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

FENTON, Mich., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces continued strong earnings with net income of $3,415 and $9,026 for the three and nine month periods ended September 30, 2019, respectively.

• 13.50% increase in gross loans since September 30, 2018
  
• 4.50% increase in total deposits since September 30, 2018
  
• Year to date yield on interest earning assets increased to 4.81% from 4.58% at September 30, 2018
  
• 18.88% increase in tangible book value per share since September 30, 2018

Ronald L. Justice, President and CEO said, “Our strong earnings are built off of our continued growth in net interest income. Even when adjusting for nonrecurring items, net interest income continues to grow quarter after quarter. Our team works diligently to put our customers in the most beneficial financial situation possible. I am extremely proud of the work they do both for Fentura, and, more importantly, the communities that we serve.”

Following is a discussion of the Corporation's financial performance as of, and for the quarter ended, September 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:

		9/30/2019						6/30/2019						3/31/2019						12/31/2018						9/30/2018
INCOME STATEMENT DATA
Interest income		$			11,240			$			10,788			$			10,437			$			9,931			$			9,311
Interest expense		2,184						2,195						2,090						1,926						1,638
Net interest income		9,056						8,593						8,347						8,005						7,673
Provision for loan losses		422						264						213						290						191
Noninterest income		2,262						2,250						1,522						1,703						2,760
Noninterest expenses		6,608						6,691						6,509						6,907						6,075
Federal income tax expense		873						791						633						502						654
Net income		$			3,415			$			3,097			$			2,514			$			2,009			$			3,513
PER SHARE
Earnings		$			0.73			$			0.67			$			0.54			$			0.46			$			0.96
Dividends		$			0.07			$			0.07			$			0.07			$			0.06			$			0.06
Tangible book value(1)		$			20.59			$			19.83			$			19.15			$			18.61			$			17.32
Quoted market value
High		$			21.00			$			20.90			$			21.00			$			22.02			$			22.50
Low		$			20.45			$			20.45			$			20.05			$			20.94			$			20.60
Close(1)		$			21.00			$			20.60			$			20.89			$			21.00			$			21.15
PERFORMANCE RATIOS
Return on average assets		1.40				%		1.31				%		1.09				%		0.87				%		1.61				%
Return on average shareholders' equity		13.83				%		13.14				%		11.09				%		9.87				%		21.27				%
Return on average tangible shareholders' equity		15.08				%		14.36				%		12.13				%		10.96				%		24.27				%
Efficiency ratio		58.38				%		61.71				%		65.95				%		71.15				%		58.23				%
Yield on earning assets (FTE)		4.85				%		4.81				%		4.77				%		4.54				%		4.53				%
Rate on interest bearing liabilities		1.41				%		1.46				%		1.40				%		1.29				%		1.15				%
Net interest margin to earning assets (FTE)		3.92				%		3.83				%		3.82				%		3.66				%		3.73				%
BALANCE SHEET DATA(1)
Total investment securities		$			62,351			$			73,285			$			82,222			$			94,721			$			79,531
Gross loans		$			826,597			$			813,547			$			809,863			$			772,227			$			728,302
Total assets		$			978,046			$			949,790			$			946,172			$			926,450			$			909,901
Total deposits		$			801,101			$			792,555			$			789,533			$			763,124			$			766,587
Borrowed funds		$			69,000			$			54,000			$			59,000			$			69,000			$			74,000
Total shareholders' equity		$			99,142			$			95,504			$			92,236			$			89,516			$			66,340
Net loans to total deposits		102.51				%		102.02				%		101.97				%		100.60				%		94.46				%
Common shares outstanding		4,658,722						4,653,343						4,647,978						4,636,455						3,645,402
QTD BALANCE SHEET AVERAGES
Total assets		$			971,074			$			947,095			$			934,078			$			917,242			$			866,253
Earning assets		$			920,551			$			900,738			$			887,974			$			868,498			$			817,110
Interest bearing liabilities		$			611,804			$			603,965			$			604,973			$			592,878			$			565,908
Total shareholders' equity		$			97,958			$			94,519			$			91,964			$			80,781			$			65,541
Total tangible shareholders' equity		$			89,860			$			86,478			$			84,025			$			72,742			$			57,419
Earned common shares outstanding		4,646,835						4,641,161						4,635,255						4,332,665						3,643,151
Unvested stock grants		9,967						9,967						9,788						3,022						—
Total common shares outstanding		4,656,802						4,651,128						4,645,043						4,335,687						3,643,151
ASSET QUALITY(1)
Nonperforming loans to gross loans		0.11				%		0.13				%		0.15				%		0.14				%		0.09				%
Nonperforming assets to total assets		0.09				%		0.11				%		0.13				%		0.12				%		0.09				%
ALLL to gross loans		0.65				%		0.62				%		0.59				%		0.58				%		0.57				%
CAPITAL RATIOS(1)
Total capital to risk weighted assets		14.42				%		14.18				%		13.99				%		14.00				%		11.31				%
Tier 1 capital to risk weighted assets		13.73				%		13.53				%		13.37				%		13.40				%		10.73				%
CET1 capital to risk weighted assets		11.96				%		11.73				%		11.54				%		11.52				%		8.77				%
Tier 1 leverage ratio		11.22				%		11.16				%		10.99				%		10.92				%		8.90				%
(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:

