 0.09% 0.14%
Nonperforming assets to total assets0.11% 0.13% 0.12% 0.09% 0.13%
ALLL to gross loans0.62% 0.59% 0.58% 0.57% 0.57%
CAPITAL RATIOS(1)         
Shareholders' equity to assets10.06% 9.75% 9.66% 7.29% 7.50%
Tier 1 leverage(2)12.47% 12.23% 12.15% 10.22% 10.11%
CET1 capital to risk weighted assets(2)12.47% 12.23% 12.15% 10.22% 10.11%
Tier 1 capital to average assets(2)10.28% 10.05% 9.90% 8.48% 8.70%
          
(1)At end of period         
(2)The State Bank         

The following table outlines the Corporation's YTD results of operations and provides certain performance measures as of, and for the six month periods ended:

         Variance
 6/30/2019 6/30/2018 Amount %
INCOME STATEMENT DATA              
Interest income$21,225  $17,108  $4,117  24.06%
Interest expense4,285  2,263  2,022  89.35%
Net interest income16,940  14,845  2,095  14.11%
Provision for loan losses477  576  (99) (17.19)%
Noninterest income3,772  3,814  (42) (1.10)%
Noninterest expenses13,200  12,328  872  7.07%
Federal income tax expense1,424  1,163  261  22.44%
Net income$5,611  $4,592  $1,019  22.19%
PER SHARE       
Earnings$1.21  $1.26  $(0.05) (3.97)%
Dividends$0.14  $0.12  $0.02  16.67%
Tangible book value(1)$20.28  $16.86  $3.42  20.28%
Quoted market value       
High$21.00  $21.15  $(0.15) (0.71)%
Low$20.05  $18.88  $1.17  6.20%
Close(1)$20.60  $21.10  $(0.50) (2.37)%
PERFORMANCE RATIOS       
Return on average assets1.20% 1.16%   0.04%
Return on average shareholders' equity12.14% 15.13%   (2.99)%
Return on average tangible shareholders' equity13.27% 17.44%   (4.17)%
Efficiency ratio63.73% 66.07%   (2.34)%
Yield on earning assets (FTE)4.79% 4.61%   0.18%
Rate on interest bearing liabilities1.43% 0.90%   0.53%
Net interest margin to earning assets (FTE)3.83% 4.00%   (0.17)%
BALANCE SHEET DATA(1)       
Total investment securities$73,285  $49,110  $24,175  49.23%
Gross loans$813,547  $707,364  $106,183  15.01%
Total assets$949,790  $841,459  $108,331  12.87%
Total deposits$792,555  $702,035  $90,520  12.89%
Borrowed funds$54,000  $74,000  $(20,000) (27.03)%
Total shareholders' equity$95,504  $63,078  $32,426  51.41%
Net loans to total deposits102.02% 100.18%   1.84%
Common shares outstanding4,653,343  3,640,060  1,013,283  27.84%
YTD BALANCE SHEET AVERAGES       
Total assets$940,585  $797,594  $142,991  17.93%
Earning assets$894,357  $749,755  $144,602  19.29%
Interest bearing liabilities$604,469  $509,294  $95,175  18.69%
Total shareholders' equity$93,239  $61,219  $32,020  52.30%
Total tangible shareholders' equity$85,249  $53,106  $32,143  60.53%
Earned common shares outstanding4,638,208  3,635,446  1,002,762  27.58%
Unvested stock grants9,878    9,878  N/M
Total common shares outstanding4,648,086  3,635,446  1,012,640  27.85%
ASSET QUALITY(1)       
Nonperforming loans to gross loans0.13% 0.14%   (0.01)%
Nonperforming assets to total assets0.11% 0.13%   (0.02)%
ALLL to gross loans0.62% 0.57%   0.05%
CAPITAL RATIOS(1)       
Shareholders' equity to assets10.06% 7.50%   2.56%
Tier 1 leverage(2)12.47% 10.11%   2.36%
CET1 capital to risk weighted assets(2)12.47% 10.11%   2.36%
Tier 1 capital to average assets(2)10.28% 8.70%   1.58%
        
