Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - FENTURA FINANCIAL INC | k49168e8vkza.htm |
| EX-10.1 - EX-10.1 - FENTURA FINANCIAL INC | k49168exv10w1.htm |
Exhibit 99.1
2010 ANNUAL MEETING
DON’S FIRST SPEECH
DON’S FIRST SPEECH
2009 PROVED TO BE ANOTHER DIFFICULT YEAR FOR FENTURA. WHILE WE WILL SPEND SOME TIME THIS
MORNING DISCUSSING THE CAUSES BEHIND THE SUBSTANTIAL LOSS FOR THE YEAR, WE INTEND TO SPEND MOST OF
OUR TIME TODAY DISCUSSING THE FUTURE. WE WILL PROVIDE YOU WITH SOME INSIGHTS INTO OUR STRATEGIC
PLANNING PROCESS—AS WELL
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AS ANNOUNCE MAJOR CHANGES IN STORE FOR YOUR COMPANY FOR 2010.
AS EVERYONE IN THIS ROOM KNOWS VERY WELL, 2009 WAS ANOTHER VERY DISAPPOINTING YEAR FOR OUR
COMPANY—AS WE REPORTED A $16 MILLION LOSS FOR THE YEAR. AS IN THE PRIOR YEAR, THE LOSS WAS
PRINCIPALLY A RESULT OF THE INABILITY OF MANY OF OUR BORROWERS TO REPAY—WHICH LED TO HEAVY
PROVISION EXPENSE FOR POSSIBLE FUTURE LOAN LOSSES. PROVISION FOR LOAN LOSS EXPENSE IN 2009 TOTALED
$14.7
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MILLION—NEARLY TWICE THE LEVEL OF 2008 AND 2007—AND ABOUT 12 TIMES GREATER THAN OUR
PRE-RECESSION HISTORICAL ANNUAL PROVISION LEVELS. IN ADDITION, LOAN COLLECTION EXPENSES INCREASED
BY $2.7 MILLION AND FEES FOR OTHER PROFESSIONAL SERVICES AND EXPENSES INCREASED $1.5 MILLION.
OBVIOUSLY, THESE EXTRAORDINARY RECESSIONARY AND CREDIT-RELATED EXPENSES PLAYED HAVOC WITH OUR
INCOME STATEMENT AND SERIOUSLY ATTACKED OUR CAPITAL ACCOUNT.
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ON THE FLIP SIDE, WE DID REPORT A PROFIT FOR THE FOURTH QUARTER OF 2009—AND THE ANNUAL
REPORT LETTER TO SHAREHOLDERS DID POINT TO SOME IMPROVEMENT IN ASSET QUALITY TRENDS AND EXPECTED
IMPROVEMENT IN THE OVERALL ECONOMY!
SINCE YOU’VE HAD A CHANCE TO READ ABOUT LAST YEAR’S FINANCIAL PERFORMANCE IN THE PROXY MAILING
PACKAGE.—I’M GOING TO FOCUS MY COMMENTS ON THE POSITIVE THINGS WE BEGAN SEEING DURING THE THIRD
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AND FOURTH QUARTERS OF 2009 WHICH ARE CONTINUING INTO 2010.
FIRST, WE ARE DEFINITELY BEGINNING TO SEE SOME POSITIVE TRENDS IN OVERALL LOAN QUALITY. FEWER
LOANS ARE MIGRATING INTO A WATCH OR SUBSTANDARD LOAN STATUS,—NON PERFORMING LOANS HAVE DECLINED
SLIGHTLY FROM THE PRIOR YEAR-— AND LOAN DELINQUENCIES ENDED THE YEAR BELOW THE LEVEL OF 2008.
CERTAIN TROUBLED BUSINESS LOAN BORROWERS HAVE BEEN ABLE TO CHANGE THEIR PRODUCT LINE OR DIVERSIFY
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THEIR CUSTOMER BASE THUS STRENGTHENING THEIR COMPANIES, AND ALLOWING US TO UPGRADE THEIR LOANS.