														Variance
		9/30/2019						9/30/2018						Amount									%
INCOME STATEMENT DATA
Interest income		$			32,465			$			26,419			$						6,046			22.89		%
Interest expense		6,469						3,901						2,568									65.83		%
Net interest income		25,996						22,518						3,478									15.45		%
Provision for loan losses		899						767						132									17.21		%
Noninterest income		6,034						6,574						(540							)		(8.21		)%
Noninterest expenses		19,808						18,403						1,405									7.63		%
Federal income tax expense		2,297						1,817						480									26.42		%
Net income		$			9,026			$			8,105			$						921			11.36		%
PER SHARE
Earnings		$			1.94			$			2.23			$						(0.29	)		(13.00		)%
Dividends		$			0.21			$			0.18			$						0.03			16.67		%
Tangible book value(1)		$			20.59			$			17.32			$						3.27			18.88		%
Quoted market value
High		$			21.00			$			21.15			$						(0.15	)		(0.71		)%
Low		$			20.05			$			18.88			$						1.17			6.20		%
Close(1)		$			21.00			$			21.15			$						(0.15	)		(0.71		)%
PERFORMANCE RATIOS
Return on average assets		1.27				%		1.32				%											(0.05		)%
Return on average shareholders' equity		12.73				%		17.29				%											(4.56		)%
Return on average tangible shareholders' equity		13.90				%		19.87				%											(5.97		)%
Efficiency ratio		61.84				%		63.26				%											(1.42		)%
Yield on earning assets (FTE)		4.81				%		4.58				%											0.23		%
Rate on interest bearing liabilities		1.43				%		0.99				%											0.44		%
Net interest margin to earning assets (FTE)		3.85				%		3.91				%											(0.06		)%
BALANCE SHEET DATA(1)
Total investment securities		$			62,351			$			79,531			$						(17,180	)		(21.60		)%
Gross loans		$			826,597			$			728,302			$						98,295			13.50		%
Total assets		$			978,046			$			909,901			$						68,145			7.49		%
Total deposits		$			801,101			$			766,587			$						34,514			4.50		%
Borrowed funds		$			69,000			$			74,000			$						(5,000	)		(6.76		)%
Total shareholders' equity		$			99,142			$			66,340			$						32,802			49.45		%
Net loans to total deposits		102.51				%		94.46				%											8.05		%
Common shares outstanding		4,658,722						3,645,402						1,013,320									27.80		%
YTD BALANCE SHEET AVERAGES
Total assets		$			950,749			$			820,481			$						130,268			15.88		%
Earning assets		$			904,590			$			772,111			$						132,479			17.16		%
Interest bearing liabilities		$			606,912			$			528,165			$						78,747			14.91		%
Total shareholders' equity		$			94,815			$			62,662			$						32,153			51.31		%
Total tangible shareholders' equity		$			86,789			$			54,547			$						32,242			59.11		%
Earned common shares outstanding		4,641,084						3,638,123						1,002,961									27.57		%
Unvested stock grants		9,907						—						9,907									N/M
Total common shares outstanding		4,650,991						3,638,123						1,012,868									27.84		%
ASSET QUALITY(1)
Nonperforming loans to gross loans		0.11				%		0.09				%											0.02		%
Nonperforming assets to total assets		0.09				%		0.09				%											—		%
ALLL to gross loans		0.65				%		0.57				%											0.08		%
CAPITAL RATIOS(1)
Total capital to risk weighted assets		14.42				%		11.31				%											3.11		%
Tier 1 capital to risk weighted assets		13.73				%		10.73				%											3.00		%
CET1 capital to risk weighted assets		11.96				%		8.77				%											3.19		%
Tier 1 leverage ratio		11.22				%		8.90				%											2.32		%
(1)At end of period

