8-K

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) October 23, 2006 (October 17, 2006)

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 October 17, 2006, Fentura Financial, Inc. issued a news release to report its financial results for the quarter and nine-month period ended September 30, 2006. 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 October 17, 2006.

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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/ Ronald L. Justice
	Ronald L. Justice, SVP-Corporate Governance &
	Investor Relations

Dated: October 23, 2006

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EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated October 17, 2006

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EX-99.1

EXHIBIT 99.1

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

Contact: Ronald L. Justice
The State Bank
(810) 714-3902

October 17, 2006

For Immediate Release

FENTURA FINANCIAL, INC. REPORTS INCREASED THIRD QUARTER EARNINGS

          Fenton, Michigan—October 17, 2006—Fentura Financial, Inc. (trading symbol: FETM), the holding company for The State Bank of Fenton, Michigan, Davison State Bank of Davison, Michigan, and West Michigan Community Bank of Hudsonville, Michigan, today announced earnings of $1,336,000 or $.62 per diluted share for the quarter ended September 30, 2006, a 2.8% increase over earnings of $1,299,000 or $.61 per diluted share for the same period in 2005, and a 6.2% increase over the quarter ended June 30, 2006.

     For the nine months ended September 30, 2006, the Company reported net income of $3,801,000 or $1.77 per diluted share versus $3,745,000 or $1.77 per diluted share for the same period in 2005, an increase of 1.5%.

          Financial highlights for the Quarter Ended September 30, 2006

1.	Revenues increased 13.6% driven by a 15.9% increase in interest income and a 3% increase in non-interest income.
2.	Total loans increased $19,356,000 or 4.5% to $453,772,000 from September 30, 2005.

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3.	Total deposits of $531,585,000 increased $14,649,000 or 2.8% compared to September 30, 2005.
4.	Return on average shareholders’ equity was 10.85% for the quarter ended September 30, 2006 a decline from the 11.38% reported for the same period in 2005 and an increase over the 10.46% reported for the quarter ended June 30, 2006.
5.	Non-performing loans as a percent of total loans were .44% at September 30, 2006 an improvement from the .47% reported at September 30, 2005.

Components of Third Quarter Results

          Third quarter 2006 total revenue of $12,152,000 increased $1,455,000 or 13.6% over the $10,697,000 reported in the third quarter of 2005. Interest income for the quarter increased $1,399,000 or 15.9% over the same time period in 2005. Continued loan growth and improved earning asset yields contributed to the increased interest income. Third quarter 2006 non-interest income of $1,940,000 also increased compared to the same quarter in 2005. Increases in total service charges on deposit accounts based on account growth and improved income from trust and investment services were the primary contributors to the quarter to quarter non-interest income results. Net interest income was down when comparing the two quarters due to increased interest expense in 2006. While the subsidiary banks experienced deposit account growth, and as market interest rates increased, deposits transitioned from interest free checking or lower rate savings accounts to certificates of deposit causing an increase in the cost of funds and an increase in interest expense. This deposit trend as well as the rising market interest rate environment caused a decline in the Company’s net interest margin to 4.01% for the quarter ended September 30, 2006 compared to the 4.26% reported for the period ending September 30, 2005.

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     Third quarter 2006 non-interest expense at $5,503,000 increased 4.4% compared to the $5,272,000 reported in the third quarter of 2005. Compensation and occupancy expenses connected with a new branch opened during 2006 contributed to the year-to-year 2006 increase in non-interest expense.

     Provision for loan losses was $240,000 for the quarter ended September 30, 2006 compared to $404,000 for the quarter ended September 30, 2005. The Company performs a quarterly analysis of the adequacy of the allowance for loan and lease losses to determine the necessary allowance balance to cover identified losses based upon information available at that time regarding assets quality, loan trends and other economic factors. The provision recorded is a result of this computation and while the quarterly provision was lower in 2006, the allowance for loan and lease losses to gross loans ratio of 1.46% was higher than the 1.45% reported at September 30, 2005.

     Total assets of the Company increased 2.3% to $622,964,000 at September 30, 2006 from the $609,187,000 reported on September 30, 2005. Total assets increased principally due to increased commercial loan volumes. At September 30, 2006, loans totaled $453,772,000 compared to $434,416,000 reported at September 30, 2005. Commercial loans increased $27,115,000 between the two periods principally due to new business development efforts in existing and new markets, expanding existing relationships, and new loan opportunities generated by the Company’s alliance with other community bank partners. Total deposits of $531,585,000 increased $14,649,000 at the end of the third quarter 2006 compared to the

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$516,936,000 reported at the end of the third quarter 2005. Growth of certificates of deposit due to higher market rates was the primary contributor to the improved deposit totals.

