8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 3, 2010 (April 30, 2010)

Fentura Financial, Inc.

(Exact name of registrant as specified in its charter)

Michigan
(State or other jurisdiction of incorporation)

0-23550	38-2806518
(Commission File Number)	(IRS Employer Identification No.)

175 North Leroy Street P.O. Box 725 Fenton, Michigan	48430-0725
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (810) 629-2263

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     The following information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.

     On April 30, 2010, Fentura Financial, Inc. issued a news release to report its financial results for the quarter ended March 31, 2010. The release is furnished as Exhibit 99.1 hereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number
	99.1	Press Release, dated April 30, 2010.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FENTURA FINANCIAL, INC. (Registrant)
	By:	/s/ Donald L. Grill
		Donald L. Grill, President and Chief Executive Officer
Dated: May 3, 2010

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EXHIBIT INDEX

Exhibit Number
	99.1	Press Release, dated April 30, 2010

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EX-99.1

EXHIBIT 99.1

Fentura Financial, Inc.
P.O. Box 725
Fenton, MI 48430-0725

Contact:	Donald L. Grill
	CEO
	Fentura Financial, Inc.
	(810) 714-3985
	April 30, 2010

For Immediate Release

FIRST QUARTER 2010 FINANCIAL PERFORMANCE HIGHLIGHTS

During the first quarter of 2010, Fentura Financial, Inc. experienced a net loss of $483,000 or ($0.21) per share. The loss follows a $890,000 or $0.40 per share profit reported for the prior quarter, and reflects substantial improvement from the first quarter of 2009 when the net loss for the quarter totaled $1,659,000 or ($0.76) per share.

For the first quarter of 2010, net interest income totaled $3,713,000 a decrease of $390,000 from the first quarter of 2009. The decrease was primarily a result of bank efforts to shrink the balance sheet to enhance capital ratios. The net interest margin improved 7 basis points from 3.52 to 3.59 on the year-to-year comparison resulting from reduced reliance on brokered and other high cost certificates of deposits. Loan loss provision expense remained elevated at $1,790,000, although down substantially from the three prior quarters and comparable to the first quarter of 2009. Non-interest income increased 18.2% on the year-to-year comparison increasing from $1,140,000 to $1,347,000. The quarterly improvement was a result of equity investment losses reported in 2009. Non interest expense of $4,567,000 reflects a substantial $569,000 improvement over the expense level reported for the first quarter of 2009. Expense reductions in the areas of salaries, benefits and occupancy expense, comprise the majority of the year-to-year improvement in total non interest expense. The current period gain from “discontinued operations” was an adjustment connected with the sale of Davison State Bank.

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During the past year, the subsidiary banks have been methodically reducing loan and deposit balances in an attempt to improve capital ratios. Accordingly, for the first quarter of 2010 total assets of $508,994,000 reflect a $68,340,000 or 11.8% reduction from the level reported for the prior year quarter. While total stockholder’s equity declined $13,610,000 as a result of net losses reported since the first quarter of 2009, all three subsidiary banks remain adequately capitalized as of the close of the first quarter of 2010.

In a prior release dated April 28, 2010, Fentura Chairman Forrest Shook announced plans regarding the sale of two Fentura subsidiary banks. A copy of that release, along with the detailed financial results for the first quarter of 2010, are attached to this earnings announcement.

Fentura Financial, Inc. is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank also headquartered in Fenton with offices serving Fenton, Linden, Holly, and Grand Blanc; West Michigan Community Bank headquartered in Hudsonville with offices serving Hudsonville, Holland and Jenison; and Livingston Community Bank, a division of The State Bank, headquartered in Brighton. Fentura Financial, Inc. shares are traded over the counter under the FETM trading symbol.

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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. Further information concerning our business, including additional factors that could materially affect our financial results, is included in our filings with the Securities and Exchange Commission.

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Fentura Financial Inc.
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED

	Mar 31			Dec 31			Sept 30			Jun 30			Mar 31
	2010			2009			2009			2009			2009
ASSETS
Cash and cash equivalents
Cash and due from banks	$	17,019		$	18,459		$	18,814		$	43,645		$	26,643
Short term investments		28,650			23,650			27,250			—			—
Total cash & cash equivalents		45,669			42,109			46,064			43,645			26,643
Securities:
Securities available for sale		42,113			43,608			49,405			51,483			42,737
Securities held to maturity		5,453			5,456			5,577			5,654			6,563
Total securities		47,566			49,064			54,982			57,137			49,300
Loans held for sale		1,265			831			1,434			1,136			4,842
Loans:
Commercial		252,231			252,764			270,542			278,224			282,184
Real estate — construction		20,129			26,295			34,072			37,028			51,001
Real estate — mortgage		25,751			28,058			30,829			33,050			36,235
Consumer		45,509			48,313			50,438			50,669			51,206
Total loans		343,620			355,430			385,881			398,971			420,626
Less: Allowance for loan losses		(12,338	)		(10,726	)		(14,485	)		(13,970	)		(11,405	)
Net loans		331,282			344,704			371,396			385,001			409,221
Bank owned life insurance		7,267			7,221			7,138			7,088			7,034
Bank premises and equipment		15,697			15,914			16,111			16,369			16,610
Federal Home Loan Bank stock		1,900			1,900			1,900			1,900			1,900
Accrued interest receivable		1,927			1,813			2,020			1,996			2,275
Goodwill		—			—			—			—			—
Acquisition intangibles		126			157			189			220			252
Equity Investment		—			—			—			—			845
Other Real Estate Owned		8,928			7,967			6,856			5,933			5,703
Assets of discontinued operations		37,378			37,919			41,195			42,712			43,878
Other assets		9,989			12,480			5,707			5,502			8,831
TOTAL ASSETS	$	508,994		$	522,079		$	554,992		$	568,639		$	577,334
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		65,886			64,530			63,786			69,231			65,668
Interest bearing deposits		362,903			376,245			405,080			409,844			409,224
Total deposits		428,789			440,775			468,866			479,075			474,892
Short-term borrowings		67			164			34			477			886
Federal Home Loan Bank Advances		7,981			7,981			9,981			9,981			10,007
Repurchase agreements		—			—			—			—			—
Subordinated debentures		14,000			14,000			14,000			14,000			14,000
Note Payable		—			—			—			—			750
Liabilities of discontinued operations		34,596			35,217			38,164			40,143			40,856
Accrued interest, taxes & other liabilities		3,318			3,410			4,400			5,753			2,090
Total liabilities		488,751			501,547			535,445			549,429			543,481
STOCKHOLDERS’ EQUITY
Common stock — no par value
5,000,000 shares authorized		42,945			42,913			42,883			42,850			42,814
Retained earnings		(22,140	)		(21,657	)		(22,548	)		(21,700	)		(6,336	)
Accumulated other comprehensive income (loss)		(562	)		(724	)		(788	)		(1,940	)		(2,625	)
Total stockholders’ equity		20,243			20,532			19,547			19,210			33,853
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	508,994		$	522,079		$	554,992		$	568,639		$	577,334
		—			—			—			—			—
Common stock shares issued & outstanding		2,267,135			2,248,553			2,225,214			2,209,183			2,195,326
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		5.96	%		6.56	%		6.73	%		6.00	%		5.49	%
Allowance for Loan Losses as a % of Non-Performing Loans		60.00	%		45.87	%		56.12	%		58.22	%		48.82	%
Accruing Loans Past Due 90 Days More to Total Loans		0.12	%		0.09	%		0.05	%		0.00	%		0.16	%
Non-Performing Assets as a % of Total Assets		6.52	%		6.96	%		6.27	%		5.56	%		5.31	%
Quarterly Average Balances:
Total Loans		356,573			373,415			392,044			414,002			425,898
Total Earning Assets		427,638			448,117			456,172			468,460			482,503
Total Shareholders’ Equity		20,750			20,281			20,167			34,168			36,640
Total Assets		513,830			530,250			562,326			568,639			575,640
Diluted Shares Outstanding		2,249,917			2,226,745			2,210,613			2,196,743			2,187,084

Fentura Financial Inc.
Consolidated Income Statements
(Dollars in thousands, except per share data)
UNAUDITED