Income Statement Breakdown and Analysis

		Quarter to Date
			9/30/2019																						6/30/2019							3/31/2019							12/31/2018							9/30/2018
GAAP net income		$	3,415																							$	3,097						$	2,514						$	2,009						$	3,513
GAAP net income
Acquisition related items (net of tax)
Accretion on purchased loans		(189																					)			(145				)			(175				)			(167				)			(116				)
Amortization of core deposit intangible		88																								90							89							107							107
Amortization on acquired time deposits		7																								7							7							9							9
Amortization on purchased MSRs		3																								3							3							6							6
Total acquisition related items (net of tax)		(91																					)			(45				)			(76				)			(45				)			6
Other nonrecurring items (net of tax)
Prepayment penalties collected		(284																					)			(9				)			(13				)			—							(96				)
Net gain from BOLI death benefit		—																								—							—							—							(932				)
Total other nonrecurring items (net of tax)		(284																					)			(9				)			(13				)			—							(1,028				)
Adjusted net income from operations		$																				3,040				$			3,043				$			2,425				$			1,964				$			2,491
GAAP net interest income		$																				9,056				$			8,593				$			8,347				$			8,005				$			7,673
Accretion on purchased loans		(239																					)			(183				)			(222				)			(211				)			(147				)
Prepayment penalties collected		(360																					)			(12				)			(16				)			—							(122				)
Amortization on acquired time deposits		9																								9							9							12							12
Adjusted net interest income		$																				8,466				$			8,407				$			8,118				$			7,806				$			7,416
PERFORMANCE RATIOS
Based on adjusted net income from operations
Earnings per share		$																				0.65				$			0.66				$			0.52				$			0.45				$			0.68
Return on average assets		1.24																					%			1.29				%			1.05				%			0.85				%			1.14				%
Return on average shareholders' equity		12.31																					%			12.91				%			10.69				%			9.65				%			15.08				%
Return on average tangible shareholders' equity		13.42																					%			14.11				%			11.70				%			10.71				%			17.21				%
Based on adjusted net interest income
Yield on earning assets (FTE)		4.59																					%			4.72				%			4.66				%			4.44				%			4.40				%
Rate on interest bearing liabilities		1.42																					%			1.47				%			1.41				%			1.30				%			1.16				%
Net interest margin to earning assets (FTE)		3.67																					%			3.75				%			3.72				%			3.57				%			3.61				%

		Year to Date September 30																Variance
		2019										2018						Amount									%
GAAP net income		$							9,026			$			8,105			$						921			11.36		%
Acquisition related items (net of tax)
Accretion on purchased loans		(509								)		(622				)		113									(18.17		)%
Amortization of core deposit intangible		267										321						(54							)		(16.82		)%
Amortization on acquired time deposits		21										28						(7							)		(25.00		)%
Amortization on purchased MSRs		9										18						(9							)		(50.00		)%
Total acquisition related items (net of tax)		(212								)		(255				)		43									(16.86		)%
Other nonrecurring items (net of tax)
Prepayment penalties collected		(306								)		(137				)		(169							)		123.36		%
Net gain from BOLI death benefit		—										(932				)		932									(100.00		)%
Total other nonrecurring items (net of tax)		(306								)		(1,069				)		763									(71.38		)%
Adjusted net income from operations		$							8,508			$			6,781			$						1,727			25.47		%
GAAP net interest income		$							25,996			$			22,518			$						3,478			15.45		%
Accretion on purchased loans		(644								)		(787				)		143									(18.17		)%
Prepayment penalties collected		(388								)		(173				)		(215							)		124.28		%
Amortization on acquired time deposits		27										35						(8							)		(22.86		)%
Adjusted net interest income		$							24,991			$			21,593			$						3,398			15.74		%
PERFORMANCE RATIOS
Based on adjusted net income from operations
Earnings per share		$							1.83			$			1.86			$						(0.03	)		(1.61		)%
Return on average assets		1.20								%		1.10				%											0.10		%
Return on average shareholders' equity		12.00								%		14.47				%											(2.47		)%
Return on average tangible shareholders' equity		13.11								%		16.62				%											(3.51		)%
Based on adjusted net interest income
Yield on earning assets (FTE)		4.66								%		4.41				%											0.25		%
Rate on interest bearing liabilities		1.44								%		1.00				%											0.44		%
Net interest margin to earning assets (FTE)		3.70								%		3.75				%											(0.05		)%

To effectively compare core operating results from period to period, the impact of acquisition related items and other nonrecurring 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, and into 2020, 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 for the remainder of 2019, and narrow slightly in 2020, due to the forecasted 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 an 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
		September 30, 2019																June 30, 2019																September 30, 2018
		Average Balance						Tax Equivalent Interest						Average Yield / Rate				Average Balance						Tax Equivalent Interest						Average Yield / Rate				Average Balance						Tax Equivalent Interest						Average Yield / Rate
Interest earning assets
Total loans		$			827,456			$			10,639			5.10		%		$			805,954			$			10,141			5.05		%		$			722,811			$			8,768			4.81		%
Taxable investment securities		58,059						375						2.56		%		67,237						462						2.76		%		52,617						311						2.34		%
Nontaxable investment securities		9,482						72						3.01		%		9,374						70						3.00		%		11,417						77						2.68		%
Federal funds sold		16,546						89						2.13		%		10,195						61						2.40		%		23,872						120						1.99		%
Interest earning cash and cash equivalents		5,858						35						2.37		%		4,828						28						2.33		%		3,243						15						1.84		%
FHLB stock		3,150						45						5.67		%		3,150						41						5.22		%		3,150						36						4.53		%
Total earning assets		920,551						11,255						4.85		%		900,738						10,803						4.81		%		817,110						9,327						4.53		%
Non-earning assets
ALLL		(5,139				)												(4,822				)												(4,080				)
Fixed assets		14,942																14,837																14,808
Accrued income and other assets		40,720																36,342																38,415
Total assets		$			971,074													$			947,095													$			866,253
Interest bearing liabilities
Interest bearing demand deposits		$			97,572			$			229			0.93		%		$			75,496			$			117			0.62		%		$			67,368			$			65			0.38		%
Savings deposits		243,796						282						0.46		%		243,794						319						0.52		%		235,723						125						0.21		%
Time deposits		209,984						1,207						2.28		%		229,863						1,319						2.30		%		188,817						907						1.91		%
Borrowed funds		60,452						451						2.96		%		54,812						440						3.22		%		74,000						541						2.90		%
Total interest bearing liabilities		611,804						2,169						1.41		%		603,965						2,195						1.46		%		565,908						1,638						1.15		%
Noninterest bearing liabilities
Noninterest bearing deposits		253,292																243,010																232,153
Accrued interest and other liabilities		8,020																5,601																2,651
Shareholders' equity		97,958																94,519																65,541
Total liabilities and shareholders' equity		$			971,074													$			947,095													$			866,253
Net interest income (FTE)								$			9,086													$			8,608													$			7,689
Net interest margin to earning assets (FTE)														3.92		%														3.83		%														3.73		%