(1)At end of period       
(2)The State Bank       
        

Income Statement Breakdown and Analysis

 Quarter to Date
 6/30/2019 3/31/2019  12/31/2018 9/30/2018 6/30/2018
GAAP net income$3,097  $2,514  $2,009  $3,513  $2,518 
Provision for loan losses (net of tax) 209   168   229   151   238 
Acquisition related items (net of tax)              
Accretion on purchased loans (145)  (175)  (167)  (116)  (255)
Amortization of core deposit intangible 90   89   107   107   107 
Amortization on acquired time deposits 7   7   9   9   9 
Amortization on purchased MSRs 3   3   6   6   6 
Total acquisition related items (net of tax) (45)  (76)  (45)  6   (133)
Other nonrecurring items (net of tax)              
Net gain from BOLI death benefit          (932)   
Total other nonrecurring items (net of tax)          (932)   
Adjusted net income from operations$ 3,261  $ 2,606  $ 2,193  $ 2,738  $ 2,623 
               
GAAP net interest income$ 8,593  $ 8,347  $ 8,005  $ 7,673  $ 7,497 
Accretion on purchased loans (183)  (222)  (211)  (147)  (323)
Amortization on acquired time deposits 9   9   12   12   12 
Adjusted net interest income$ 8,419  $ 8,134  $ 7,806  $ 7,538  $ 7,186 
               
PERFORMANCE RATIOS              
Based on adjusted net income from operations              
Earnings per share$ 0.70  $ 0.56  $ 0.51  $ 0.75  $ 0.72 
Return on average assets 1.38%  1.13%  0.95%  1.25%  1.31%
Return on average shareholders' equity 13.84%  11.49%  10.77%  16.57%  16.88%
Return on average tangible shareholders' equity 15.13%  12.58%  11.96%  18.92%  19.39%
               
Based on adjusted net interest income              
Yield on earning assets (FTE) 4.73%  4.67%  4.44%  4.46%  4.45%
Rate on interest bearing liabilities 1.47%  1.41%  1.30%  1.16%  0.97%
Net interest margin to earning assets (FTE) 3.75%  3.72%  3.57%  3.66%  3.81%


 Year to Date June 30 Variance
 2019 2018 Amount %
GAAP net income$5,611  $4,592  $1,019  22.19%
Provision for loan losses (net of tax)377  455  (78) (17.14)%
Acquisition related items (net of tax)       
Accretion on purchased loans(320) (505) 185  (36.63)%
Amortization of core deposit intangible179  214  (35) (16.36)%
Amortization on acquired time deposits13  18  (5) (27.78)%
Amortization on purchased MSRs6  12  (6) (50.00)%
Total acquisition related items (net of tax)(122) (261) 139  (53.26)%
Other nonrecurring items (net of tax)       
Net gain from BOLI death benefit      N/M
Total other nonrecurring items (net of tax)      N/M
Adjusted net income from operations$5,866  $4,786  1,080  22.57%
        
GAAP net interest income$16,940  $14,845  $2,095  14.11%
Accretion on purchased loans(405) (640) 235  (36.72)%
Amortization on acquired time deposits17  23  (6) (26.09)%
Adjusted net interest income$16,552  $14,228  $2,324  16.33%
        
PERFORMANCE RATIOS       
Based on adjusted net income from operations       
Earnings per share$1.26  $1.32  $(0.06) (4.55)%
Return on average assets1.26% 1.21%   0.05%
Return on average shareholders' equity12.69% 15.77%   (3.08)%
Return on average tangible shareholders' equity13.88% 18.17%   (4.29)%
        
Based on adjusted net interest income       
Yield on earning assets (FTE)4.70% 4.44%   0.26%
Rate on interest bearing liabilities1.44% 0.91%   0.53%
Net interest margin to earning assets (FTE)3.74% 3.83%   (0.09)%

To effectively compare core operating results from period to period, the impact of the provision for loan losses and acquisition related items have been isolated.