	Three Months ended
	Mar 31			Dec 31			Sept 30			Jun 30			March 31
(prior periods restated with out DSB)	2010			2009			2009			2009			2009
Interest income:
Interest & fees on loans	$	5,306		$	5,665		$	5,935		$	6,000		$	6,463
Interest & dividends on securities:
Taxable		292			323			403			390			420
Tax-exempt		124			128			136			138			144
Interest on federal funds sold		5			3			2			—			—
Total interest income		5,727			6,119			6,476			6,528			7,027
Interest expense:
Deposits		1,817			2,035			2,278			2,613			2,613
Borrowings		197			220			226			291			311
Total interest expense		2,014			2,255			2,504			2,904			2,924
Net interest income		3,713			3,864			3,972			3,624			4,103
Provision for loan losses		1,790			3,417			1,940			7,711			1,655
Net interest income after provision for loan losses		1,923			447			2,032			(4,087	)		2,448
Non-interest income:
Service charges on deposit accounts		474			532			519			480			436
Gain on sale of mortgage loans		93			155			100			277			235
Trust & investment services income		389			330			458			463			364
Gain (Loss) on sale of securities		—			—			12			—			—
Other than temporary impairment loss		—			(79	)		—			—			—
Income (Loss) on Equity Investment		—			—			—			(874	)		(515	)
Other income and fees		391			481			391			480			620
Total non-interest income		1,347			1,419			1,480			826			1,140
Non-interest expense:
Salaries & employee benefits		2,114			1,942			2,129			2,071			2,552
Occupancy		449			423			428			447			503
Furniture and equipment		371			406			385			403			424
Loan and collection		557			1,204			984			933			385
Advertising and promotional		28			22			38			47			41
Loss on Equity Impairment		—			9			—			200			—
Goodwill Impairment Charge		—			—			—			—			—
Other operating expenses		1,048			1,271			1,016			1,211			1,231
Total non-interest expense		4,567			5,277			4,980			5,312			5,136
Income (loss) from continuing operations before income tax		(1,297	)		(3,411	)		(1,468	)		(8,573	)		(1,548	)
Federal income taxes (benefit)		(327	)		(4,034	)		(332	)		5,952			(396	)
Net income (loss) from continuing operations		(970	)		623			(1,136	)		(14,525	)		(1,152	)
Net Income (loss) from discontinued operations, net of tax		487			267			289			(839	)		(507	)
Net Income (loss)	$	(483	)	$	890		$	(847	)	$	(15,364	)	$	(1,659	)
Net Income (Loss) per share from continuing operations:
Basic and diluted earnings	$	(0.43	)	$	0.28		$	(0.51	)	$	(6.61	)	$	(0.53	)
Net Income (Loss) per share from discontinued operations:
Basic and diluted earnings	$	0.22		$	0.12		$	0.13		$	(0.38	)	$	(0.23	)
Net Income (Loss) per share:
Basic and diluted earnings	$	(0.21	)	$	0.40		$	(0.38	)	$	(6.99	)	$	(0.76	)
Performance Ratios:
Return on Average Assets		-0.09	%		0.17	%		-0.15	%		-2.70	%		-0.29	%
Return on Average Equity		-2.33	%		4.39	%		-4.20	%		-44.97	%		-4.53	%
Net Interest Margin (FTE)		3.59	%		3.49	%		3.53	%		3.18	%		3.52	%
Book Value Per Share	$	8.93		$	9.13		$	8.78		$	8.70		$	15.42
Net Charge-offs		178			7,278			1,425			5,146			705
Ratio of Net charge-offs to Gross Loans		0.05	%		2.05	%		0.48	%		1.46	%		0.17	%

FENTURA FINANCIAL, INC.
P.O. BOX 725
FENTON, MI 48430-0725

Contact:	Donald L. Grill
	The State Bank
	(810) 714-3985
	April 28, 2010

For Immediate Release

FENTURA ANNOUNCES SALE OF SUBSIDIARY BANKS

     At the Annual Meeting of Shareholders on April 28, 2010, Fentura Financial, Inc. Chairman Forrest Shook announced plans regarding the sale of two Fentura subsidiary banks. In March of 2009, Fentura announced that it had entered into an agreement to sell Davison State Bank to Hantz Financial Holdings, Inc. of Southfield, Michigan. With all regulatory approvals now in place, the closing is expected to take place on April 30, 2010. Davison State Bank was a wholly owned subsidiary formed as a De Novo bank by Fentura in 2000. At the shareholder meeting, Chairman Shook also announced that the company recently entered into a definitive agreement to sell West Michigan Community Bank to investors affiliated with Northstar Financial Group, Inc. headquartered in Bad Axe, Michigan. West Michigan Community Bank became a Fentura subsidiary through an acquisition in 2004.

     According to Fentura President and CEO Donald L. Grill, “The Fentura Board has been immersed in a two year strategic planning process designed to identify and implement initiatives to stabilize and strengthen the financial condition of the company. The sale of these two subsidiary banks will allow Fentura to redirect capital to strengthen

the holding company and its lead bank—The State Bank headquartered in Fenton, Michigan. While reducing the size the of company by about 35%, spinning off these subsidiary banks and realigning capital, strengthens the balance sheet of the company. Fentura’s ability to allocate additional capital to The State Bank will assist in mitigating regulatory concerns and stabilizing the bank for improved future performance.”

     Fentura will receive $2.8 million in connection with the sale of Davison State Bank, resulting in an approximate book price transaction. Additionally, Fentura will receive approximately $11.0 million from the sale of West Michigan Community Bank (an approximate 10% premium to book). In connection with the sale, Fentura will acquire all the non-performing assets of West Michigan Community Bank. The assets will be housed in a newly formed Holding Company subsidiary. It is expected that Fentura will utilize a portion of the proceeds from the sale of the banks to return Fentura subsidiary, The State Bank, to a well-capitalized level.

     Fentura Financial, Inc. is a bank holding company headquartered in Fenton, Michigan. Fentura Financial, Inc. shares are traded over the counter under the FETM trading symbol.

CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve 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 pricing. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Further information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filing with the Securities and Exchange Commission.

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