RESIDENTIAL PROPERTY VALUES ARE BEGINNING TO STABILIZE AND WE HAVE BEEN ABLE TO RESELL PROPERTIES
ACQUIRED THROUGH FORECLOSURE AT—OR NEAR—OUR CARRYING VALUES FOR THE FIRST TIME IN TWO YEARS.
AT BOTH THE 2008 AND 2009 SHAREHOLDER MEETINGS WE MENTIONED THE HIGH LEVEL OF CONSTRUCTION AND
DEVELOPMENT LOANS AS HAVING BEEN A MAJOR SOURCE OF OUR
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CREDIT PROBLEMS. I AM PLEASED TO REPORT
THAT SINCE MID- YEAR 2007, OUR CONSTRUCTION AND LAND DEVELOPMENT LOAN PORTFOLIO HAS DROPPED BY
65.4% FROM $62.5 MILLION TO $21.6 MILLION. THIS DRAMATIC REDUCTION IN EXPOSURE TO THIS TROUBLED
INDUSTRY SHOULD SOFTEN THE FUTURE LOAN LOSS PROVISION REQUIREMENT FOR SUCH LOANS AND ASSIST IN OUR
FINANCIAL TURNAROUND.
NOW—ARE WE “OUT OF THE WOODS?” ON ASSET QUALITY? NO—NOT YET—BUT WE
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DEFINITELY CAN SEE THE
“LIGHT AT THE END OF THE TUNNEL.” (PAUSE)
LAST YEAR WE BEGAN THE PROCESS OF SHRINKING THE BANK BALANCE SHEETS TO IMPROVE THEIR NET
INTEREST MARGINS AND CAPITAL RATIOS. LOAN AND DEPOSIT INTEREST RATE SPREADS WERE WIDENED AND
NON-CORE DEPOSIT RELATIONSHIPS WERE REDUCED—RESULTING IN A 10 BASIS POINT IMPROVEMENT IN THE NET
INTEREST MARGIN ON A YEAR-TO-YEAR BASIS.
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ANOTHER AREA OF ACCOMPLISHMENT THAT WAS PROBABLY MASKED BY THE MAGNITUDE OF THE LOSS FOR THE
YEAR, WAS IN THE AREA OF EXPENSE CONTROL. DURING THE EARLY PART OF 2009, WE SUBSTANTIALLY CHANGED
OUR ORGANIZATIONAL STRUCTURE AND ELIMINATED THE ASSOCIATED OVERHEAD EXPENSE. WE COLLAPSED ONE OF
OUR BANK BOARDS,—WE MODIFIED SENIOR MANAGEMENT ROLES AND RESPONSIBILITY,—WE ELIMINATED ABOUT
12% OF OUR WORKFORCE—WE CUT SALARIES ACROSS THE BOARD FOR ALL
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EMPLOYEES,—WE ELIMINATED BONUSES
AND STOCK OPTIONS-— AND WE SUSPENDED RETIREMENT CONTRIBUTIONS FOR ALL
EMPLOYEE PLANS INCLUDING THE
BASIC 401(K) COMPANY CONTRIBUTION PLAN. THE IMPACT WAS PAINFUL AND DIFFICULT AS THESE EXPENSE
REDUCTIONS IMPACTED EVERYONE IN OUR COMPANY. AS YOU CAN WELL APPRECIATE, IT’S NOT EASY TO MAINTAIN
EMPLOYEE MORALE WHEN THE COMPANY IS REPORTING LARGE OPERATING LOSSES
AND EMPLOYEES ARE BEING ASKED TO SACRIFICE
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PERSONALLY. BUT I’M PLEASED TO TELL YOU THAT OUR
EMPLOYEES ARE JUST AS LOYAL TO OUR COMPANY AS YOU ARE. I’M NOT AWARE OF ANY OFFICER OR EMPLOYEE
WHO WALKED AWAY FROM US BECAUSE OF THE PERSONAL SACRIFICE AND THE TOUGH TIMES WE ARE
FACING.—VIRTUALLY EVERY EMPLOYEE “COMMITTED TO THE CAUSE” AND RESOLVED TO DO HIS OR HER PART TO
HELP OUR COMPANY SURVIVE. THE SAVINGS CONNECTED WITH THESE CHANGES CUT EXPENSES BY WELL OVER ONE
MILLION DOLLARS FOR THE YEAR
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AND WILL CONTINUE TO BENEFIT US IN 2010 AND BEYOND. (PAUSE)
MY HOPE IS THAT YOU SENSE THE TONE OF OPTIMISM THAT I FEEL—ABOUT HOW WE’RE CURRENTLY
PERFORMING AND HOW WE’RE POSITIONED COMING OUT OF THE RECESSION. OUR BANKS WITHSTOOD A COUPLE
YEARS WORTH OF “HEAVY BODY BLOWS” AND THEY ARE ALL STILL STANDING FIRM AND THEY ARE ALL STILL
ADEQUATELY CAPITALIZED. SO—I BELIEVE WE HAVE WEATHERED THE WORST OF THE STORM!