		Nine Months Ended
		September 30, 2019																																		September 30, 2018
		Average Balance																								Tax Equivalent Interest						Average Yield / Rate				Average Balance													Tax Equivalent Interest						Average Yield / Rate
Interest earning assets
Total loans		$																					808,159			$			30,521			5.05		%		$										701,791			$			25,239			4.81		%
Taxable investment securities		68,219																								1,396						2.74		%		43,273													702						2.17		%
Nontaxable investment securities		9,812																								218						2.97		%		11,957													230						2.57		%
Federal funds sold		8,928																								150						2.25		%		9,656													127						1.76		%
Interest earning cash and cash equivalents		6,322																								88						1.86		%		2,425													47						2.59		%
FHLB stock		3,150																								138						5.86		%		3,009													122						5.42		%
Total earning assets		904,590																								32,511						4.81		%		772,111													26,467						4.58		%
Non-earning assets
ALLL		(4,851																						)												(3,836											)
Fixed assets		14,866																																		14,642
Accrued income and other assets		36,144																																		37,564
Total assets		$																					950,749													$										820,481
Interest bearing liabilities
Interest bearing demand deposits		$																					82,161			$			445			0.72		%		$										63,697			$			112			0.24		%
Savings deposits		243,135																								898						0.49		%		239,431													372						0.21		%
Time deposits		221,903																								3,746						2.26		%		161,944													2,081						1.72		%
Borrowed funds		59,713																								1,380						3.09		%		63,093													1,336						2.83		%
Total interest bearing liabilities		606,912																								6,469						1.43		%		528,165													3,901						0.99		%
Noninterest bearing liabilities
Noninterest bearing deposits		243,523																																		226,955
Accrued interest and other liabilities		5,499																																		2,699
Shareholders' equity		94,815																																		62,662
Total liabilities and shareholders' equity		$																					950,749													$										820,481
Net interest income (FTE)																										$			26,042																				$			22,566
Net interest margin to earning assets (FTE)																																3.85		%																					3.91		%

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 an 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												Nine Months Ended
		September 30, 2019												September 30, 2019												September 30, 2019
		Compared To												Compared To												Compared To
		June 30, 2019												September 30, 2018												September 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		$	363			$	135			$	498			$	1,321			$	550			$	1,871			$	1,308			$	3,974			$	5,282
Taxable investment securities		(57		)		(30		)		(87		)		33				31				64				218				476				694
Nontaxable investment securities		2				—				2				(47		)		42				(5		)		46				(58		)		(12		)
Federal funds sold		71				(43		)		28				(79		)		48				(31		)		38				(15		)		23
Interest earning cash and cash equivalents		6				1				7				15				5				20				(24		)		65				41
FHLB stock		—				4				4				—				9				9				10				6				16
Total changes in interest income		385				67				452				1,243				685				1,928				1,596				4,448				6,044
Changes in interest expense
Interest bearing demand deposits		41				71				112				39				125				164				42				291				333
Savings deposits		—				(37		)		(37		)		4				153				157				6				520				526
Time deposits		(102		)		(10		)		(112		)		110				190				300				901				764				1,665
Borrowed funds		166				(155		)		11				(160		)		70				(90		)		(105		)		149				44
Total changes in interest expense		105				(131		)		(26		)		(7		)		538				531				844				1,724				2,568
Net change in net interest income (FTE)		$	280			$	198			$	478			$	1,250			$	147			$	1,397			$	752			$	2,724			$	3,476

		Average Yield/Rate for the Three Month Periods Ended
		9/30/2019																6/30/2019				3/31/2019				12/31/2018				9/30/2018
Total earning assets		4.85														%		4.81		%		4.77		%		4.54		%		4.53			%
Total interest bearing liabilities		1.41														%		1.46		%		1.40		%		1.29		%		1.15			%
Net interest margin to earning assets (FTE)		3.92														%		3.83		%		3.82		%		3.66		%		3.73			%

		Quarter to Date Net Interest Income (FTE)
		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Total interest income (FTE)		11,255				10,803				10,453				9,947				9,327
Total interest expense		2,169				2,195				2,090				1,926				1,638
Net interest income (FTE)		$	9,086			$	8,608			$	8,363			$	8,021			$	7,689

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 and shrink slightly in 2020. The anticipated minor reduction in net interest margins for 2020 is due to yields on earning assets falling faster than rates on interest bearing liabilities.

