GlobeNewswire Inc | Nov 1, 2021 04:51PM EDT

November 01, 2021

FENTON, Mich., Nov. 01, 2021 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces quarterly results of net income of $3,855 and $13,237 for the three and nine month periods ended September30, 2021.

Ronald Justice, President and CEO, stated "I am extremely pleased by our team's tremendous efforts which continue to generate strong operating results. While residential mortgage activity has been trending downward, overall closings and pipelines remain at historically high levels. Additionally, our commercial lending team has done a tremendous job of developing new relationships and expanding existing customer relationships. These efforts have led to increases in gross loans (net of PPP loans) of $59,029 and $160,367 since June30, 2021 and September30, 2020, respectively. Asset quality metrics remain strong and the vast majority of borrowers who were granted COVID-19 related payment deferrals have resumed regular payments. Our team remains committed to our mission and we are well positioned and optimistic about our future."

Following is a discussion of the Corporation's financial performance as of, and for the three and nine month periods ended September30, 2021. At the end of this document is a list of abbreviations and acronyms.

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

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020INCOMESTATEMENT DATAInterest $ 11,584 $ 11,658 $ 11,919 $ 11,624 $ 12,070 incomeInterest 653 762 676 972 1,189 expenseNet interest 10,931 10,896 11,243 10,652 10,881 incomeProvision for (436 ) 6 212 982 1,109 loan lossesNoninterest 2,899 4,230 3,854 4,676 5,159 incomeNoninterest 9,453 9,222 9,031 10,971 8,218 expensesFederalincome tax 958 1,172 1,198 642 1,377 expenseNet income $ 3,855 $ 4,726 $ 4,656 $ 2,733 $ 5,336 PER SHARE Earnings $ 0.84 $ 1.02 $ 1.00 $ 0.58 $ 1.14 Dividends $ 0.080 $ 0.080 $ 0.080 $ 0.075 $ 0.075 Tangible book $ 26.53 $ 25.73 $ 24.75 $ 23.88 $ 23.50 value^(1)Quoted market valueHigh $ 26.25 $ 27.40 $ 24.75 $ 22.25 $ 17.99 Low $ 25.60 $ 23.55 $ 21.90 $ 16.93 $ 16.80 Close^(1) $ 25.75 $ 26.00 $ 23.30 $ 22.00 $ 16.93 PERFORMANCE RATIOSReturn onaverage 1.16 % 1.45 % 1.50 % 0.84 % 1.68 %assetsReturn onaverage 12.26 % 15.64 % 15.86 % 9.27 % 18.86 %shareholders'equityReturn onaveragetangible 12.63 % 16.12 % 16.38 % 9.58 % 19.54 %shareholders'equityEfficiency 68.35 % 60.97 % 59.82 % 71.57 % 51.23 %ratioYield onearning 3.69 % 3.79 % 4.01 % 3.75 % 3.97 %assets (FTE)Rate oninterest 0.34 % 0.41 % 0.37 % 0.50 % 0.63 %bearingliabilitiesNet interestmargin to 3.48 % 3.55 % 3.79 % 3.44 % 3.58 %earningassets (FTE)BALANCE SHEET DATA^(1)Totalinvestment $ 138,476 $ 129,944 $ 89,772 $ 76,111 $ 78,179 securitiesGross loans $ 1,015,177 $ 986,358 $ 1,028,117 $ 1,066,562 $ 1,060,885 Total assets $ 1,329,300 $ 1,309,685 $ 1,303,175 $ 1,251,446 $ 1,284,845 Total $ 1,144,291 $ 1,126,496 $ 1,122,508 $ 1,071,976 $ 1,061,470 depositsBorrowed $ 50,000 $ 49,500 $ 49,000 $ 49,000 $ 96,217 fundsTotalshareholders' $ 124,809 $ 122,986 $ 119,360 $ 115,868 $ 114,081 equityNet loans tototal 87.80 % 86.60 % 90.60 % 98.48 % 98.99 %depositsCommon shares 4,569,955 4,638,614 4,673,932 4,694,275 4,691,142 outstandingQTD BALANCESHEET AVERAGESTotal assets $ 1,323,912 $ 1,309,942 $ 1,259,119 $ 1,288,199 $ 1,264,105 Earning $ 1,248,018 $ 1,234,827 $ 1,206,411 $ 1,235,895 $ 1,210,274 assetsInterestbearing $ 756,545 $ 753,706 $ 735,159 $ 773,132 $ 750,281 liabilitiesTotalshareholders' $ 124,720 $ 121,235 $ 119,034 $ 117,263 $ 112,565 equityTotaltangible $ 121,120 $ 117,567 $ 115,298 $ 113,444 $ 108,655 shareholders'equityEarned commonshares 4,582,401 4,644,833 4,664,893 4,682,063 4,673,629 outstandingUnvested 20,671 20,671 21,922 14,208 14,208 stock grantsTotal commonshares 4,603,072 4,665,504 4,686,815 4,696,271 4,687,837 outstandingASSET QUALITY ^(1)Nonperformingloans to 0.82 % 0.87 % 0.79 % 0.75 % 0.07 %gross loansNonperformingassets to 0.63 % 0.66 % 0.62 % 0.64 % 0.06 %total assetsAllowance forloan losses 1.03 % 1.09 % 1.08 % 1.02 % 0.95 %to grossloansAllowance forloan lossesto gross 1.04 % 1.14 % 1.23 % 1.23 % 1.19 %loans, net ofPPP loansCAPITAL RATIOS^(1)Total capitalto risk 13.63 % 14.35 % 15.02 % 15.14 % 15.57 %weightedassetsTier 1capital to 12.64 % 13.27 % 13.84 % 13.93 % 14.40 %risk weightedassetsCET1 capitalto risk 11.33 % 11.87 % 12.34 % 12.38 % 12.77 %weightedassetsTier 1leverage 10.21 % 10.19 % 10.31 % 9.80 % 9.86 %ratio ^(1)At end of period

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

9/30/2021 9/30/2020 9/30/2019 9/30/2018 9/30/2017INCOMESTATEMENT DATAInterest $ 35,161 $ 34,355 $ 32,465 $ 26,419 $ 21,246incomeInterest 2,091 4,952 6,469 3,901 2,181expenseNet interest 33,070 29,403 25,996 22,518 19,065incomeProvision for (218 ) 4,652 899 767 261loan lossesNoninterest 10,983 14,964 6,034 6,574 6,768incomeNoninterest 27,706 23,713 19,808 18,403 16,418expensesFederalincome tax 3,328 3,271 2,297 1,817 2,640expenseNet income $ 13,237 $ 12,731 $ 9,026 $ 8,105 $ 6,514PER SHARE Earnings $ 2.86 $ 2.73 $ 1.94 $ 2.23 $ 1.80Dividends $ 0.240 $ 0.225 $ 0.210 $ 0.180 $ 0.150Tangible book $ 26.53 $ 23.50 $ 20.37 $ 16.91 $ 14.29value^(1)Quoted market valueHigh $ 27.40 $ 26.00 $ 21.00 $ 23.00 $ 20.65Low $ 21.90 $ 12.55 $ 20.05 $ 18.88 $ 15.10Close^(1) $ 25.75 $ 16.93 $ 21.00 $ 21.15 $ 18.45PERFORMANCE RATIOSReturn onaverage 1.36 % 1.45 % 1.27 % 1.32 % 1.21 %assetsReturn onaverage 14.55 % 15.79 % 12.73 % 17.29 % 16.20 %shareholders'equityReturn onaveragetangible 15.00 % 16.40 % 13.35 % 18.77 % 17.48 %shareholders'equityEfficiency 62.89 % 53.45 % 61.84 % 63.26 % 63.55 %ratioYield onearning 3.83 % 4.12 % 4.81 % 4.59 % 4.15 %assets (FTE)Rate oninterest 0.37 % 0.93 % 1.43 % 0.98 % 0.60 %bearingliabilitiesNet interestmargin to 3.60 % 3.52 % 3.85 % 3.91 % 3.72 %earningassets (FTE)BALANCE SHEET DATA^(1)Totalinvestment $ 138,476 $ 78,179 $ 62,351 $ 79,531 $ 67,155 securitiesGross loans $ 1,015,177 $ 1,060,885 $ 826,597 $ 728,302 $ 628,552 Total assets $ 1,329,300 $ 1,284,845 $ 978,046 $ 909,901 $ 756,967 Total $ 1,144,291 $ 1,061,470 $ 801,101 $ 766,587 $ 625,588 depositsBorrowed $ 50,000 $ 96,217 $ 69,000 $ 74,000 $ 68,000 fundsTotalshareholders' $ 124,809 $ 114,081 $ 99,142 $ 66,340 $ 57,161 equityNet loans tototal 87.80 % 98.99 % 102.51 % 94.46 % 99.95 %depositsCommon shares 4,569,955 4,691,142 4,658,722 3,645,402 3,631,576 outstandingYTD BALANCESHEET AVERAGESTotal assets $ 1,297,657 $ 1,171,415 $ 950,749 $ 820,481 $ 718,335 Earning $ 1,230,553 $ 1,116,861 $ 903,192 $ 772,111 $ 687,175 assetsInterestbearing $ 748,472 $ 711,449 $ 606,912 $ 528,165 $ 481,657 liabilitiesTotalshareholders' $ 121,659 $ 107,711 $ 94,815 $ 62,662 $ 53,760 equityTotaltangible $ 117,991 $ 103,712 $ 90,394 $ 57,732 $ 49,838 shareholders'equityEarned commonshares 4,630,709 4,665,951 4,641,084 3,638,123 3,618,889 outstandingUnvested 21,088 13,966 9,907 ? ? stock grantsTotal commonshares 4,651,797 4,679,917 4,650,991 3,638,123 3,618,889 outstandingASSET QUALITY ^(1)Nonperformingloans to 0.82 % 0.07 % 0.11 % 0.01 % 0.03 %gross loansNonperformingassets to 0.63 % 0.06 % 0.09 % 0.03 % 0.05 %total assetsAllowance forloan losses 1.03 % 0.95 % 0.65 % 0.57 % 0.52 %to grossloansAllowance forloan lossesto gross 1.04 % 1.19 % 0.65 % 0.57 % 0.52 %loans, net ofPPP loansCAPITAL RATIOS^(1)Total capitalto risk 13.63 % 15.57 % 14.42 % 11.31 % 10.92 %weightedassetsTier 1capital to 12.64 % 14.40 % 13.73 % 10.73 % 10.41 %risk weightedassetsCET1 capitalto risk 11.33 % 12.77 % 11.96 % 8.77 % 8.23 %weightedassetsTier 1leverage 10.21 % 9.86 % 11.22 % 8.90 % 9.26 %ratio ^(1)At end of period