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NOW—ARE WE CLOSE TO RETURNING TO PROFITABILITY OR AT LEAST NEAR BREAK-EVEN PERFORMANCE?
WELL—WE CAN’T BE CERTAIN—BUT IT IS BEGINNING TO FEEL LIKE THAT. THERE ARE SOME POSITIVE SIGNS
IN THE OVERALL ECONOMY AS UNEMPLOYMENT IS NO LONGER INCREASING, AUTO SALES ARE STRENGTHENING AND
OVERALL CONSUMER CONFIDENCE IS IMPROVING.
AS I MENTIONED EARLIER, WE DID REPORT A PROFIT DURING THE FOURTH QUARTER OF 2009, (THE FIRST
IN 7 CONSECUTIVE QUARTERS).
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ADDITIONALLY, LATER THIS WEEK WE’LL BE REPORTING A MODEST MANAGEABLE
LOSS FOR THE FIRST QUARTER OF 2010 AS COMPARED TO THE SIZEABLE LOSSES OF 2008 AND 2009.
NOW, TWO QUARTERS DO NOT CONSTITUTE A TREND, BUT WHEN COUPLED WITH THE MANY OTHER POSITIVE
ASSET QUALITY MEASURES AND EXPENSE REDUCTIONS I MENTIONED PREVIOUSLY, YOU CAN BEGIN TO UNDERSTAND
THE REASON FOR MY OPTIMISM.
SOME OF YOU FOLLOW THE FINANCIAL PERFORMANCE OF FINANCIAL INSTITUTIONS
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CLOSELY. SO YOU KNOW
THAT THE KEY TO SURVIVAL FOR A STRUGGLING BANK IS IN BEING ABLE TO PREVENT OPERATING LOSSES FROM
ERODING CAPITAL TO A POINT—WHERE THE BANK BECOMES UNDERCAPITALIZED AND UNABLE TO CONTINUE AS A
VIABLE ENTITY. THAT RISK HAS CLEARLY BEEN THE FOCUS OF OUR ATTENTION FOR THE PAST TWO YEARS—AND
WHILE WE HAVE SHARED SOME INFORMATION WITH YOU ABOUT OUR STRATEGIC PLANS, WE HAVE NOT BEEN ABLE TO
PAINT A COMPLETE PICTURE UNTIL TODAY.
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SO AT THIS TIME—IT’S MY PLEASURE TO TURN THE MEETING OVER TO CHAIRMAN SHOOK FOR HIS COMMENTS
ABOUT THE SPECIFIC STEPS WE ARE TAKING TO STRENGTHEN THE CAPITAL POSITION AND FUTURE PERFORMANCE OF
OUR COMPANY.
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2010 ANNUAL MEETING PRESENTATION
FORREST SHOOK
FORREST SHOOK
THANK YOU DON.
EACH YEAR I TRY TO PROVIDE YOU WITH AN OUTSIDE DIRECTOR’S VIEWPOINT ON COMPANY FINANCIAL
PERFORMANCE AND GIVE YOU A GLIMPSE OF OUR PLANS FOR THE FUTURE. AND THAT IS THE SAME FORMAT I
INTEND TO FOLLOW THIS MORNING.