Noninterest Income

		Quarter to Date
		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Net gain on sales of mortgage loans		$	665			$	422			$	195			$	162			$	277
ATM and debit card income		418				404				360				397				386
Trust and investment services		395				459				328				372				444
Mortgage servicing fees		243				230				211				208				199
Service charges on deposit accounts		239				222				234				259				273
Net MSR income		142				344				8				67				133
Net gain from BOLI death benefit		—				—				—				—				932
Net gain on sales of commercial loans		—				—				—				—				—
Other income and fees		160				169				186				238				116
Total noninterest income		$	2,262			$	2,250			$	1,522			$	1,703			$	2,760

		Year to Date September 30								Variance
		2019				2018				Amount				%
Net gain on sales of mortgage loans		$	1,282			$	679			$	603			88.81	%
ATM and debit card income		1,182				1,128				54				4.79	%
Trust and investment services		1,182				1,219				(37		)		(3.04	)%
Mortgage servicing fees		684				577				107				18.54	%
Service charges on deposit accounts		695				785				(90		)		(11.46	)%
Net MSR income		494				296				198				66.89	%
Net gain from BOLI death benefit		—				932				(932		)		(100.00	)%
Net gain on sales of commercial loans		—				518				(518		)		(100.00	)%
Other income and fees		515				440				75				17.05	%
Total noninterest income		$	6,034			$	6,574			$	(540	)		(8.21	)%

Net gain on sales of mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. Through the first nine months of 2019, the Corporation had two sales of residential mortgage pools that were previously held in its loan portfolio. One sale occurred in the second quarter of 2019 in which $28,000 of residential mortgages generated a gain of $25. The second sale occurred in the third quarter of 2019, in which $2,600 of residential mortgages generated a gain of $64. In 2018, the Corporation had one sale of residential mortgages that were previously held in its portfolio. The sale generated a gain of $47 and $4,724 of residential mortgages were sold. Excluding the impact of these sales, net gains from the sales of mortgage loans increased by $561 when the first nine months of 2019 are compared to the same period in 2018 and this trend is expected to continue throughout the remainder of the year. While the Corporation  continually analyzes its residential mortgage portfolio for opportunistic sales strategies, there are no sales anticipated in the foreseeable future.

ATM and debit card income represents fees earned on ATM and debit card transactions. The Corporation expects these fees to increase modestly in future periods.

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 activity is expected to approximate current levels for the foreseeable future.

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 as mortgage demand remains strong.

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 for the foreseeable future.

Net MSR income is the net of income generated from the capitalization of new MSRs and the amortization of serviced loans as a result of paydowns and payoffs. As noted above, the Corporation sold pools of residential mortgage loans out of its loan portfolio in the second and third quarter of 2019. This second quarter sale generated $266 of net MSR income from the capitalization of the associated servicing rights while the third quarter sale generated $25 of capitalized servicing rights. The Corporation expects net MSR income to stabilize in future periods as residential mortgage sales continue at current levels for the foreseeable future.

Net gain from BOLI death benefit is recognized in the event of the death of an insured individual. The Corporation does not expect to receive any gains from BOLI death benefits in 2019.

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 nine months ending September 30, 2019. While the Corporation  continually analyzes its commercial loan portfolio for opportunistic sales strategies, there are no sales anticipated in the foreseeable future.

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 foreseeable future.

Noninterest Expenses

		Quarter to Date
		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Compensation		$	3,530			$	3,749			$	3,630			$	3,429			$	3,359
Furniture and equipment		579				525				491				508				486
Professional services		494				439				445				518				381
Occupancy		444				426				437				416				379
Data processing		323				281				278				512				164
Advertising and promotional		222				291				163				198				177
Loan and collection		120				119				110				134				135
Amortization of CDI		112				114				112				136				135
Telephone and communication		110				108				111				107				106
ATM and debit card		109				100				95				96				105
FDIC insurance premiums		20				17				101				120				132
Other losses		13				4				11				152				2
Other general and administrative		532				518				525				581				514
Total noninterest expenses		$	6,608			$	6,691			$	6,509			$	6,907			$	6,075

		Year to Date September 30								Variance
		2019				2018				Amount				%
Compensation		$	10,909			$	9,992			$	917			9.18	%
Furniture and equipment		1,595				1,390				205				14.75	%
Professional services		1,378				1,269				109				8.59	%
Occupancy		1,307				1,223				84				6.87	%
Data processing		882				456				426				93.42	%
Advertising and promotional		676				520				156				30.00	%
Loan and collection		349				403				(54		)		(13.40	)%
Amortization of CDI		338				406				(68		)		(16.75	)%
Telephone and communication		329				306				23				7.52	%
ATM and debit card		304				291				13				4.47	%
FDIC insurance premiums		138				352				(214		)		(60.80	)%
Other losses		28				261				(233		)		(89.27	)%
Other general and administrative		1,575				1,534				41				2.67	%
Total noninterest expenses		$	19,808			$	18,403			$	1,405			7.63	%

Compensation includes all compensation and benefits paid to the Corporation's employees. Compensation for the nine months ending September 30, 2019 has increased compared to the same time period for 2018, 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 includes 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 CDI 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 includes 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 remain at current levels for 2019.