Income Statement Breakdown and Analysis

Quarter to Date 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020GAAP net $ 3,855 $ 4,726 $ 4,656 $ 2,733 $ 5,336 incomeAcquisitionrelated items (net of tax)Accretion onpurchased (152 ) (152 ) (151 ) (82 ) (144 )loansAmortizationof core 54 53 54 71 72 depositintangiblesAmortizationon acquired 2 2 2 5 5 time depositsOtheracquisition 51 ? ? ? ? relatedexpensesTotalacquisition (45 ) (97 ) (95 ) (6 ) (67 )related items(net of tax)Othernonrecurring items (net oftax)FHLBprepayment ? ? ? 1,507 ? penaltiesChange in fairvalue ofequity ? ? ? ? ? investment dueto acquisitiontransactionChange in fairvalue ofmortgage ? ? ? ? ? bankinginstrumentsInterestwriteoff fromloan ? ? ? 265 ? transferred tononaccrualNet gain fromCOLI death ? ? ? ? ? benefitPrepaymentpenalties (65 ) (33 ) (17 ) (97 ) (16 )collectedMortgageservicingrights ? ? ? (188 ) (176 )impairment(reduction ofimpairment)Total othernonrecurring (65 ) (33 ) (17 ) 1,487 (192 )items (net oftax)Adjusted netincome from $ 3,745 $ 4,596 $ 4,544 $ 4,214 $ 5,077 operations GAAP netinterest $ 10,931 $ 10,896 $ 11,243 $ 10,652 $ 10,881 incomeAccretion onpurchased (192 ) (192 ) (191 ) (104 ) (182 )loansInterestwriteoff fromloan ? ? ? 335 ? transferred tononaccrualPrepaymentpenalties (82 ) (42 ) (21 ) (123 ) (20 )collectedAmortizationon acquired 3 3 3 6 6 time depositsAdjusted netinterest $ 10,660 $ 10,665 $ 11,034 $ 10,766 $ 10,685 income PERFORMANCE RATIOSBased onadjusted net income fromoperationsEarnings per $ 0.82 $ 0.99 $ 0.97 $ 0.90 $ 1.09 shareReturn on 1.12 % 1.41 % 1.46 % 1.30 % 1.60 %average assetsReturn onaverage 11.91 % 15.21 % 15.48 % 14.30 % 17.94 %shareholders'equityReturn onaveragetangible 12.27 % 15.68 % 15.98 % 14.78 % 18.59 %shareholders'equityEfficiency 68.74 % 61.46 % 60.20 % 59.02 % 52.03 %ratio Based onadjusted net interestincomeYield onearning assets 3.60 % 3.72 % 3.94 % 3.78 % 3.91 %(FTE)Rate oninterest 0.34 % 0.41 % 0.37 % 0.50 % 0.63 %bearingliabilitiesNet interestmargin to 3.39 % 3.47 % 3.71 % 3.47 % 3.52 %earning assets(FTE)

Year to Date September Variance 30 2021 2020 Amount %GAAP net income $ 13,237 $ 12,731 $ 506 3.97 %Acquisition related items (net of tax)Accretion on purchased (455 ) (434 ) (21 ) 4.84 %loansAmortization of core 161 214 (53 ) (24.77 ) %deposit intangiblesAmortization on acquired 6 13 (7 ) (53.85 ) %time depositsOther acquisition Nrelated expenses 51 ? 51 / MTotal acquisitionrelated items (net of (237 ) (207 ) (30 ) 14.49 %tax)Other nonrecurring items (net of tax)FHLB prepayment ? ? ? ? %penaltiesChange in fair value ofequity investment due to ? (578 ) 578 (100.00 ) %acquisition transactionChange in fair value ofmortgage banking ? (448 ) 448 (100.00 ) %instrumentsInterest writeoff fromloan transferred to ? ? ? ? %nonaccrualNet gain from COLI death ? (173 ) 173 (100.00 ) %benefitPrepayment penalties (115 ) (64 ) (51 ) 79.69 %collectedMortgage servicingrights impairment ? 188 (188 ) (100.00 ) %(reduction ofimpairment)Total other nonrecurring (115 ) (1,075 ) 960 (89.30 ) %items (net of tax)Adjusted net income from $ 12,885 $ 11,449 $ 1,436 12.54 %operations GAAP net interest income $ 33,070 $ 29,403 $ 3,667 12.47 %Accretion on purchased (575 ) (549 ) (26 ) 4.74 %loansInterest writeoff fromloan transferred to ? ? ? ? %nonaccrualPrepayment penalties (145 ) (81 ) (64 ) 79.01 %collectedAmortization on acquired 9 17 (8 ) (47.06 ) %time depositsAdjusted net interest $ 32,359 $ 28,790 $ 3,569 12.40 %income PERFORMANCE RATIOS Based on adjusted net income from operationsEarnings per share $ 2.78 $ 2.45 $ 0.33 13.47 %Return on average assets 1.33 % 1.31 % 0.02 %Return on average 14.16 % 14.20 % (0.04 ) %shareholders' equityReturn on averagetangible shareholders' 14.60 % 14.75 % (0.15 ) %equityEfficiency ratio 63.31 % 55.13 % 8.18 % Based on adjusted net interest incomeYield on earning assets 3.75 % 4.04 % (0.29 ) %(FTE)Rate on interest bearing 0.37 % 0.93 % (0.56 ) %liabilitiesNet interest margin to 3.52 % 3.45 % 0.07 %earning assets (FTE)

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, nonearning 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.

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 period-to-period comparisons more meaningful.