IT CERTAINLY IS DIFFICULT TO STAND IN FRONT OF A GROUP OF SHAREHOLDERS AND DISCUSS THE FACT
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THAT THE COMPANY LOST $16 MILLION DOLLARS THE PRIOR YEAR. HOWEVER, THAT IS EXACTLY WHAT
HAPPENED—AND ON THE HEELS OF A $12 MILLION DOLLAR LOSS THE PRIOR YEAR—IT MAKES THINGS PRETTY
UNCOMFORTABLE FOR ALL OF US.
SO THE KEY QUESTIONS ARE—HOW BAD IS OUR SITUATION—AND WHERE DO WE GO FROM HERE?
WITHOUT ANY DOUBT, THIS ECONOMY—AND ITS IMPACT ON THE BANKING INDUSTRY HAS CREATED THE MOST
DIFFICULT CHALLENGE BANKS
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HAVE FACED SINCE THE GREAT DEPRESSION. AS DON HAS ALREADY MENTIONED,
OPERATING LOSSES HAVE ERODED THE CAPITAL POSITION OR NET WORTH OF OUR COMPANY. ARE THE CAPITAL
LEVELS AT OUR BANKS STRESSED?—OF COURSE THEY ARE.—BUT ARE THE LEVELS AT A CRITICAL OR DANGEROUS
LEVEL?—NO THEY ARE NOT. I AM PLEASED TO ASSURE YOU THAT IN SPITE OF THE SUBSTANTIAL LOSSES
ENCOUNTERED DURING THE PAST TWO YEARS, ALL THREE OF OUR BANKS REMAIN ADEQUATELY CAPITALIZED
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ACCORDING TO REGULATORY CAPITAL STANDARDS. BUT SINCE OUR CAPITAL HAS DETERIORATED DURING THE PAST
TWO YEARS, YOUR BOARD HAS BEEN INVOLVED IN AN EXTENSIVE STRATEGIC PLANNING PROCESS TO IMPROVE
OVERALL CAPITAL LEVELS.
EARLY LAST YEAR, WE CONSIDERED A TARP INJECTION FROM THE FEDERAL GOVERNMENT. WE ALSO LOOKED AT
RAISING CAPITAL FROM THE ISSUANCE OF NEW PREFERRED OR COMMON STOCK. AFTER SERIOUS CONSIDERATION,
THE BOARD DECIDED AGAINST ACCEPTING
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THE GOVERNMENT TARP PROCEEDS. ADDITIONALLY, THE BOARD HAS
RESISTED ISSUING NEW COMMON STOCK BECAUSE IT WOULD HAVE SUCH A DILUTIVE AFFECT ON EXISTING
SHAREHOLDERS. PREFERRED STOCK IS NOT AN OPTION AT THIS TIME BECAUSE OF THE INABILITY OF THE BANKS
TO UPSTREAM DIVIDENDS AS A SOURCE OF REPAYMENT ON A NEW PREFERRED STOCK ISSUE.
GIVEN THESE DECISIONS, EARLY LAST YEAR THE BOARD DECIDED TO SELL DAVISON STATE BANK AND
RECLAIM THE
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CAPITAL INVESTED THERE FOR REDISTRIBUTION TO THE STATE BANK, WEST MICHIGAN COMMUNITY
BANK OR BOTH. WHILE THAT TRANSACTION AWAITED REGULATORY APPROVAL FOR WELL OVER A YEAR—I AM
PLEASED TO REPORT THAT THE ACQUIRING ENTITY RECEIVED APPROVAL FOR THE PURCHASE EARLY THIS MONTH AND
THE CLOSING IS ACTUALLY EXPECTED TO TAKE PLACE AT THE END OF THIS MONTH. DON WILL PROVIDE A FEW
DETAILS ON THE FINANCIAL IMPACT OF
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THIS TRANSACTION IN HIS COMMENTS TO FOLLOW.