Included in other losses was a $260 one time loan related expense in the first quarter of 2018 and one time loss 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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
ASSETS
Cash and cash equivalents		$	37,572			$	20,067			$	16,509			$	23,412			$	63,469
Total investment securities		62,351				73,285				82,222				94,721				79,531
Loans HFS		15,111				6,771				1,835				903				2,021
Gross loans		826,597				813,547				809,863				772,227				728,302
Less ALLL		5,413				5,014				4,745				4,488				4,146
Net loans		821,184				808,533				805,118				767,739				724,156
All other assets		41,828				41,134				40,488				39,675				40,724
Total assets		$	978,046			$	949,790			$	946,172			$	926,450			$	909,901
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits		$	801,101			$	792,555			$	789,533			$	763,124			$	766,587
Total borrowed funds		69,000				54,000				59,000				69,000				74,000
Accrued interest and other liabilities		8,803				7,731				5,403				4,810				2,974
Total liabilities		878,904				854,286				853,936				836,934				843,561
Total shareholders' equity		99,142				95,504				92,236				89,516				66,340
Total liabilities and shareholders' equity		$	978,046			$	949,790			$	946,172			$	926,450			$	909,901

		9/30/2019 vs 6/30/2019							9/30/2019 vs 9/30/2018
		Variance							Variance
		Amount				%			Amount				%
ASSETS
Cash and cash equivalents		$	17,505			87.23	%		$	(25,897	)		(40.80	)%
Total investment securities		(10,934		)		(14.92	)%		(17,180		)		(21.60	)%
Loans HFS		8,340				123.17	%		13,090				647.7	%
Gross loans		13,050				1.6	%		98,295				13.5	%
Less ALLL		399				7.96	%		1,267				30.56	%
Net loans		12,651				1.56	%		97,028				13.4	%
All other assets		694				1.69	%		1,104				2.71	%
Total assets		$	28,256			2.97	%		$	68,145			7.49	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits		$	8,546			1.08	%		$	34,514			4.5	%
Total borrowed funds		15,000				27.78	%		(5,000		)		(6.76	)%
Accrued interest and other liabilities		1,072				13.87	%		5,829				196	%
Total liabilities		24,618				1.49	%		35,343				2.2	%
Total shareholders' equity		3,638				3.81	%		32,802				49.45	%
Total liabilities and shareholders' equity		$	28,256			2.97	%		$	68,145			7.49	%

Cash and cash equivalents

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Cash and due from banks		$	28,572			$	17,067			$	16,509			$	19,412			$	21,469
Federal funds sold		9,000				3,000				—				4,000				42,000
Cash and cash equivalents		$	37,572			$	20,067			$	16,509			$	23,412			$	63,469
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
Cash and due from banks		$	11,505			67.41		%						$	7,103			33.08		%
Federal funds sold		6,000				200		%						(33,000		)		(78.57		)%
Cash and cash equivalents		$	17,505			87.23		%						$	(25,897	)		(40.80		)%

Cash and cash equivalents fluctuate from period to period based on loan demand and variances in deposit accounts. Cash and cash equivalents are expected to approximate current levels for the foreseeable future.

Total investment securities

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
AFS
U.S. Government and federal agency		$	22,854			$	33,842			$	38,796			$	57,029			$	49,011
Collateralized mortgage obligations - agencies		10,826				11,856				12,516				9,833				1,662
State and municipal		10,194				8,889				10,322				10,558				12,741
Certificates of deposit		7,155				7,154				8,394				8,393				7,171
Mortgage backed residential		6,227				6,733				7,031				4,276				4,408
Unrealized gain/(loss) on AFS securities		1,048				776				288				(235		)		(478		)
Total AFS		58,304				69,250				77,347				89,854				74,515
HTM State and municipal		2,100				2,104				2,965				2,971				3,728
Equity securities		1,947				1,931				1,910				1,896				1,288
Total investment securities		$	62,351			$	73,285			$	82,222			$	94,721			$	79,531
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
AFS
U.S. Government and federal agency		$	(10,988	)		(32.47		)%						$	(26,157	)		(53.37		)%
Collateralized mortgage obligations - agencies		(1,030		)		(8.69		)%						9,164				551.38		%
State and municipal		1,305				14.68		%						(2,547		)		(19.99		)%
Certificates of deposit		1				0.01		%						(16		)		(0.22		)%
Mortgage backed residential		(506		)		(7.52		)%						1,819				41.27		%
Unrealized gain/(loss) on AFS securities		272				35.05		%						1,526				(319.25		)%
Total AFS		(10,946		)		(15.81		)%						(16,211		)		(21.76		)%
HTM State and municipal		(4		)		(0.19		)%						(1,628		)		(43.67		)%
Equity securities		16				0.83		%						659				51.16		%
Total investment securities		$	(10,934	)		(14.92		)%						$	(17,180	)		(21.60		)%

During 2018, the Corporation increased total investment securities due to advantageous pricing opportunities. However, since late 2018, yields on bonds that meet the Corporation's investment standards have declined significantly. As such, the Corporation has not replaced the majority of maturing investments. Total investment securities are expected to approximate current levels or decline slightly in future periods.