Three Months Ended September 30, 2021 June 30, 2021 September 30, 2020 Average Tax Average Average Tax Average Average Tax Average Balance Equivalent Yield / Balance Equivalent Yield / Balance Equivalent Yield / Interest Rate Interest Rate Interest RateInterest earning assetsTotal loans $ 1,000,660 $ 11,076 4.39 % $ 1,023,620 $ 11,220 4.40 % $ 1,086,629 $ 11,701 4.28 %Taxableinvestment 113,868 372 1.30 % 89,467 322 1.44 % 62,490 256 1.63 %securitiesNontaxableinvestment 17,085 95 2.21 % 17,234 100 2.33 % 15,822 101 2.54 %securitiesFederal funds ? ? ? % ? ? ? % ? ? ? %soldInterest earningcash and cash 112,917 45 0.16 % 101,018 23 0.09 % 41,845 9 0.09 %equivalentsFederal Home 3,488 16 1.82 % 3,488 14 1.61 % 3,488 24 2.74 %Loan Bank stockTotal earning 1,248,018 11,604 3.69 % 1,234,827 11,679 3.79 % 1,210,274 12,091 3.97 %assets Nonearning assetsAllowance for (10,889 ) (11,193 ) (9,255 ) loan lossesFixed assets 16,465 16,104 15,349 Accrued income 70,318 70,204 47,737 and other assetsTotal assets $ 1,323,912 $ 1,309,942 $ 1,264,105 Interest bearing liabilitiesInterest bearing $ 228,147 $ 121 0.21 % $ 223,420 $ 122 0.22 % $ 221,592 $ 144 0.26 %demand depositsSavings deposits 325,161 108 0.13 % 320,000 108 0.14 % 271,260 116 0.17 %Time deposits 153,694 264 0.68 % 161,197 377 0.94 % 161,212 567 1.40 %Borrowed funds 49,543 160 1.28 % 49,089 155 1.27 % 96,217 362 1.50 %Total interestbearing 756,545 653 0.34 % 753,706 762 0.41 % 750,281 1,189 0.63 %liabilities Noninterestbearing liabilitiesNoninterest 433,057 425,353 388,904 bearing depositsAccrued interestand other 9,590 9,648 12,355 liabilitiesShareholders' 124,720 121,235 112,565 equityTotalliabilities and $ 1,323,912 $ 1,309,942 $ 1,264,105 shareholders'equityNet interest $ 10,951 $ 10,917 $ 10,902 income (FTE)Net interestmargin to 3.48 % 3.55 % 3.58 %earning assets(FTE)



Nine Months Ended September 30, 2021 September 30, 2020 Average Tax Average Average Tax Average Balance Equivalent Yield / Balance Equivalent Yield / Interest Rate Interest RateInterestearning assetsTotal loans $ 1,032,792 $ 33,894 4.39 % $ 1,004,476 $ 32,970 4.38 %Taxableinvestment 87,399 896 1.37 % 60,760 932 2.05 %securitiesNontaxableinvestment 17,161 300 2.34 % 12,601 266 2.82 %securitiesFederal funds ? ? ? % 11,196 116 1.38 %soldInterestearning cash 89,713 79 0.12 % 24,522 40 0.22 %and cashequivalentsFederal HomeLoan Bank 3,488 55 2.11 % 3,306 87 3.52 %stockTotal earning 1,230,553 35,224 3.83 % 1,116,861 34,411 4.12 %assets Nonearning assetsAllowance for (11,075 ) (7,610 ) loan lossesFixed assets 16,108 15,465 Accruedincome and 62,071 46,699 other assetsTotal assets $ 1,297,657 $ 1,171,415 Interestbearing liabilitiesInterestbearing $ 219,378 $ 364 0.22 % $ 194,058 $ 868 0.60 %demanddepositsSavings 318,664 325 0.14 % 250,045 455 0.24 %depositsTime deposits 161,219 932 0.77 % 182,786 2,441 1.78 %Borrowed 49,211 470 1.28 % 84,560 1,188 1.88 %fundsTotalinterest 748,472 2,091 0.37 % 711,449 4,952 0.93 %bearingliabilities Noninterestbearing liabilitiesNoninterestbearing 417,387 341,642 depositsAccruedinterest and 10,139 10,613 otherliabilitiesShareholders' 121,659 107,711 equityTotalliabilitiesand $ 1,297,657 $ 1,171,415 shareholders'equityNet interest $ 33,133 $ 29,459 income (FTE)Net interestmargin to 3.60 % 3.52 %earningassets (FTE)

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 Nine Months Ended September 30, 2021 September 30, 2021 September 30, 2021 Compared To Compared To Compared To June 30, 2021 September 30, 2020 September 30, 2020 Increase (Decrease) Due to Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net Volume Rate NetChanges in interest income Total loans $ (131 ) $ (13 ) $ (144 ) $ (2,276 ) $ 1,651 $ (625 ) $ 855 $ 69 $ 924 Taxable investment 221 (171 ) 50 424 (308 ) 116 450 (486 ) (36 ) securitiesNontaxable investment (1 ) (4 ) (5 ) 37 (43 ) (6 ) 105 (71 ) 34 securitiesFederal funds sold ? ? ? ? ? ? (58 ) (58 ) (116 ) Interest earning cash and 3 19 22 25 11 36 76 (37 ) 39 cash equivalentsFederal Home Loan Bank ? 2 2 ? (8 ) (8 ) 7 (39 ) (32 ) stockTotal changes in interest 92 (167 ) (75 ) (1,790 ) 1,303 (487 ) 1,435 (622 ) 813 income Changes in interest expenseInterest bearing demand 13 (14 ) (1 ) 26 (49 ) (23 ) 166 (670 ) (504 ) depositsSavings deposits 11 (11 ) ? 96 (104 ) (8 ) 147 (277 ) (130 ) Time deposits (16 ) (97 ) (113 ) (25 ) (278 ) (303 ) (260 ) (1,249 ) (1,509 ) Borrowed funds 3 2 5 (155 ) (47 ) (202 ) (407 ) (311 ) (718 ) Total changes in interest 11 (120 ) (109 ) (58 ) (478 ) (536 ) (354 ) (2,507 ) (2,861 ) expenseNet change in net interest $ 81 $ (47 ) $ 34 $ (1,732 ) $ 1,781 $ 49 $ 1,789 $ 1,885 $ 3,674 income (FTE)

Average Yield/Rate for the Three Month Periods Ended 9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2021 2021 2021 2020 2020Total earning assets 3.69 % 3.79 % 4.01 % 3.75 % 3.97 %Total interest bearing 0.34 % 0.41 % 0.37 % 0.50 % 0.63 %liabilitiesNet interest margin to 3.48 % 3.55 % 3.79 % 3.44 % 3.58 %earning assets (FTE)

Quarter to Date Net Interest Income (FTE) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Interest $ 11,584 $ 11,658 $ 11,919 $ 11,624 $ 12,070 incomeFTE 20 21 22 22 21 adjustmentTotalinterest 11,604 11,679 11,941 11,646 12,091 income(FTE)Totalinterest 653 762 676 972 1,189 expenseNetinterest $ 10,951 $ 10,917 $ 11,265 $ 10,674 $ 10,902 income(FTE)

Noninterest Income

Quarter to Date 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Net gain onsales of $ 1,096 $ 1,253 $ 1,845 $ 2,545 $ 3,064 mortgageloansATM and debit 495 511 448 437 460 card incomeTrust andinvestment 562 403 468 445 464 servicesNet mortgageservicing (69 ) 1,119 138 509 559 rights incomeMortgageservicing 369 362 335 325 293 feesServicecharges on 199 168 166 194 177 depositaccountsChange incashsurrendervalue of 165 237 64 65 65 corporateowned lifeinsurancePPP referral 6 74 351 ? ? feesNet gain onsales of ? ? ? ? ? commercialloansNet gain fromcorporateowned life ? ? ? ? ? insurancedeath benefitChange infair value of (4 ) 2 (19 ) (3 ) 2 equityinvestmentsOther income 80 101 58 159 75 and feesTotalnoninterest $ 2,899 $ 4,230 $ 3,854 $ 4,676 $ 5,159 income Memo items: Residentialmortgage $ 1,396 $ 2,734 $ 2,318 $ 3,379 $ 3,916 operations

Year to Date September 30 Variance 2021 2020 Amount %Net gain on sales of $ 4,194 $ 8,736 $ (4,542 ) (51.99 ) %mortgage loansATM and debit card 1,454 1,209 245 20.26 %incomeTrust and investment 1,433 1,174 259 22.06 %servicesNet mortgage servicing 1,188 346 842 243.35 %rights incomeMortgage servicing 1,066 825 241 29.21 %feesService charges on 533 515 18 3.50 %deposit accountsChange in cashsurrender value of 466 196 270 137.76 %corporate owned lifeinsurancePPP referral fees 431 ? 431 ? %Net gain on sales of ? 668 (668 ) (100.00 ) %commercial loansNet gain fromcorporate owned life ? 173 (173 ) (100.00 ) %insurance deathbenefitChange in fair value (21 ) 758 (779 ) (102.77 ) %of equity investmentsOther income and fees 239 364 (125 ) (34.34 ) %Total noninterest $ 10,983 $ 14,964 $ (3,981 ) (26.60 ) %income Memo items: Residential mortgage $ 6,448 $ 9,907 (3,459 ) (34.91 ) %operations

Residential Mortgage Operations

Net gain on sales of mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. Throughout 2020 and continuing into 2021, the interest rate environment was advantageous for residential mortgage originations and refinancing, resulting in record gains. While residential mortgage originations and refinancing activity remained strong during the first nine months of 2021, however not as strong as 2020, it is likely to slow down due to lower housing inventory and expected increases in interest rates.