WHILE WE REMAINED OPTIMISTIC THROUGH OUT THE YEAR THAT THIS SALE WOULD ULTIMATELY BE APPROVED,
WE CONTINUED TO INVESTIGATE OTHER ALTERNATIVES TO STRENGTHEN THE OVERALL CONDITION OF THE
COMPANY.—AND TODAY IS GIVES ME A GREAT DEAL OF PLEASURE TO INFORM YOU THAT-— JUST LAST
WEEK—YOUR BOARD AUTHORIZED MANAGEMENT TO ENTER INTO AN AGREEMENT TO SELL WEST MICHIGAN COMMUNITY
BANK TO THE
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OWNERS OF NORTHSTAR FINANCIAL GROUP, INC.. DON WILL ALSO PROVIDE SOME ADDITIONAL
FINANCIAL DETAILS ON THIS
TRANSACTION, BUT I DO WANT YOU TO KNOW THAT THE SALE OF THESE TWO BANKS WILL ALLOW FENTURA TO
INJECT ADDITIONAL CAPITAL INTO THE STATE BANK TO RETURN IT TO WHAT IS CONSIDERED A STRONG OR WELL
CAPITALIZED POSITION.
AS WE DISCUSSED AND CONCLUDED IN ONE OF OUR SPECIAL DIRECTOR MEETINGS ABOUT A YEAR
AGO—SOMETIMES YOU HAVE TO SHRINK TO
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SURVIVE AND POSITION YOUR COMPANY TO—“LIVE TO FIGHT ANOTHER
DAY”. THAT IS EXACTLY THE PHILOSOPHY WE HAVE BEEN OPERATING UNDER FOR THE PAST 18 MONTHS—AND
WITH THESE ANNOUNCEMENTS TODAY—THE APPROVAL OF THE SALE OF DAVISON STATE BANK—AND THE AGREEMENT
TO SELL WEST MICHIGAN COMMUNITY BANK—WE ARE THERE. THAT IS TO SAY—WE BELIEVE WE WILL HAVE
ACCOMPLISHED OUR GOAL OF REPOSITIONING THE COMPANY BY
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SHRINKING TO BECOME A SMALLER BUT STRONGER
COMPANY.
I DO WANT YOU TO KNOW THAT THIS HAS BEEN A COUPLE OF VERY DIFFICULT YEARS FOR ALL OF US. IT
HAS BEEN DIFFICULT FOR YOU AS SHAREHOLDERS, DIFFICULT FOR THOSE OF US WHO ARE DIRECTORS AND
DIFFICULT FOR OUR OFFICERS AND EMPLOYEES. NONE OF US EVER IMAGINED THAT OUR SHARE PRICE COULD OR
WOULD DROP TO SUCH A LOW LEVEL AND I DON’T THINK ANY OF US EXPECTED THAT COMPANY PERFORMANCE WOULD
DETERIORATE TO
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A POINT THAT WE WOULD HAVE TO SUSPEND THE DIVIDEND.
BUT IN LOOKING BACK, THE NATIONAL AND INTERNATIONAL FINANCIAL COMMUNITY PRETTY MUCH WENT INTO
A FREE FALL IN 2008. THE FEDERAL GOVERNMENT STABILIZED THE BIG BANKS DURING THE EARLY PART OF
2009, BUT DID VERY LITTLE TO ASSIST THE SMALL BANKS WHO HAVE BEEN LEFT TO “FEND FOR THEMSELVES”.
WHILE WE ARE ALL DISAPPOINTED AND SUFFERING AS SHAREHOLDERS BECAUSE OF THE PERFORMANCE OF OUR
BANKS. WE
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TRACK OUR PERFORMANCE AGAINST OTHER SIMILAR SIZE MICHIGAN BANKS—AND WE ARE ACTUALLY
DOING BETTER THAN MANY BY COMPARISON.
IT IS IMPORTANT THAT YOU REALIZE THAT YOUR DIRECTORS AND MANAGEMENT TEAM HAVE WRESTLED HARD
WITH THESE PROBLEMS OVER THE LAST TWO YEARS. WE HAVE UNCOVERED EVERY STONE AND LOOKED AT EVERY
SCENARIO POSSIBLE. WE BELIEVE WE HAVE CREATED A SURVIVAL STRATEGY BY RETURNING FENTURA TO ITS
ORIGINAL CORE MARKETS AS A ONE
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BANK HOLDING COMPANY FOR THE STATE BANK. THE SALE OF DAVISON STATE
BANK AND WEST MICHIGAN COMMUNITY BANK SHOULD PROVIDE FENTURA AND THE STATE BANK WITH ENOUGH CAPITAL
TO NOT ONLY WEATHER THE STORM BUT BE POSITIONED FOR IMPROVED PERFORMANCE WHEN THE ECONOMY FINALLY
TURNS AROUND.