     The return on average assets for the Company was .84% for the third quarter of 2006 compared with .85% in the third quarter of 2005. The return on average shareholders’ equity for the third quarter of 2006 was 10.85% compared to 11.38% for the third quarter 2005. Cash dividends paid to shareholders in the third quarter 2006 increased 13.6% to $.25 per share compared to the $.22 per share paid in the third quarter of 2005.

Year-to-Date Results

     Net interest income for the nine months ended September 30, 2006 of $17,413,000 increased $559,000 or 3.3% over the $16,854,000 reported for the same period in 2005. Higher interest rates on loans based on increased market interest rates as well as interest income on new commercial loan relationships accounted for the improved position in 2006. Non-interest income at $5,625,000 for the nine months ended September 30, 2006 increased $387,000 over the $5,238,000 reported for the same period in 2005. Service charges on deposits increased from new account growth during the period as well as improved levels of income from trust and investment services during the first nine months of 2006. Offsetting improved income levels was an increase in non-interest expense when comparing the first nine months of 2006 to the same period in 2005. In 2006, these expenses totaled $16,785,000 an increase of $1,121,000 or 7.2% over the $15,664,000 reported for the same period in 2005. Additional salary and benefit costs to staff a new community banking office at one of the banking subsidiaries as well as expansion in other markets were the primary contributors to the increased expense.

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Additionally, for the nine months ended September 30, 2006, provision for loan losses was $880,000 a decrease of $122,000 from the $1,002,000 provided in the same period in 2005.

     According to President and CEO Donald L. Grill, “We are pleased with our quarterly and year to date earnings results in light of the challenging Michigan economy. Our growth and expansion strategies, coupled with the diligent efforts of our fine bankers continued to create strong financial results.”

          Fentura is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank headquartered in Fenton with offices serving Fenton, Linden, Holly, Grand Blanc and Brighton; Davison State Bank headquartered in Davison, Michigan with offices serving the Davison area; and West Michigan Community Bank headquartered in Hudsonville, Michigan with offices serving Hudsonville, Holland, Jenison, and Grandville. 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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Fentura Financial Inc.
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED

	Sept 30			June 30			Mar 31			Dec 31			Sept 30
	2006			2006			2006			2005			2005
ASSETS
Cash and cash equivalents
Cash and due from banks	$	17,473		$	19,346		$	19,156		$	21,327		$	22,885
Short term investments		8,950			6,900			8,650			9,750			8,300
Total cash & cash equivalents		26,423			26,246			27,806			31,077			31,185
Securities:
Securities available for sale		92,557			92,646			93,217			99,542			94,705
Securities held to maturity		12,202			16,958			15,395			14,851			13,663
Total securities		104,759			109,604			108,612			114,393			108,368
Loans held for sale		2,079			679			1,695			1,042			2,442
Loans:
Commercial		268,305			265,097			260,054			254,498			241,190
Real estate — construction		82,414			87,908			86,449			76,386			81,156
Real estate — mortgage		37,963			37,076			36,347			37,627			39,529
Consumer		65,090			66,896			69,534			70,845			72,541
Total loans		453,772			456,977			452,384			439,356			434,416
Less: Allowance for loan losses		(6,625	)		(6,682	)		(6,518	)		(6,301	)		(6,294	)
Net loans		447,147			450,295			445,866			433,055			428,122
Bank owned life insurance		6,736			6,683			6,642			6,579			6,417
Bank premises and equipment		16,564			16,665			15,350			14,617			14,245
Federal Home Loan Bank stock		2,172			2,432			2,300			2,300			2,300
Accrued interest receivable		3,079			2,837			2,830			2,676			2,550
Goodwill		7,955			7,955			7,955			7,955			7,955
Acquisition intangibles		835			912			988			1,075			1,162
Other assets		5,215			4,857			4,276			4,320			4,441
TOTAL ASSETS	$	622,964		$	629,165		$	624,320		$	619,089		$	609,187
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		75,564			77,463			77,652			76,792			81,532
Interest bearing deposits		456,021			456,937			456,313			451,262			435,404
Total deposits		531,585			534,400			533,965			528,054			516,936
Short-term borrowings		1,251			6,565			20			1,537			1,950
Federal Home Loan Bank Advances		11,091			12,130			14,189			14,228			16,267
Repurchase agreements		10,000			10,000			10,000			10,000			10,000
Subordinated debentures		14,000			14,000			14,000			14,000			14,000
Accrued interest, taxes & other liabilities		5,094			4,026			4,420			4,375			3,893
Total liabilities		573,021			581,121			576,594			572,194			563,046
STOCKHOLDERS’ EQUITY
Common stock — no par value 5,000,000 shares authorized		41,978			41,810			34,798			34,491			34,359
Retained earnings		9,149			8,358			14,431			13,729			12,882
Accumulated other comprehensive income (loss)		(1,184	)		(2,124	)		(1,503	)		(1,325	)		(1,100	)
Total stockholders’ equity		49,943			48,044			47,726			46,895			46,141
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	622,964		$	629,165		$	624,320		$	619,089		$	609,187
* Common stock shares issued & outstanding		2,147,408			2,142,496			2,130,564			2,124,427			2,119,374
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		0.44	%		0.44	%		0.46	%		0.67	%		0.47	%
Allowance for Loan Losses as a % of Non-Performing Loans		332.58	%		330.14	%		312.91	%		213.09	%		306.58	%
Accruing Loans Past Due 90 Days More to Total Loans		0.02	%		0.04	%		0.02	%		0.02	%		0.03	%
Non-Performing Assets as a % of Total Assets		0.48	%		0.44	%		0.35	%		0.56	%		0.46	%
Quarterly Average Balances:
Total Loans		452,538			450,361			446,889			436,632			429,357
Total Earning Assets		576,675			573,687			570,751			559,834			551,618
Total Shareholders’ Equity		48,844			48,223			47,937			47,497			45,294
Total Assets		630,713			622,474			619,398			610,275			603,683
Diluted Shares Outstanding		2,149,598			2,135,056			2,137,265			2,128,215			2,091,588