Net mortgage servicing rights income represents income generated from the capitalization of MSR, net of amortization. In each of the first two quarters of 2020, the Corporation recognized impairments in its servicing portfolio as a direct result of the low interest rate environment and a record level of refinancing activity. During the third and fourth quarters of 2020, these impairments had recovered. In the first quarter of 2021, refinancing activity remained elevated, however beginning in the second quarter of 2021, the composition of mortgage originations shifted from refinancing activity to purchase activity and was at a slower volume than previous refinancing.

In 2021, the Corporation elected to adopt the fair value measurement option for all MSR pursuant to FASB ASC 860 ("Transfers and Servicing"). This election resulted in a transfer of $301 to retained earnings to reflect the difference between the fair value and the carrying amount of MSR as of January 1, 2021, net of tax. Changes in the fair value of MSR are highly correlated to changes in interest rates. As a significant portion of the serviced loan portfolio has been originated over the past two years at low interest rates, management expects the value of the servicing portfolio to remain strong. In addition, as the Corporation continues to see a shift from refinancing activity to purchase activity in mortgage originations which should positively impact the servicing portfolio value.

The primary driver utilized in the fair value of MSR is prepayment speeds. Prepayment speed assumptions are derived from a combination of recent industry-wide pool speeds and Bloomberg's dealer estimates. Faster prepayment speeds result in lower value, due to cash flow being shorter. During the third quarter of 2021, prepayment speeds increased slightly due to overall industry trends in the Corporation's serviced portfolio resulting in a slight decrease in the fair value of MSR.

Mortgage servicing fees includes the fees earned for servicing loans that have been sold into the secondary market. The annual increase in mortgage servicing fees is directly related to the increase in the size of the serviced portfolio. The MSR portfolio has continued to grow throughout 2021 and the mortgage servicing fees are expected to increase throughout the remainder of 2021 as the Corporation continues to add to the serviced portfolio.

Throughout the remainder of 2021, overall revenues from residential mortgage operations (net gain on sales of mortgage loans, net mortgage servicing rights income, and mortgage servicing fees) are expected to remain strong, but are not expected to reach the elevated levels experienced during 2020 due to the constrained housing inventory and rising interest rates.

All Other Noninterest Income

ATM and debit card income represents fees earned on ATM and debit card transactions. The Corporation expects these fees to increase moderately throughout the remainder of 2021, as economic activity begins to normalize to pre-pandemic levels.

Trust and investment services includes income the Corporation earned from contracts with customers to manage assets for investment and/or to transact on their accounts through the wealth management and trust department. Income generated from trust services has remained stable from fiduciary fees for estate settlement services and portfolio management. Revenue from wealth management has increased in 2021 due to strong demand from customers for annuities. Both the trust services and wealth management programs are subject to market fluctuations and interest rate changes. Trust and investment services income is expected to increase modestly throughout the remainder of 2021.

Service charges on deposit accounts includes fees earned from deposit customers for transaction-based, account maintenance and overdraft services. The increase in the third quarter of 2021 is a result of more deposit customers utilizing overdraft services. Service charges on deposit accounts are expected to approximate current levels throughout the remainder of 2021.

Change in cash surrender value of corporate owned life insurance increased in 2021 as a result of the purchase of $15,000 in additional corporate owned life insurance policies in the second quarter of 2021. The Corporation expects the change in cash surrender value of corporate owned life insurance to moderate through the remainder of 2021.

PPP referral fees represent referral fees the Corporation earned from the second round of the PPP loan program through the SBA. Due to strong portfolio loan demand, management elected to refer the second round of PPP requests to a third party for processing and funding. As such, the associated referral fees were recognized as a component of noninterest income. As the second round of the PPP loan program ended on May 31, 2021, the Corporation does not expect to earn additional PPP referral fees throughout the remainder of 2021.

Net gain on sales of commercial loans represents the income earned from the sale of commercial loans into the secondary market. During the first quarter of 2020, the Corporation sold the guaranteed portion of one SBA loan and one USDA loan. The Corporation continually analyzes its commercial loan portfolio for opportunistic sales strategies. In 2021, the Corporation did not sell the guaranteed portion of SBA or USDA loans.

Net gain from corporate owned life insurance death benefit is recognized in the event of the death of an insured individual. The death of an insured individual occurred in the second quarter of 2020. The Corporation does not expect to receive any gains from COLI death benefits in 2021.

Change in fair value of equity investments represents the income earned on equities held in the Corporation's investment portfolio. During the first quarter of 2020, the Corporation recorded a $732 gain from an equity investment in a financial institution that was sold. The Corporation does not anticipate any significant changes in fair value from investment equity sales in the foreseeable future.

Other income and fees includes miscellaneous other income items, none of which are individually significant. Other income and fees are expected to approximate current levels throughout 2021.

Noninterest Expenses

Quarter to Date 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Total compensation $ 5,001 $ 5,000 $ 5,004 $ 4,958 $ 4,531 Professional 790 703 624 938 524 servicesFurniture and 761 712 637 607 614 equipmentData processing 557 583 509 501 503 Occupancy 522 508 495 475 491 Loan and 264 337 406 359 292 collectionAdvertising and 384 304 284 184 284 promotionalATM and debit card 131 144 122 125 109 FDIC insurance 153 79 155 59 55 premiumsTelephone and 80 130 94 64 91 communicationAmortization ofcore deposit 68 67 68 90 91 intangiblesOther acquisition 64 ? ? ? ? related expensesFHLB prepayment ? ? ? 1,907 ? penaltyOther general and 678 655 633 704 633 administrativeTotal noninterest $ 9,453 $ 9,222 $ 9,031 $ 10,971 $ 8,218 expenses

Year to Date September Variance 30 2021 2020 Amount %Total compensation $ 15,005 $ 13,031 $ 1,974 15.15 %Professional services 2,117 1,617 500 30.92 %Furniture and equipment 2,110 1,842 268 14.55 %Data processing 1,649 1,480 169 11.42 %Occupancy 1,525 1,402 123 8.77 %Loan and collection 1,007 683 324 47.44 %Advertising and promotional 972 791 181 22.88 %ATM and debit card 397 309 88 28.48 %FDIC insurance premiums 387 169 218 128.99 %Telephone and communication 304 273 31 11.36 %Amortization of core deposit 203 271 (68 ) (25.09 ) %intangiblesOther acquisition related 64 ? 64 N/MexpensesFHLB prepayment penalty ? ? ? N/MOther general and 1,966 1,845 121 6.56 %administrativeTotal noninterest expenses $ 27,706 $ 23,713 $ 3,993 16.84 %

Total compensation includes salaries, commissions and incentives, employee benefits, and payroll taxes. Total compensation has increased in 2021 due to an increase in the number of employees, a reduction of deferred loan costs, annual merit increases and an increase in employee benefits. Fluctuations in commissions and incentives are primarily driven by residential mortgage originations, which can vary significantly from period to period. However, commissions are expected to decline throughout the remainder of 2021 as mortgage originations decline.

Professional services include expenses relating to third-party professional services. These services include, but are not limited to, regulatory, auditing, consulting, and legal. The increase in professional services is primarily due to audit and accounting and other outside services, which include professional services related to the Interactive Teller Machine project. These expenses are expected to continue to increase in future periods to ensure compliance with audit and regulatory requirements and legal expenses related to the acquisition.

Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, certain service contracts, and other related items. The increase in furniture and equipment relate to the Interactive Teller Machine integration with in the Corporation. These expenses are expected to continue to increase with the size and complexity of the Corporation..

Data processing primarily includes the expenses relating to the Corporation's core data processor. These expenses are expected to increase throughout the remainder of 2021 with the size and complexity of the Corporation.

Occupancy expenses primarily consist of depreciation of buildings, property taxes, repairs and maintenance, utilities, insurance, and other related items. The increase in these expenses in 2021 is due to branch remodels. These expenses are expected to continue to increase with the size and complexity of the Corporation.

Loan and collection includes expenses related to the origination and collection of loans. The increase in expenses throughout 2020 and into the first half of 2021 is a direct result of increased loan volume due to the low interest rate environment created by the Federal Reserve Bank's response to the COVID-19 pandemic. Due to declining volume, loan and collection costs are expected to decline through the remainder of 2021.