As outlined in the preceding tables, the Corporation has been able to generate strong net income and adjusted net income from operations.  The Corporation has also been successful at consistently increasing adjusted net interest income. This increase continues to be primarily driven through increases in loans while maintaining relatively healthy interest margins. Through 2019, the Corporation expects to see a continued increase in net interest income. This increase will primarily be driven by loan growth. The Corporation expects net interest margin to earning assets to approximate current levels due to the current, and anticipated future, interest rate environment.

Average Balances, Interest Rate, and Net Interest Income

The following tables present the daily average amount outstanding for each major category of interest earning assets, non-earning assets, interest bearing liabilities, and noninterest bearing liabilities. These tables also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances.

 Three Months Ended
 June 30, 2019 March 31, 2019 June 30, 2018
   Tax Average   Tax Average   Tax Average
 Average Equivalent Yield / Average Equivalent Yield / Average Equivalent Yield /
 Balance Interest Rate Balance Interest Rate Balance Interest Rate
Interest earning assets                 
Total loans$805,954  $10,141  5.05% $791,069  $9,741  4.99% $703,967  $8,433  4.80%
Taxable investment securities (1)67,237  462  2.76% 79,367  559  2.86% 37,763  198  2.10%
Nontaxable investment securities9,374  70  3.00% 10,582  76  2.91% 11,478  72  2.52%
Federal funds sold10,195  61  2.40% 43    % 1,320  6  1.82%
Cash4,828  28  2.33% 3,763  25  2.69% 2,265  10  1.77%
FHLB stock3,150  41  5.22% 3,150  52  6.69% 2,953  25  3.40%
Total earning assets900,738  10,803  4.81% 887,974  10,453  4.77% 759,746  8,744  4.62%
                  
Non-earning assets                 
ALLL(4,822)     (4,591)     (3,783)    
Fixed assets14,837      14,818      14,538     
Accrued income and other assets36,342      35,877      35,293     
Total assets$947,095      $934,078      $805,794     
                  
Interest bearing liabilities                 
Interest bearing demand deposits$75,496  $117  0.62% $73,414  $84  0.46% $58,997  $25  0.17%
Savings deposits243,794  319  0.52% 241,815  297  0.50% 238,862  124  0.21%
Time deposits229,863  1,319  2.30% 225,866  1,220  2.19% 147,620  603  1.64%
Borrowed funds54,812  440  3.22% 63,878  489  3.10% 68,533  480  2.81%
Total interest bearing liabilities603,965  2,195  1.46% 604,973  2,090  1.40% 514,012  1,232  0.96%
                  
Noninterest bearing liabilities                 
Noninterest bearing deposits243,010      234,268      227,459     
Accrued interest and other liabilities5,601      2,873      1,990     
Shareholders' equity94,519      91,964      62,333     
Total liabilities and shareholders' equity$947,095      $934,078      $805,794     
Net interest income (FTE)  $8,608      $8,363      $7,512   
Net interest margin to earning assets (FTE)    3.83%     3.82%     3.97%

(1) Includes taxable AFS securities and equity securities.

 Six Months Ended
 June 30, 2019 June 30, 2018
   Tax Average   Tax Average
 Average Equivalent Yield / Average Equivalent Yield /
 Balance Interest Rate Balance Interest Rate
Interest earning assets                     
Total loans$798,511  $19,882  5.02% $691,280  $16,471  4.80%
Taxable investment securities (1)73,303  1,021  2.81% 38,603  391  2.04%
Nontaxable investment securities9,977  146  2.95% 12,228  153  2.52%
Federal funds sold5,119  61  2.40% 2,547  19  1.50%
Cash4,297  53  2.49% 2,158  20  1.87%
FHLB stock3,150  93  5.95% 2,939  86  5.90%
Total earning assets894,357  21,256  4.79% 749,755  17,140  4.61%
            