Loans HFS

Loans HFS represent the balance of loans that have been committed to be sold to the secondary market, but have not yet been delivered. The significant increase in loans HFS is due to a considerable increase in residential mortgage demand. Loans HFS are expected to decrease slightly, however, over the rest of 2019 as loan appetite tends to decrease towards the end of the year. That being said, if interest rates further decline, the Corporation could expect the balance in loans held for sale to approximate current levels going into 2020.

Net loans

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Commercial real estate		$	420,127			$	408,103			$	394,462			$	369,043			$	351,739
Residential real estate		291,401				289,944				306,466				293,271				274,035
Commercial		63,747				63,998				56,790				56,583				48,594
Home equity		43,061				42,890				43,130				43,597				41,136
Installment		8,261				8,612				9,015				9,733				12,798
Gross loans		$	826,597			$	813,547			$	809,863			$	772,227			$	728,302
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
Commercial real estate		$	12,024			2.95		%						$	68,388			19.44		%
Residential real estate		1,457				0.5		%						17,366				6.34		%
Commercial		(251		)		(0.39		)%						15,153				31.18		%
Home equity		171				0.4		%						1,925				4.68		%
Installment		(351		)		(4.08		)%						(4,537		)		(35.45		)%
Gross loans		$	13,050			1.6		%						$	98,295			13.5		%

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Accruing interest
Current		$	824,587			$	811,184			$	807,671			$	769,799			$	725,954
Past due 30-89 days		1,089				1,275				1,009				1,325				1,689
Past due 90 days or more		209				301				310				191				150
Total accruing interest		825,885				812,760				808,990				771,315				727,793
Nonaccrual		712				787				873				912				509
Total loans		$	826,597			$	813,547			$	809,863			$	772,227			$	728,302
Total loans past due and in nonaccrual status		$	2,010			$	2,363			$	2,192			$	2,428			$	2,348

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Nonaccrual loans		$	712			$	787			$	873			$	912			$	509
Accruing loans past due 90 days or more		209				301				310				191				150
Total nonperforming loans		921				1,088				1,183				1,103				659
OREO		—				—				—				32				143
Total nonperforming assets		$	921			$	1,088			$	1,183			$	1,135			$	802

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Nonperforming loans to gross loans		0.11		%		0.13		%		0.15		%		0.14		%		0.09		%
Nonperforming assets to total assets		0.09		%		0.11		%		0.13		%		0.12		%		0.09		%
ALLL to gross loans		0.65		%		0.62		%		0.59		%		0.58		%		0.57		%

As outlined in the preceding tables, the Corporation has been successful in growing its loan portfolio over the past 12 months with most of the growth coming in the form of commercial, commercial real estate and residential real estate loans. Despite the above peer growth, the Corporation has not relaxed its underwriting standards as evidenced by the low level of nonperforming loans. This comparatively low level of nonperforming loans has also resulted in an ALLL to gross loans at a level below many of the Corporation's peers. While the Corporation's ALLL to gross loans is below its peers, it is important to understand that the ALLL does not include the net unamortized discount on purchased loans as it is a component of gross loans.

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Net unamortized discount on purchased loans		$	1,626			$	1,914			$	2,095			$	2,318			$	2,529

All other assets

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Premises and equipment, net		$	15,443			$	14,792			$	14,838			$	14,761			$	14,644
BOLI		10,248				10,181				10,070				10,007				9,959
MSR		3,900				3,758				3,414				3,406				3,340
Goodwill		3,219				3,219				3,219				3,219				3,219
FHLB stock		3,150				3,150				3,150				3,150				3,150
AIR		2,954				3,350				3,298				3,020				3,082
CDI assets		1,015				1,128				1,241				1,353				1,489
OREO		—				—				—				32				143
Other assets		1,899				1,556				1,258				727				1,698
All other assets		$	41,828			$	41,134			$	40,488			$	39,675			$	40,724
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
Premises and equipment, net		$	651			4.4		%						$	799			5.46		%
BOLI		67				0.66		%						289				2.9		%
MSR		142				3.78		%						560				16.77		%
Goodwill		—				—		%						—				—		%
FHLB stock		—				—		%						—				—		%
AIR		(396		)		(11.82		)%						(128		)		(4.15		)%
CDI assets		(113		)		(10.02		)%						(474		)		(31.83		)%
OREO		—				—		%						(143		)		(100.00		)%
Other assets		343				22.04		%						201				11.84		%
All other assets		$	694			1.69		%						$	1,104			2.71		%

Premises and equipment, net is comprised of land and land improvements, building and building improvements, furniture and equipment, and construction in progress. The $651 increase in the third quarter of 2019 in mainly due to the build-out of a newly leased property and newly purchased customer facing equipment.

All other assets are expected to increase commensurate with the overall growth of the Corporation.