Advertising and promotional includes the Corporation's media costs and any donations or sponsorships made on behalf of the Corporation. The increase in advertising and promotional expenses in the third quarter of 2021 is due to the Corporation's sponsorship for a portion of the Linden, Argentine Township, Fenton, Fenton Township Pathway group. The annual increase in expenses is a result of the Corporation enhancing its marketing efforts to attract new and expand existing customer loan and deposit account relationships. In addition to traditional marketing strategies, the Corporation rolled out a new branding strategy in 2020, which resulted in elevated advertising and promotional expenses in both 2020 and 2021. Total advertising and promotional expenses are expected to increase modestly throughout the remainder of 2021 due to the growth of the Corporation.

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 approximate current levels throughout the remainder of 2021.

FDIC insurance premiums typically fluctuate based on the size of the Corporation's balance sheet, capital position, overall risk profile, and examination ratings. The fluctuation is attributed to the increased asset size and composition of the Corporation's balance sheet. FDIC insurance premiums are expected to normalize throughout the remainder of 2021.

Telephone and communication includes expenses relating to the Corporation's communication systems. These expenses are expected to increase throughout 2021 primarily due to the growth of the Corporation.

Amortization of core deposit intangibles relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and is expected to continue to decline in 2021 as the core deposit intangible is being amortized based on the sum-of-years-digits method. The Corporation expects an increase in the the core deposit intangible in 2022 associated with the acquisition of Farmers State Bank of Munith.

Other acquisition related expenses includes, but is not limited to, consulting and legal expenses related to the Corporation's acquisition of Farmers State Bank of Munith. The transaction is anticipated to close during the fourth quarter of 2021. As such, these expenses are expected to be temporarily elevated over the remainder of 2021 and potentially into early 2022.

During the fourth quarter of 2020, the Corporation paid off three Federal Home Loan Bank borrowings, totaling $30,000. The Corporation incurred a one-time early payoff fee in the amount $1,907. The payoff was executed to enhance net interest income and net interest margins in 2021, 2022, and 2023. The weighted average rate of the three FHLB borrowings was 2.17%. As a result of the early payoffs, the Corporation will reduce interest expense by approximately $660 during 2021.

Other general and administrative includes miscellaneous other expense items, none of which are typically significant. Other general and administrative expenses are expected to approximate current levels into the foreseeable future.

Balance Sheet Breakdown and Analysis

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020ASSETS Cash and cash $ 112,861 $ 132,676 $ 121,477 $ 46,757 $ 75,032 equivalentsTotalinvestment 138,476 129,944 89,772 76,111 78,179 securitiesResidentialmortgage loans 9,702 7,670 26,322 27,306 34,833 held-for-sale,at fair valueGross loans 1,015,177 986,358 1,028,117 1,066,562 1,060,885 Less allowancefor loan and 10,500 10,800 11,100 10,900 10,100 lease lossesNet loans 1,004,677 975,558 1,017,017 1,055,662 1,050,785 All other 63,584 63,837 48,587 45,610 46,016 assetsTotal assets $ 1,329,300 $ 1,309,685 $ 1,303,175 $ 1,251,446 $ 1,284,845 LIABILITIESAND SHAREHOLDERS'EQUITYTotal deposits $ 1,144,291 $ 1,126,496 $ 1,122,508 $ 1,071,976 $ 1,061,470 Total borrowed 50,000 49,500 49,000 49,000 96,217 fundsAccruedinterestpayable and 10,200 10,703 12,307 14,602 13,077 otherliabilitiesTotal 1,204,491 1,186,699 1,183,815 1,135,578 1,170,764 liabilitiesTotalshareholders' 124,809 122,986 119,360 115,868 114,081 equityTotalliabilitiesand $ 1,329,300 $ 1,309,685 $ 1,303,175 $ 1,251,446 $ 1,284,845 shareholders'equity

9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %ASSETS Cash and cash $ (19,815 ) (14.93 ) % $ 37,829 50.42 %equivalentsTotalinvestment 8,532 6.57 % 60,297 77.13 %securitiesResidentialmortgage loans 2,032 26.49 % (25,131 ) (72.15 ) %held-for-sale,at fair valueGross loans 28,819 2.92 % (45,708 ) (4.31 ) %Less allowancefor loan and (300 ) (2.78 ) % 400 3.96 %lease lossesNet loans 29,119 2.98 % (46,108 ) (4.39 ) %All other (253 ) (0.40 ) % 17,568 38.18 %assetsTotal assets $ 19,615 1.50 % $ 44,455 3.46 % LIABILITIESAND SHAREHOLDERS'EQUITYTotal deposits $ 17,795 1.58 % $ 82,821 7.80 %Total borrowed 500 1.01 % (46,217 ) (48.03 ) %fundsAccruedinterestpayable and (503 ) (4.70 ) % (2,877 ) (22.00 ) %otherliabilitiesTotal 17,792 0.77 % 33,727 1.51 %liabilitiesTotalshareholders' 1,823 1.48 % 10,728 9.40 %equityTotalliabilitiesand $ 19,615 1.50 % $ 44,455 3.46 %shareholders'equity

Total investment securities

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Available-for-sale U.S. Government $ 5,967 $ 5,917 $ 5,942 $ 7,935 $ 19,311and federal agencyState and 25,227 23,096 17,080 15,768 15,729municipalMortgage backed 67,199 60,390 32,135 19,101 20,886residentialCertificates of 4,190 4,932 4,932 5,180 5,921depositCollateralizedmortgage 31,732 31,281 25,505 23,110 11,141obligations -agenciesUnrealized gain/(loss) on 1,432 1,334 1,117 1,932 2,099available-for-salesecuritiesTotal 135,747 126,950 86,711 73,026 75,087available-for-saleHeld-to-maturitystate and 1,515 1,859 1,968 1,973 1,977municipalEquity securities 1,214 1,135 1,093 1,112 1,115Total investment $ 138,476 $ 129,944 $ 89,772 $ 76,111 $ 78,179securities 9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %Available-for-sale U.S. Government $ 50 0.85 % $ (13,344 ) (69.10 ) %and federal agencyState and 2,131 9.23 % 9,498 60.39 %municipalMortgage backed 6,809 11.28 % 46,313 221.74 %residentialCertificates of (742 ) (15.04 ) % (1,731 ) (29.23 ) %depositCollateralizedmortgage 451 1.44 % 20,591 184.82 %obligations -agenciesUnrealized gain/(loss) on 98 7.35 % (667 ) (31.78 ) %available-for-salesecuritiesTotal 8,797 6.93 % 60,660 80.79 %available-for-saleHeld-to-maturitystate and (344 ) (18.50 ) % (462 ) (23.37 ) %municipalEquity securities 79 6.96 % 99 8.88 %Total investment $ 8,532 6.57 % $ 60,297 77.13 %securities

The amortized cost and fair value of AFS investment securities as of September30, 2021 were as follows:

Maturing Securities Due in After One After Five with Variable One Year Years But After Ten Monthly Total Year or But Within Within Ten Years Payments or Less Five Years Years Noncontractual MaturitiesU.S.Government and $ 2,986 $ 2,015 $ 966 $ ? $ ? $ 5,967 federal agencyState and 2,268 8,611 12,514 1,834 ? 25,227 municipalMortgagebacked ? ? ? ? 67,199 67,199 residentialCertificates 984 3,206 ? ? ? 4,190 of depositCollateralizedmortgage ? ? ? ? 31,732 31,732 obligations -agenciesTotal $ 6,238 $ 13,832 $ 13,480 $ 1,834 $ 98,931 $ 134,315 amortized costFair value $ 6,332 $ 14,319 $ 13,654 $ 2,089 $ 99,353 $ 135,747

The amortized cost and fair value of HTM investment securities as of September30, 2021 were as follows:

Maturing After After Securities Due in One Year Five with Variable One But Years After Monthly Year or Within But Ten Payments or Total Less Five Within Years Noncontractual Years Ten Maturities YearsState and $ 334 $ 801 $ 380 $ ? $ ? $ 1,515 municipalFair $ 338 $ 837 $ 402 $ ? $ ? $ 1,577 value

Throughout 2021, the Corporation expanded its investment portfolio to generate additional interest income. Total investment securities are expected to stabilize through 2021. The following table summarizes information as of September30, 2021 for investment securities purchased YTD:

Fully Taxable Book Value Equivalent Weighted Average YieldU.S. Government and federal agency $ 2,006 0.95 %State and municipal 11,199 1.15 %Collateralized mortgage obligations 14,471 1.15 %- agenciesMortgage backed residential 54,083 1.37 %Total $ 81,759 1.29 %

Residential mortgage loans held-for-sale, at fair value

Loans HFS represent the fair value of loans that have been committed to be sold to the secondary market, but have not yet been delivered. The level of loans HFS fluctuates based on loan demand as well as the timing of loan deliveries to the secondary market.