Non-earning assets           
ALLL(4,706)     (3,714)    
Fixed assets14,827      14,560     
Accrued income and other assets36,107      36,993     
Total assets$940,585      $797,594     
            
Interest bearing liabilities           
Interest bearing demand deposits$74,454  $201  0.54% $61,861  $47  0.15%
Savings deposits242,805  616  0.51% 241,284  247  0.21%
Time deposits227,865  2,539  2.25% 148,509  1,174  1.59%
Borrowed funds59,345  929  3.16% 57,640  795  2.78%
Total interest bearing liabilities604,469  4,285  1.43% 509,294  2,263  0.90%
            
Noninterest bearing liabilities           
Noninterest bearing deposits238,640      224,357     
Accrued interest and other liabilities4,237      2,724     
Shareholders' equity93,239      61,219     
Total liabilities and shareholders' equity$940,585      $797,594     
Net interest income (FTE)  $16,971      $14,877   
Net interest margin to earning assets (FTE)    3.83%     4.00%

(1) Includes taxable AFS securities and equity securities.

Net Interest Income

Net interest income is the amount by which interest income on earning assets exceeds the interest expenses on interest bearing liabilities. Net interest income, which includes loan fees, is influenced by changes in the balance and mix of assets and liabilities and market interest rates. The Corporation exerts some control over these factors; however, FRB monetary policy and competition have a significant impact. For analytical purposes, net interest income is adjusted to a FTE basis by adding the income tax savings from interest on tax exempt loans, and nontaxable investment securities, thus making year to year comparisons more meaningful.

Volume and Rate Variance Analysis

The following table sets forth the effect of volume and rate changes on interest income and expense for the periods indicated. For the purpose of this table, changes in interest due to volume and rate were determined as follows:

   Volume - change in volume multiplied by the previous period's rate.
   Rate - change in the FTE rate multiplied by the previous period's volume.

The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

 Three Months Ended Three Months Ended Six Months Ended
 June 30, 2019 June 30, 2019 June 30, 2019
 Compared To Compared To Compared To
 March 31, 2019 June 30, 2018 June 30, 2018
 Increase (Decrease) Due to Increase (Decrease) Due to Increase (Decrease) Due to
 Volume Rate Net Volume Rate Net Volume Rate Net
Changes in interest income                                   
Total Loans$244  $156  $400  $1,256  $452  $1,708  $778  $2,633  $3,411 
Taxable Investment Securities(79) (18) (97) 188  76  264  186  444  630 
Nontaxable Investment Securities(20) 14  (6) (55) 53  (2) 52  (59) (7)
Fed Funds Sold  61  61  52  3  55  16  26  42 
Cash21  (18) 3  14  4  18  8  25  33 
FHLB Stock  (11) (11) 2  14  16  1  6  7 
Total changes in interest income166  184  350  1,457  602  2,059  1,041  3,075  4,116 
                  
Changes in interest expense                 
Interest Bearing Demand Deposits3  30  33  9  83  92  11  143  154 
Savings Deposits4  18  22  3  192  195  2  367  369 
Time Deposits26  73  99  416  300  716  768  597  1,365 
Borrowed Funds(159) 110  (49) (348) 308  (40) 24  110  134 
Total changes in interest expense(126) 231  105  80  883  963  805  1,217  2,022 
Net change in net interest income (FTE)$292  $(47) $245  $1,377  $(281) $1,096  $236  $1,858  $2,094 


 Average Yield/Rate for the Three Month Periods Ended
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Total earning assets 4.81%  4.77%  4.54%  4.53%  4.62%
Total interest bearing liabilities 1.46%  1.40%  1.29%  1.15%  0.96%
Net interest margin to earning assets (FTE) 3.83%  3.82%  3.66%  3.73%  3.97%
                    
 Quarter to Date Net Interest Income (FTE)
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Total interest income (FTE) 10,803   10,453   9,947   9,327   8,744 
Total interest expense 2,195   2,090   1,926   1,638   1,232 
Net interest income (FTE)$8,608  $8,363  $8,021  $7,689  $7,512 

As outlined in the previous tables, the Corporation has increased net interest income primarily through increases in volume. Net interest margins are expected to approximate current levels for the remainder of the year.

