Fentura Financial (FETM) in Fenton, Mich., has turned a profit thanks to an improvement in its loan portfolio.

The $308 million-asset company reported a $453,000 profit in the fourth quarter, after losing about $400,000 in the prior-year period. It earned $1.3 million on the year, after losing $1.5 million in 2011.

Its delinquencies fell to 1.9% of loans, compared with 2.6% at the end of the third quarter and 8.4% at the end of 2011. Substandard assets were $13.2 million, a 30% improvement from the third quarter and a 55% improvement from the end of 2011.

Net interest income was $2.5 million, down 7% from the third quarter. Interest income declined throughout 2012 as assets matured and were repriced at lower rates, the company said. Allowance for loan loss was $5 million at the end of the year.

Noninterest income was $1.2 million, down 8% from the third quarter, and noninterest expense was $3.7 million, up 6% from the third quarter. Fentura recorded $961,000 in gains on mortgage sales in 2012, up 176% from 2011.

"We are encouraged and pleased with our 2012 operating results, which reflect continued improvement in credit quality, the strengthening of capital and the efforts of our team to build strong client relationships and grow our business," Chief Executive Ronald Justice said in the news release.

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