Loans and allowance for loan losses

The following tables outline the composition and changes in the loan portfolio as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Commercial,net of PPP 74,308 65,875 60,693 63,579 60,053 loansPPP loans 4,985 35,195 122,583 177,845 211,060 Commercial 616,358 573,598 541,428 517,054 483,275 real estateTotalcommercial 695,651 674,668 724,704 758,478 754,388 loansResidential 273,478 265,323 258,333 262,770 261,375 mortgageHome equity 41,902 41,771 40,205 39,900 39,456 Totalresidential 315,380 307,094 298,538 302,670 300,831 real estateloansConsumer 4,146 4,596 4,875 5,414 5,666 Gross loans 1,015,177 986,358 1,028,117 1,066,562 1,060,885 Allowance forloan and lease (10,500 ) (10,800 ) (11,100 ) (10,900 ) (10,100 )lossesLoans, net $ 1,004,677 $ 975,558 $ 1,017,017 $ 1,055,662 $ 1,050,785 Memo items: Gross loans,net of PPP $ 1,010,192 $ 951,163 $ 905,534 $ 888,717 $ 849,825 loansResidentialmortgage loans $ 591,399 $ 581,984 $ 546,836 $ 526,416 $ 489,247 serviced forothers 9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %Commercial,net of PPP $ 8,433 12.80 % $ 14,255 23.74 %loansPPP loans (30,210 ) (85.84 ) % (206,075 ) (97.64 ) %Commercial 42,760 7.45 % 133,083 27.54 %real estateTotalcommercial 20,983 3.11 % (58,737 ) (7.79 ) %loansResidential 8,155 3.07 % 12,103 4.63 %mortgageHome equity 131 0.31 % 2,446 6.20 %Totalresidential 8,286 2.70 % 14,549 4.84 %real estateloansConsumer (450 ) (9.79 ) % (1,520 ) (26.83 ) %Gross loans 28,819 2.92 % (45,708 ) (4.31 ) %Allowance for 300 (2.78 ) % (400 ) 3.96 %loan lossesLoans, net $ 29,119 2.98 % $ (46,108 ) (4.39 ) % Memo items: Gross loans,net of PPP $ 59,029 6.21 % $ 160,367 18.87 %loansResidentialmortgage loans $ 9,415 1.62 % $ 102,152 20.88 %serviced forothers

The following table presents historical loan balances by portfolio segment and impairment evaluation as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Loanscollectivelyevaluated forimpairmentCommercial $ 79,252 $ 100,424 $ 183,203 $ 241,424 $ 271,113 Commercial 609,382 564,781 532,294 508,182 481,071 real estateResidential 272,463 264,448 257,543 262,017 260,665 mortgageHome equity 41,840 41,708 40,141 39,874 39,456 Consumer 4,146 4,596 4,875 5,412 5,663 Subtotal 1,007,083 975,957 1,018,056 1,056,909 1,057,968 Loansindividuallyevaluated forimpairmentCommercial $ 41 $ 646 $ 73 $ ? $ ? Commercial 6,976 8,817 9,134 8,872 2,204 real estateResidential 1,015 875 790 753 710 mortgageHome equity 62 63 64 26 ? Consumer ? ? ? 2 3 Subtotal 8,094 10,401 10,061 9,653 2,917 Gross Loans $ 1,015,177 $ 986,358 $ 1,028,117 $ 1,066,562 $ 1,060,885

The following table presents historical allowance for loan losses allocations by portfolio segment and impairment evaluation as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Loanscollectively evaluated forimpairmentCommercial $ 613 $ 585 $ 626 $ 673 $ 633 Commercial 6,104 6,264 6,026 5,602 5,152 real estateResidential 3,066 2,814 3,280 3,480 3,479 mortgageHome equity 410 440 453 440 438 Consumer 53 85 92 97 101 Subtotal 10,246 10,188 10,477 10,292 9,803 Loansindividually evaluated forimpairmentCommercial $ ? $ 42 $ ? $ ? $ ? Commercial 250 566 619 602 289 real estateResidential 4 4 4 4 5 mortgageHome equity ? ? ? ? ? Consumer ? ? ? 2 3 Subtotal 254 612 623 608 297 Allowance for $ 10,500 $ 10,800 $ 11,100 $ 10,900 $ 10,100 loan losses

Commercial $ 613 $ 627 $ 626 $ 673 $ 633 Commercial 6,354 6,830 6,645 6,204 5,441 real estateResidential 3,070 2,818 3,284 3,484 3,484 mortgageHome equity 410 440 453 440 438 Consumer 53 85 92 99 104 Allowancefor loan $ 10,500 $ 10,800 $ 11,100 $ 10,900 $ 10,100 losses

The following table summarizes the Corporation's current, past due, and nonaccrual loans as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Accruing interestCurrent $ 1,004,220 $ 976,852 $ 1,018,343 $ 1,057,404 $ 1,058,437 Past due 2,596 923 1,636 1,165 1,703 30-89 daysPast due90 days or 364 36 120 50 86 moreTotalaccruing 1,007,180 977,811 1,020,099 1,058,619 1,060,226 interestNonaccrual 7,997 8,547 8,018 7,943 659 Total $ 1,015,177 $ 986,358 $ 1,028,117 $ 1,066,562 $ 1,060,885 loansTotalloans pastdue and in $ 10,957 $ 9,506 $ 9,774 $ 9,158 $ 2,448 nonaccrualstatus

The following table summarizes the Corporation's nonperforming assets as of:

9/30/2021 6/30/2021 3/31/2021 12/31/ 9/30/ 2020 2020Nonaccrual loans $ 7,997 $ 8,547 $ 8,018 $ 7,943 $ 659 Accruing loans past due 90 364 36 120 50 86 days or moreTotal nonperforming loans 8,361 8,583 8,138 7,993 745 Other real estate owned ? ? ? ? ? Total nonperforming assets $ 8,361 $ 8,583 $ 8,138 $ 7,993 $ 745

The following table summarizes the Corporation's primary asset quality measures as of:

9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2021 2021 2021 2020 2020Nonperforming loans to gross 0.82 % 0.87 % 0.79 % 0.75 % 0.07 %loansNonperforming assets to total 0.63 % 0.66 % 0.62 % 0.64 % 0.06 %assetsAllowance for loan losses to 1.03 % 1.09 % 1.08 % 1.02 % 0.95 %gross loansAllowance for loan losses to 1.04 % 1.14 % 1.23 % 1.23 % 1.19 %gross loans, less PPP loans

During the fourth quarter of 2020, the Corporation transferred one commercial real estate loan with an outstanding principal balance of $7,214 to nonaccrual. The underlying collateral for this loan is an extended stay hotel. It was determined in the fourth quarter of 2020 that the hotel's cash flow was insufficient to service the debt in accordance with the contractual terms of the note. However, as COVID-19 restrictions eased in the second quarter of 2021, the hotel began, and continues to make, the regular contractual principal and interest payments. A specific reserve has been established for the estimated collateral deficiency (based on a current appraisal), net of a 70% USDA guarantee and the loan will remain in a nonaccrual status until it is deemed that sufficient improvements in cash flows can be established.

The following table summarizes the balance of net unamortized discounts on purchased loans as of:

9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2021 2021 2021 2020 2020Net unamortizeddiscount on $ 196 $ 388 $ 580 $ 773 $ 877 purchased loans

Despite historically strong credit quality indicators, there continues to be significant uncertainty surrounding the overall impact of the COVID-19 pandemic on the loan portfolio. Management continues to actively enhance the analysis of the ALLL as client impact and broader economic data from the pandemic becomes more clear.

The following table summarizes the average loan size as of:

9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 2021 2021 2021 2020 2020Commercial $ 217 $ 168 $ 206 $ 169 $ 166 Commercial real estate 791 761 727 707 672 Total commercial loans 608 498 444 351 321 Residential mortgage 203 199 183 182 180 Home equity 47 47 46 45 45 Total residential real 141 138 131 130 129 estate loansConsumer 25 24 22 22 22 Gross loans $ 287 $ 262 $ 249 $ 226 $ 215

COVID-19, CARES Act and SBA activity

The communities which the Corporation serves are not immune to the fallout of the COVID-19 pandemic. The Corporation has committed significant efforts to work with customers through temporary loan modifications and participation in the PPP loan program through the SBA.

The Corporation considered the modification type on a loan-by-loan basis. Most modifications for loans held within the Corporation's loan portfolio resulted in the deferment of principal and interest payments for 6 months or less.