Noninterest Income

 Quarter to Date
 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Trust and investment services$459  $328  $372  $444  $392 
ATM and debit card income 404   360   397   386   388 
Net gain on sales of mortgage loans 422   195   162   277   187 
Service charges on deposit accounts 222   234   259   273   253 
Mortgage servicing fees 230   211   208   199   192 
Net MSR income 344   8   67   133   79 
Net gain on sales of commercial loans             368 
Other income and fees 169   186   238   1,048   154 
Total noninterest income$ 2,250  $ 1,522  $ 1,703  $ 2,760  $ 2,013 


 Year to Date June 30 Variance
 2019 2018 Amount %
Trust and investment services$787  $775  $12  1.55%
ATM and debit card income764  742  22  2.96%
Net gain on sales of mortgage loans617  402  215  53.48%
Service charges on deposit accounts456  512  (56) (10.94)%
Mortgage servicing fees441  378  63  16.67%
Net MSR income352  163  189  115.95%
Net gain on sales of commercial loans  518  (518) (100.00)%
Other income and fees355  324  31  9.57%
Total noninterest income$3,772  $3,814  $(42) (1.10)%

Trust and investment services include income the Corporation earns from its contracts with customers to manage assets for investment, and/or to transact on their accounts. The wealth management component is strongly correlated to changes in the stock market and as such, can vary from period to period. Trust and investment services income is expected to increase throughout 2019.

ATM and debit card income are fees earned on ATM and debit card transactions. The Corporation expects these fees to increase modestly throughout 2019.

Net gain on sales of mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. The first three months of the year are typically the lowest in terms of mortgage activity. In the second quarter of 2019, the Corporation sold approximately $28,000 of residential mortgages that was previously held in its loan portfolio which generated a gain of $25. Excluding the impact of this sale, and excluding the impact of the same type of sale that occurred in the first quarter of 2018, net gains from the sales of mortgage loans increased by $237 when the first six months of 2019 are compared to the same period in 2018 and this trend is expected to continue throughout the remainder of the year.

Service charges on deposit accounts include fees earned from the Corporation's deposit customers for transaction-based, account maintenance and overdraft services. The decrease in service charges on deposit accounts is a result of declines in NSF fees as well as a shift of customer demand toward deposit accounts with no or reduced service charges. Service charges on deposit accounts are expected to approximate current levels throughout the remainder of the year.

Mortgage servicing fees include the fees earned for servicing loans that have been sold into the secondary market. The increase in mortgage servicing fees is directly related to the increases in the size of the serviced portfolio. Mortgage servicing fees are expected to continue to increase throughout the year as mortgage demand remains strong.

Net MSR income is the net of income generated from the capitalization of new mortgage services rights and the amortization of serviced loans as a result of paydowns and payoffs.  As noted above, the Corporation sold of pool of residential mortgage loans out of its loan portfolio in the second quarter of 2019.  This sale generated $266 of net MSR income from the capitalization of the associated servicing rights.  The Corporation expects net MSR income to stabilize and approximate prior trends in future period.

Net gain on sales of commercial loans includes the income earned on the sale of commercial loans into the secondary market. There were no sales for the six months ending June 30, 2019. The Corporation continues to analyze the portfolio for opportunities and will sell commercial loans into the secondary market when deemed financially beneficial.

Other income and fees include other income items, none of which are individually significant.  Other income and fees are expected to approximate current levels for the for the remainder of 2019.