AT THIS TIME, DON IS GOING TO RETURN TO THE PODIUM TO DESCRIBE IN MORE DETAIL THE POSITIVE
IMPACT THAT THE SALE OF THESE TWO BANKS
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WILL HAVE ON FENTURA AND THE STATE BANK.
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2010 ANNUAL MEETING
DON’S SECOND PRESENTATION
DON’S SECOND PRESENTATION
AS FORREST POINTED OUT IN HIS COMMENTS, OUR PRIMARY FOCUS FOR THE PAST TWO YEARS—HAS
BEEN ON CAPITAL ADEQUACY. FROM MID YEAR 2007 TO MID YEAR 2009, THE CAPITAL OR NET WORTH POSITION
OF OUR BANKS DECLINED ON AVERAGE ABOUT ONE FOURTH—DECLINING FROM A LEVEL OF 8% OF TOTAL ASSETS
WHEN THE RECESSION STARTED—TO ABOUT 6% OF TOTAL ASSETS AT
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JUNE 30, 2009. THAT DETERIORATION WAS
CLEARLY A WAKE-UP CALL—AND THE BOARDS AND MANAGEMENT TEAMS OF ALL THREE BANKS HAVE BEEN WORKING
DILIGENTLY SINCE MID-YEAR LAST YEAR TO ADDRESS THE SITUATION—AND I’M PROUD TO REPORT THAT ALL
THREE BANKS HAVE IMPROVED THEIR CAPITAL POSITIONS SINCE THEN. HOWEVER, AS FORREST JUST POINTED
OUT, WE DECIDED THAT SHRINKING BACK TO OUR ORIGINAL CORE FRANCHISE WAS THE BEST STRATEGY TO
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ENSURE
OUR BEST LONG-TERM CHANCE FOR SURVIVAL.
SO THIS MORNING I’D LIKE TO TALK THROUGH SOME OF THE FINANCIAL DETAILS CONNECTED WITH
SHRINKING THE COMPANY.
LAST YEAR WE’VE AGREED TO SELL DAVISON STATE BANK AND THAT CLOSING WILL TAKE PLACE TODAY AT
4:00. THE $2.8 MILLION SALE PRICE IS ABOUT EQUAL TO THE CURRENT BOOK VALUE OF THE BANK.
IN A SEPARATE AND SECOND TRANSACTION, WE HAVE ENTERED INTO AN AGREEMENT TO
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SELL WEST MICHIGAN
COMMUNITY BANK FOR APPROXIMATELY $11.00 MILLION WHICH IS A 10% PREMIUM ABOVE BOOK VALUE. WHEN YOU
STOP TO THINK ABOUT IT FOR A MINUTE—THESE SALE PRICES AT OR ABOVE BOOK VALUE ARE PRETTY HANDSOME
IN TODAY’S MARKETPLACE AS SMALL BANK STOCKS (INCLUDING FENTURA) ARE SELLING WELL BELOW BOOK VALUE.
AS A RESULT, WE BELIEVE THESE TRANSACTIONS WILL BENEFIT YOU AS SHAREHOLDERS BOTH IN THE NEAR AND
LONG TERM. WHILE WE DID NOT USE
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INVESTMENT BANKING FIRMS TO NEGOTIATE THE TRANSACTIONS, WE DID PAY
ADVISORY FIRMS FOR CERTAIN CONSULTING ASSISTANCE AND FOR A SALE PRICE FAIRNESS OPINION IN THE CASE
OF WEST MICHIGAN COMMUNITY BANK.