Total deposits

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
Demand		$	253,784			$	245,703			$	235,305			$	233,954			$	235,208
Savings		213,494				232,094				230,006				223,728				221,028
Money market demand		80,873				69,374				61,294				61,369				60,836
NOW		39,286				18,017				19,358				10,234				8,952
Time deposits		213,664				227,367				243,570				233,839				240,563
Total deposits		$	801,101			$	792,555			$	789,533			$	763,124			$	766,587
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
Demand		$	8,081			3.29		%						$	18,576			7.9		%
Savings		(18,600		)		(8.01		)%						(7,534		)		(3.41		)%
Money market demand		11,499				16.58		%						20,037				32.94		%
NOW		21,269				118.05		%						30,334				338.85		%
Time deposits		(13,703		)		(6.03		)%						(26,899		)		(11.18		)%
Total deposits		$	8,546			1.08		%						$	34,514			4.5		%

The Corporation has continued its focus of growing non-contractual deposits while supplementing funding with time deposits. On a quarterly average basis, noninterest bearing deposits increased $10,282, or 4.23%, from June 30, 2019. The Corporation has also been able to drive this meaningful increase through enhanced organic growth strategies. The quarter over quarter decrease in Savings and increase in NOW account balances are related to the transition of specific accounts from Savings to NOW account types. This was a one-time transition. The Corporation expects that deposit growth will continue to be strong with the majority of the growth coming in the form of demand and money market accounts.

Total borrowed funds

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

		9/30/2019				6/30/2019				3/31/2019				12/31/2018				9/30/2018
FHLB borrowings		$	55,000			$	40,000			$	40,000			$	55,000			$	60,000
Subordinated debentures		14,000				14,000				14,000				14,000				14,000
Federal funds purchased		—				—				5,000				—				—
Total borrowed funds		$	69,000			$	54,000			$	59,000			$	69,000			$	74,000
		9/30/2019 vs 6/30/2019												9/30/2019 vs 9/30/2018
		Variance												Variance
		Amount				%								Amount				%
FHLB borrowings		$	15,000			37.5		%						$	(5,000	)		(8.33		)%
Subordinated debentures		—				—		%						—				—		%
Federal funds purchased		—				—		%						—				—		%
Total borrowed funds		$	15,000			27.78		%						$	(5,000	)		(6.76		)%

 

While the Corporation increased its reliance on borrowed funds in 2018 to fund its strong loan demand, borrowed funds gradually declined in the quarters prior to September 30, 2019 as the Corporation has been able to fund organic growth through increases in deposit accounts. Total borrowed funds increased in the third quarter of 2019 as the interest rates for FHLB borrowings were extremely attractive. Total borrowed funds are expected to decrease as maturing FHLB borrowings roll off. However, the Corporation continues to analyze the market for opportunities and will borrow funds when deemed financially beneficial.

Accrued interest and other liabilities

Accrued interest 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 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. During the fourth quarter of 2018, the Corporation increased its capital position through a private placement of common stock to both retail and accredited individual investors. The private placement generated net proceeds of $20,500. These proceeds were used to fund the Corporation's strong organic growth, opportunistic strategic growth, and enhance its capital position. The balance of growth in retained earnings was the result of the Corporation's strong earnings. Total shareholders' equity is expected to continue to grow throughout 2019 through the Corporation's earnings as no significant changes in dividend strategy are anticipated.

Abbreviations and Acronyms

ABA: American Bankers Association	GAAP: Generally Accepted Accounting Principles
ACH: Automated Clearing House	HFS: Held for sale
AFS: Available-for-sale	HTM: Held to maturity
AIR: Accrued interest receivable	IRA: Individual retirement account
ALLL: Allowance for loan losses	LIBOR: London Interbank Offered Rate
AOCI: Accumulated other comprehensive income	MSR: Mortgage servicing rights
ARRC: Alternative Reference Rates Committee	N/M: Not meaningful
ASC: Accounting Standards Codification	NASDAQ: National Association of Securities Dealers Automated Quotations
ASU: Accounting Standards Update
ATM: Automated teller machine	NOW: Negotiable order of withdrawal
BOLI: Bank owned life insurance	NSF: Non-sufficient funds
CDI: Core deposit intangible	OIS: Overnight Index Swap
CET1: Common equity tier 1	OREO: Other real estate owned
DRIP: Dividend Reinvestment Plan	OTTI: Other-than-temporary impairment
ESOP: Employee Stock Ownership Plan	QTD: Quarter to date
FASB: Financial Accounting Standards Board	SBA: Small Business Association
FDIC: Federal Deposit Insurance Corporation	SERP: Supplemental Executive Retirement Plan
FHLB: Federal Home Loan Bank	SOFR: Secured Overnight Funding Rate
FRB: Federal Reserve Bank	TDR: Troubled debt restructuring
FTE: Fully taxable equivalent	YTD: Year to date

About Fentura Financial, Inc. and The 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 Top 50 performing stocks in 2016 and 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 15 full-service branches in Genesee, Livingston, Oakland, Saginaw, and Shiawassee Counties and a loan production office in Saginaw County. The State Bank was ranked #20 by S&P Global in terms of 2018 performance for banks under $2 billion in assets. The State Bank’s 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. The aim of The State Bank is to become and remain “Your Financial Partner for Life.” 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
	ronj@thestatebank.com	aaronw@thestatebank.com

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.