Noninterest Expenses

 Quarter to Date
 6/30/2019
 3/31/2019
 12/31/2018
 9/30/2018
 6/30/2018
Compensation$3,749  $3,630  $3,429  $3,359  $3,316 
Furniture and equipment 525   491   508   486   441 
Professional services 426   458   518   381   388 
Occupancy 426   437   416   379   417 
Data Processing 294   265   512   164   143 
Advertising and promotional 291   163   198   177   219 
Loan and collection 119   110   134   135   139 
Amortization of core deposit intangible 114   112   136   135   136 
Telephone and communication 108   111   107   106   105 
ATM and debit card 100   95   96   105   98 
FDIC insurance premiums 17   101   120   132   110 
Other losses 4   11   152   2   (1)
Other general and administrative 518   525   581   514   538 
Total noninterest expenses$ 6,691  $ 6,509  $ 6,907  $ 6,075  $ 6,049 


 Year to Date June 30 Variance
 2019 2018 Amount %
Compensation$7,379  $6,633  $746  11.25%
Furniture and equipment1,016  904  112  12.39%
Professional services884  888  (4) (0.45)%
Occupancy863  844  19  2.25%
Data Processing559  292  267  91.44%
Advertising and promotional454  343  111  32.36%
Loan and collection229  268  (39) (14.55)%
Amortization of core deposit intangible226  271  (45) (16.61)%
Telephone and communication219  200  19  9.50%
ATM and debit card195  186  9  4.84%
FDIC insurance premiums118  220  (102) (46.36)%
Other losses15  259  (244) (94.21)%
Other general and administrative1,043  1,020  23  2.25%
Total noninterest expenses$13,200  $12,328  $872  7.07%

Compensation includes all compensation and benefits paid to the Corporation's employees. Compensation has increased, and is expected to continue to increase, due to the continued growth in size and complexity of the organization.

Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, property taxes, utilities, insurance, and other related items. These expenses are expected to approximate current levels throughout the remainder of the year.

Professional services include expenses relating to third-party professional services. These services include, but are not limited to, regulatory, auditing, consulting, and legal.  These expenses are expected to approximate their current levels for the remainder of the year.

Data Processing primarily includes the expenses relating to the Corporation's core data processor. The increase is largely due to the growth in size and complexity of the organization. These expenses are expected to approximate current levels throughout the remainder of the year.

Advertising and promotional includes the Corporation's media costs and any donations or sponsorships made on behalf of the Corporation. The increase in expenses is a direct result of the Corporation enhancing its marketing efforts to attract new and expand existing customer loans and deposit accounts. These expenses are expected to approximate current levels throughout the remainder of the year.

Loan and collection include expenses related to the origination and collection of loans, as well as expenses related to OREO. The Corporation does not expect any significant fluctuations in 2019.

Amortization of core deposit intangible relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and is expected to approximate current levels for the remainder of 2019.

Telephone and communication include expenses relating to the Corporation's communication systems. These expenses have increased due to the growth in size and complexity of the organization and are expected to approximate current levels for the remainder of the year.

ATM and debit card expenses fluctuate based on customer and non-customer utilization of ATMs and customer debit card volumes.  The Corporation expects these fees to increase modestly throughout 2019.

FDIC insurance premiums typically fluctuate based on the size of the Corporation's balance sheet, capital position, overall risk profile, and examination ratings.  FDIC insurance premiums are expected to increase over 2019 as a result of anticipated balance sheet growth.

Included in other losses was a $260 one time loan related expense in the first quarter of 2018 and one time losses totaling $132 in the fourth quarter of 2018 related to assets acquired from Community Bancorp, Inc.  Excluding these isolated items, other losses have not been significant and management does not anticipate any significant other losses in 2019.

Other general and administrative includes miscellaneous other expense items, none of which are individually significant.  These expenses are expected to approximate current levels for the reminder of the year.

Balance Sheet Breakdown and Analysis

 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
ASSETS                   
Cash and cash equivalents$20,067  $16,509  $23,412  $63,469  $44,280 
Total investment securities73,285  82,222  94,721  79,531  49,110 
Loans held for sale6,771  1,835  903  2,021  4,936 
Gross loans813,547  809,863  772,227  728,302  707,364 
Less ALLL5,014  4,745  4,488  4,146  4,033 
Net loans808,533  805,118  767,739  724,156  703,331 
All other assets41,134  40,488  39,675  40,724