* Per share data adjusted for 10% stock dividend paid on August 4, 2006

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

	Three Months ended												Nine months ended
	Sept 30			June 30			Mar 31			Sept 30			Sept 30			Sept 30
	2006			2006			2006			2005			2006			2005
Interest income:
Interest & fees on loans	$	8,929		$	8,852		$	8,430		$	7,749		$	26,211		$	21,516
Interest & dividends on securities:
Taxable		860			852			883			801			2,595			2,464
Tax-exempt		205			196			207			227			608			704
Interest on federal funds sold		218			79			94			36			391			54
Total interest income		10,212			9,979			9,614			8,813			29,805			24,738
Interest expense:
Deposits		3,943			3,594			3,241			2,538			10,778			6,449
Borrowings		567			540			507			498			1,614			1,435
Total interest expense		4,510			4,134			3,748			3,036			12,392			7,884
Net interest income		5,702			5,845			5,866			5,777			17,413			16,854
Provision for loan losses		240			240			400			404			880			1,002
Net interest income after provision for loan losses		5,462			5,605			5,466			5,373			16,533			15,852
Non-interest income:
Service charges on deposit accounts		989			950			811			907			2,750			2,571
Gain on sale of mortgage loans		124			157			163			282			444			630
Trust & investment services income		372			417			383			254			1,172			842
Loss on sale of securities		(2	)		—			—			2			(2	)		(108	)
Other income and fees		457			364			440			439			1,261			1,303
Total non-interest income		1,940			1,888			1,797			1,884			5,625			5,238
Non-interest expense:
Salaries & employee benefits		3,197			3,313			3,334			3,094			9,844			9,062
Occupancy		457			510			432			441			1,399			1,325
Furniture and equipment		541			551			508			495			1,600			1,576
Loan and collection		72			84			71			87			227			255
Advertising and promotional		140			201			153			153			494			509
Other operating expenses		1,096			1,054			1,071			1,002			3,221			2,937
Total non-interest expense		5,503			5,713			5,569			5,272			16,785			15,664
Income before federal income taxes		1,899			1,780			1,694			1,985			5,373			5,426
Federal income taxes		563			522			487			686			1,572			1,681
Net Income	$	1,336		$	1,258		$	1,207		$	1,299		$	3,801		$	3,745
*Per Share Data:
Basic earnings	$	0.62		$	0.59		$	0.56		$	0.61		$	1.77		$	1.77
Diluted earnings	$	0.62		$	0.59		$	0.56		$	0.61		$	1.77		$	1.77
Cash dividends declared	$	0.25		$	0.23		$	0.23		$	0.22		$	0.71		$	0.65
Performance Ratios:
Return on Average Assets		0.84	%		0.81	%		0.79	%		0.85	%		0.81	%		0.85	%
Return on Average Equity		10.85	%		10.46	%		10.21	%		11.38	%		10.51	%		11.33	%
Net Interest Margin (FTE)		4.01	%		4.17	%		4.26	%		4.26	%		4.15	%		4.28	%
Book Value Per Share	$	23.25		$	22.42		$	22.40		$	21.77		$	23.25		$	21.77
Net Charge-offs		297			76			183			106			556			209
Ratio of Net charge-offs to Gross Loans		0.07	%		0.02	%		0.04	%		0.02	%		0.12	%		5.00	%

* Per share data adjusted for 10% stock dividend paid on August 4, 2006