The Corporation also provided a variety of accommodations for loans that the Corporation services for FHLMC including providing mortgage forbearance for up to 12 months, waiving assessments of penalties and late fees, halting foreclosure actions and evictions, and offering loan modification options that lower payments or keep payments the same after the forbearance period.

As outlined in the following table, the majority of the Corporation's portfolio and serviced loans have returned to normal principal and interest payments. The balance of those loans with deferrals are actively monitored and specific reserves have been established where appropriate.

The table below outlines the active COVID-19 related loan modifications as of September30, 2021:

Number of Outstanding % of Modifications Balance PortfolioCommercial real estate 1 104 0.02 %Portfolio residential 2 366 0.13 %mortgage loansTotal portfolio modifications 3 $ 470 0.05 % Residential mortgage loans 21 $ 4,960 0.84 %serviced for FHLMC

The accommodation industry was particularly impacted by the COVID-19 pandemic. Due to executive action put in place by the government, including stay-at-home orders and travel restrictions, hotel occupancy rates were reduced drastically in 2021. The Corporation has 15 commercial loans in its portfolio in the accommodation industry with a book balance of $19,370. Of these loans, approximately 51% are at least partially government-backed by guarantees from either the SBA or USDA.

The Corporation was extremely active in participating in the PPP loan program. The Corporation funded 1,370 PPP loans totaling $216,205. During the fourth quarter of 2020, the SBA began processing PPP forgiveness applications, which reduced the outstanding balance of PPP loans to $4,985 as of September30, 2021.

The Corporation generated $6,799 in fees from the SBA through the first round of the PPP loan program since April 2020. The income is being recognized over the life of the PPP loans (24 to 60 months) based on the level yield method or upon forgiveness. As of September30, 2021, the Corporation has recognized $6,712 in income since April 2020, with $87 remaining as unearned income.

During the first quarter of 2021, the SBA processed applications for a second round of PPP loans. Due to strong portfolio loan demand, management elected to refer the second round of PPP requests to a third party for processing and funding. As such, the associated referral fees were recognized as a component of noninterest income. As of September30, 2021, the Corporation generated referral fee income of $431 for the second round of the PPP loan program.The tables below summarize total PPP fee income as of:

9/30/ 6/30/2021 3/31/2021 12/31/ 9/30/2020 2021 2020PPP fees recognized $ 376 $ 999 $ 1,777 $ 1,199 $ 1,757 PPP referral fee 6 74 351 ? ? incomeTotal PPP fees $ 382 $ 1,073 $ 2,128 $ 1,199 $ 1,757 recognized

Year to Date September Variance 30 2021 2020 Amount %PPP fees recognized $ 3,152 $ 2,361 $ 791 33.50 %PPP referral fee income 431 ? 431 N/MTotal PPP fees recognized $ 3,583 $ 2,361 $ 1,222 51.76 %

All other assets

The following tables outline the composition and changes in other assets as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Corporateowned life $ 25,803 $ 25,638 $ 10,354 $ 10,291 $ 10,225insurancePremises andequipment, 16,330 16,231 15,969 15,461 15,267netMortgageservicing 6,454 6,523 5,404 4,885 4,376rightsAccruedinterest 4,416 4,423 5,451 5,068 5,645receivableFederal HomeLoan Bank 3,488 3,488 3,488 3,488 3,488stockGoodwill 3,219 3,219 3,219 3,219 3,219Right-of-use 1,241 1,364 1,139 364 387assetsCore deposit 338 406 474 541 632intangiblesDerivatives 320 601 1,009 1,331 1,772Other assets 1,975 1,944 2,080 962 1,005All other $ 63,584 $ 63,837 $ 48,587 $ 45,610 $ 46,016assets 9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %Corporateowned life $ 165 0.64 % $ 15,578 152.35 %insurancePremises andequipment, 99 0.61 % 1,063 6.96 %netMortgageservicing (69 ) (1.06 ) % 2,078 47.49 %rightsAccruedinterest (7 ) (0.16 ) % (1,229 ) (21.77 ) %receivableFederal HomeLoan Bank ? ? % ? ? %stockGoodwill ? ? % ? ? %Right-of-use (123 ) (9.02 ) % 854 220.67 %assetsCore deposit (68 ) (16.75 ) % (294 ) (46.52 ) %intangiblesDerivatives (281 ) (46.76 ) % (1,452 ) (81.94 ) %Other assets 31 1.59 % 970 96.52 %All other $ (253 ) (0.40 ) % $ 17,568 38.18 %assets

Corporate owned life insurance represents the cash surrender value of life insurance policies owned by the Corporation on the lives of key members of management. The increase in Corporate owned life insurance in the second quarter of 2021 was due to the purchase of $15,000 in additional policies.

Mortgage servicing rights are servicing assets that are recognized from the sales of mortgage loans. The increase in mortgage servicing rights throughout 2021 is due to the increased volume of residential mortgage loan sales. The serviced loan portfolio has continued to grow in 2021 and the Corporation expects the serviced loan portfolio to increase throughout the remainder of 2021 as the Corporation continues to add to the serviced portfolio.

Right-of-use assets were established pursuant to the adoption of FASB ASU 2016-02, "Leases (Topic 842)", on January 1, 2019. Right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term, for leases that are longer than 12 months. The increase in the Corporation's right-of-use assets in the first quarter of 2021 was due to the recognition of two additional lease obligations.

Derivatives represent the fair value of interest rate lock commitments and mandatory forward loan sales commitments that are in a gain position. These balances can fluctuate from period to period based on changes in interest rates and the volume of the Corporation's loan pipeline.

Other assets includes miscellaneous other asset items, none of which are individually significant.

Total deposits

The following tables outline the composition and changes in the deposit portfolio as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Noninterest $ 442,358 $ 435,588 $ 422,013 $ 378,733 $ 391,706bearing demandInterest bearingSavings 320,724 305,409 309,454 290,343 269,051Money market 119,719 113,088 109,101 113,729 99,252demandNOW 115,114 102,046 103,342 101,419 120,681Time deposits 146,376 170,365 178,598 187,752 180,780Total deposits $ 1,144,291 $ 1,126,496 $ 1,122,508 $ 1,071,976 $ 1,061,470 9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %Noninterest $ 6,770 1.55 % $ 50,652 12.93 %bearing demandInterest bearingSavings 15,315 5.01 % 51,673 19.21 %Money market 6,631 5.86 % 20,467 20.62 %demandNOW 13,068 12.81 % (5,567 ) (4.61 ) %Time deposits (23,989 ) (14.08 ) % (34,404 ) (19.03 ) %Total deposits $ 17,795 1.58 % $ 82,821 7.80 %

The Corporation has continued its focus of growing non-contractual deposits while supplementing funding with time deposits. The Corporation has been able to drive this meaningful increase through enhanced organic growth strategies. Total deposits have also increased due to government related stimulus programs. The decrease in time deposits throughout 2021 is primarily due to maturities of municipal time deposits. As a result of the liquidity position of the Corporation and rate compression on contractual time deposits, the Corporation may allow higher priced time deposits to exit. The Corporation will continue to monitor deposit growth and adjust interest rates in order to minimize downward pressure on margins.

Cash and cash equivalents

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/ 2020Cash andcash equivalentsNoninterest $ 25,693 $ 22,454 $ 25,698 $ 23,102 $ 22,108bearingInterest 87,168 110,222 95,779 23,655 52,924bearingCash andcash $ 112,861 $ 132,676 $ 121,477 $ 46,757 $ 75,032equivalents 9/30/2021 vs 6/30/2021 9/30/2021 vs 9/30/2020 Variance Variance Amount % Amount %Cash andcash equivalentsNoninterest $ 3,239 14.43 % $ 3,585 16.22 %bearingInterest (23,054 ) (20.92 ) % 34,244 64.70 %bearingCash andcash $ (19,815 ) (14.93 ) % $ 37,829 50.42 %equivalents

Cash and cash equivalents, which is comprised of cash and due from banks, fluctuate from period to period based on loan demand and variances in deposit accounts. The Corporation expects cash and cash equivalents to decline from its current elevated levels as the funds are redeployed into the loan and investment portfolios.