AS FORREST MENTIONED, THE SALE OF THE BANKS WILL ALLOW FENTURA TO INVEST A PORTION OF THE
PROCEEDS IN THE STATE BANK RETRUNING IT TO A WELL CAPITALIZED LEVEL—THROUGH AN INJECTION OF
APPROXIMATELY $6.3 MILLION OF ADDITIONAL
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PAID IN CAPITAL. THE PROCEEDS FROM THE SALE OF THE TWO
BANKS OVER AND ABOVE THAT LEVEL WILL BE UTILIZED BY FENTURA TO FORM A NEW SUBSIDIARY TO ACQUIRE
CERTAIN NON PERFORMING ASSETS FROM WEST MICHIGAN COMMUNITY BANK AS REQUIRED UNDER THE TERMS OF THE
BANK SALE AGREEMENT. THOSE ASSETS INVOLVE LOANS IN THE PROCESS OF COLLECTION OR REAL ESTATE
PROPERTIES THAT HAVE BEEN ACQUIRED
THROUGH LOAN SERVICING ACTION. UNDERLYING COLLATERAL AND PROPERTY
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VALUES COVER THE LOAN BALANCES
OR THE ASSET CARRYING VALUES. AS A RESULT, THE LIQUIDATION OVER TIME OF THE APPROXIMATE $7.5
MILLION HOUSED IN THIS NEW SUBSIDIARY—SHOULD BE AVAILABLE TO FENTURA DOWN THE ROAD. FOR GENERAL
CORPORATE PURPOSES.
IN CLOSING, THIS PROCESS OF DEVELOPING A SURVIVAL PLAN FOR FENTURA HAS BEEN AN ARDUOUS ONE FOR
OUR DIRECTORS AND OUR OFFICERS. WE HAVE EXPERIENCED AN UNTOLD NUMBER OF “UP’S AND DOWN’S” DURING
THE
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PAST 2 1/2 YEARS. BUT TODAY, WE ARE MORE CONFIDENT THEN AT ANYTIME SINCE THE RECESSION
STARTED—THAT WE HAVE A SOLID TURNAROUND AND SURVIVAL PLAN. FIVE MICHIGAN BANKS HAVE FAILED
DURING THIS RECESSION AND IT IS LIKELY THAT MORE WILL FOLLOW. OUR OBJECTIVE HAS BEEN TO PROTECT
YOUR SHAREHOLDER INVESTMENT BY FIGURING OUT A WAY TO—“WEATHER THE STORM”.
THE STORM ISN’T QUITE OVER YET BUT THE FENTURA SHIP CERTAINLY ISN’T LISTING AS
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BADLY AS SHE
ONCE DID. CLEARLY, RETURNING FENTURA TO IT’S ROOTS AS A ONE BANK HOLDING COMPANY FOR THE STATE
BANK—WITH THE STATE BANK RETURNING TO A WELL CAPITALIZED LEVEL—LEAVES US WITH THE BEST POSSIBLE
STRUCTURE TO ACHIEVE A TURNAROUND IN OUR FINANCIAL—AND HOPEFULLY THAT WILL ALSO RESULT IN A
REASONABLE AND APPROPRIATE TURNABOUT IN OUR SHARE TRADING PRICE. IF ALL GOES ACCORDING TO PLAN,
THE SALE OF THE TWO BANKS AND THE RECAPITALIZATION OF THE
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STATE BANK WILL BE COMPLETED BEFORE YEAR
END.—AND COUPLED WITH EXPECTED IMPROVEMENT IN THE ECONOMY—2011 HAS THE POTENTIAL TO BE OUR BEST
YEAR SINCE 2006.
WE APPRECIATE YOUR PATIENCE,—YOUR CONFIDENCE,—AND YOUR SUPPORT AS WE NOW PROCEED TO
IMPLEMENT THESE DRAMATIC AND STRATEGIC CHANGES DESIGNED TO IMPROVE THE FINANCIAL STRENGTH AND
PROFITABILITY OF YOUR COMPANY.
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AT THIS TIME IT’S MY PLEASURE TO TURN THE MICROPHONE BACK TO VICE CHAIRMAN MCKENNEY FOR THE
WRAP UP OF THE BUSINESS PORTION OF THE MEETING.
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