Primary and secondary liquidity sources

While the Corporation continues to maintain a strong liquidity position, it is important to monitor all liquidity sources. The following table outlines the Corporation's primary and secondary sources of liquidity as of:

9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020Cash andcash $ 112,861 $ 132,676 $ 121,477 $ 46,757 $ 75,032 equivalentsUnpledgedinvestment 127,913 118,019 76,384 59,025 58,739 securitiesFHLBborrowing 140,000 140,000 140,000 140,000 97,500 availabilityFederalfundspurchased 21,500 21,500 21,500 21,500 21,500 lines ofcreditFundsavailablethrough the 10,000 10,000 10,000 10,000 10,000 Fed DiscountWindowParentcompany line 7,000 7,500 8,000 8,000 8,000 of creditPPPLF 4,985 35,195 122,583 177,845 206,343 Totalliquidity $ 424,259 $ 464,890 $ 499,944 $ 463,127 $ 477,114 sources

Total borrowed funds

The following tables outline the composition and changes in borrowed funds as of:

9/30/21 6/30/21 3/31/21 12/31/20 9/30/20Federal HomeLoan Bank $ 35,000 $ 35,000 $ 35,000 $ 35,000 $ 77,500borrowingsSubordinated 14,000 14,000 14,000 14,000 14,000debenturesPPPLF ? ? ? ? 4,717Other 1,000 500 ? ? ?borrowingsTotal borrowed $ 50,000 $ 49,500 $ 49,000 $ 49,000 $ 96,217funds 9/30/2021 vs 6/30/ 9/30/2021 vs 9/30/2020 2021 Variance Variance Amount % Amount %Federal HomeLoan Bank $ ? ? % $ (42,500 ) (54.84 ) %borrowingsSubordinated ? ? % ? ? %debenturesPPPLF ? ? % (4,717 ) (100.00 ) %Other 500 100.00 % 1,000 N/MborrowingsTotal borrowed $ 500 1.01 % $ (46,217 ) (48.03 ) %funds

The Corporation utilizes a mix of borrowed funds and organic deposit growth to fund loan demand. The decrease in Federal Home Loan Bank borrowings in the fourth quarter of 2020 was primarily due to early payoffs of three FHLB borrowings totaling $30,000. Other borrowings is comprised of the outstanding balance on the holding company line of credit.

Total borrowed funds are expected to approximate current levels throughout the remainder of 2021. The Corporation continually analyzes the market for opportunities and will borrow funds when deemed financially beneficial.

Wholesale funding sources

The following tables outline the composition and changes in wholesale funding sources as of:

9/30/21 6/30/21 3/31/21 12/31/20 9/30/20Federal HomeLoan Bank $ 35,000 $ 35,000 $ 35,000 $ 35,000 $ 77,500borrowingsSubordinated 14,000 14,000 14,000 14,000 14,000debenturesPPPLF ? ? ? ? 4,717Other 1,000 500 ? ? ?borrowingsBrokered money ? ? ? ? 25,029market demandBrokered time 20,000 20,000 20,234 20,000 28,605depositsInternet time 2,739 2,739 2,739 2,839 10,208depositsTotalwholesale $ 72,739 $ 72,239 $ 71,973 $ 71,839 $ 160,059funds 9/30/2021 vs 6/30/ 9/30/2021 vs 9/30/2020 2021 Variance Variance Amount % Amount %Federal HomeLoan Bank $ ? ? % $ (42,500 ) (54.84 ) %borrowingsSubordinated ? ? % ? ? %debenturesPPPLF ? ? % (4,717 ) (100.00 ) %Other 500 100.00 % 1,000 N/MborrowingsBrokered money ? ? % (25,029 ) (100.00 ) %market demandBrokered time ? ? % (8,605 ) (30.08 ) %depositsInternet time ? ? % (7,469 ) (73.17 ) %depositsTotalwholesale $ 500 0.69 % $ (87,320 ) (54.55 ) %funds

The Corporation utilizes wholesale funds to manage balance sheet growth. Wholesale funding has historically been more expensive than core deposits, however, due to the COVID-19 pandemic, the FRB has kept Fed funds rates near zero. The Corporation continually analyzes sources of wholesale funding when the increases in interest earning assets out-pace the increases in core deposits.

Accrued interest payable and other liabilities

Accrued interest payable and other liabilities includes accrued interest payable, federal income taxes payable, deferred federal income taxes payable, and all other liabilities (none of which are individually significant). Accrued interest payable and other liabilities are not expected to fluctuate significantly in future periods.

Total shareholders' equity

Total shareholders' equity includes common stock, retained earnings, and AOCI. Total shareholders' equity is expected to continue to grow throughout the remainder of 2021 through the Corporation's earnings. As of September30, 2021, the Corporation's capital ratios remained strong and are expected to exceed well capitalized provisions for the foreseeable future, inclusive of the projected impact of the acquisition of Farmers State Bank of Munith in the fourth quarter of 2021.

In April 2020, the Corporation's Board of Directors amended its common stock repurchase plan to authorize the repurchase of up to $5,000 of common stock. As of September30, 2021, the Corporation has $1,022 of common stock available to repurchase. The following tables outline the number shares, dollar amount and weighted average share price associated with the Corporation's common stock repurchase plan for the following periods:

Quarter to Date 9/30/2021 6/30/2021 3/31/2021 12/31/ 9/30/ 2020 2020Number of Shares 73,714 40,383 37,315 5,342 ?RepurchasedDollar Amount of Shares $ 1,929 $ 1,059 $ 880 $ 110 $ ?RepurchasedWeighted Average Share $ 26.17 $ 26.22 $ 23.58 $ 20.59 N/MPrice

Year to Date September 30 2021 2020Number of Shares Repurchased 151,412 5,342 Dollar Amount of Shares Repurchased $ 3,868 $ 110 Weighted Average Share Price $ 25.55 $ 20.59

Stock Performance

The following graph compares the cumulative total shareholder return on the Corporation's common stock for the last five years with the cumulative total return on the ABA NASDAQ Community Bank Index (NASDAQ: ABAQ) over the same period. The graph assumes the value of an investment in the Corporation's common stock and the ABA NASDAQ Community Bank Index was $100 atSeptember30, 2016and all dividends were reinvested.

The graphaccompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/b1d51f61-f019-4687-9c48-919225bee0de

Date FETM ABAQ Index9/30/2016 100.00 100.009/30/2017 131.17 129.039/30/2018 152.07 131.539/30/2019 152.90 118.709/30/2020 126.90 79.229/30/2021 189.86 139.04

Abbreviations and Acronyms

ABA: American Bankers Association HFS: Held-for-saleAFS: Available-for-sale HTM: Held-to-maturityALLL: Allowance for loan and lease IRA: Individual retirement accountlossesAOCI: Accumulated other ITM: Interactive teller machinecomprehensive incomeASC: Accounting Standards MSR: Mortgage servicing rightsCodificationASU: Accounting Standards Update N/M: Not meaningfulATM: Automated teller machine NASDAQ: National Association of Securities Dealers Automated QuotationsCARES Act: Coronavirus Aid, Relief, NOW: Negotiable order of withdrawaland Economic Security ActCET1: Common equity tier 1 NSF: Non-sufficient fundsCOVID-19: Coronavirus Disease 2019 OREO: Other real estate ownedFASB: Financial Accounting Standards PPP: Paycheck Protection ProgramBoardFDIC: Federal Deposit Insurance PPPLF: Paycheck Protection ProgramCorporation Liquidity FacilityFHLB: Federal Home Loan Bank QTD: Quarter-to-dateFHLMC: Federal Home Loan Mortgage SAB: Staff Accounting BulletinCorporationFRB: Federal Reserve Bank SBA: U.S. Small Business AdministrationFTE: Fully taxable equivalent USDA: United States Department of AgricultureGAAP: Generally Accepted Accounting YTD: Year-to-datePrinciples

AboutFentura Financial, Inc.andThe State Bank

Fentura Financial, Inc. is the holding company for The State Bank. It was formed in 1987 and is traded on the OTCQX exchange under the symbol FETM, and was recognized as one of the Best 50 performing stocks in 2018 on that exchange.

The State Bank is a full-service, 5-Star Bauer Financial rated commercial, retail and trust bank headquartered in Fenton, Michigan. It currently operates 17 full-service branches in Genesee, Livingston, Oakland, Saginaw, and Shiawassee Counties. The State Banks commercial department provides a complete array of products including lines of credit, term loans, commercial mortgages, SBA loans and a full-suite of cash management products. The retail department offers personal checking, savings, time and IRA deposit accounts and a wide array of loan products including home equity, auto and personal loans. The residential loan department offers construction, purchase and refinance residential mortgage loans. The wealth management department offers a full-service suite of trust and portfolio management services. More information can be found at www.thestatebank.com or www.fentura.com.

Cautionary Statement: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in earning assets and net income. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

Contacts: Ronald L. Justice Aaron D. Wirsing President & CEO Chief Financial Officer Fentura Financial, Inc. Fentura Financial, Inc. 810.714.3902 810.714.3925 ron.justice@thestatebank.com aaron.wirsing@thestatebank.com