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) February 5, 2007 (February 1, 2007)

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 February 1, 2007, Fentura Financial, Inc. issued a news release to report its financial results for the quarter and year ended December 31, 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 February 1, 2007.

2

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: February 5, 2007

3

EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated February 1, 2007

4

EX-99.1

EXHIBIT 99.1

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

CONTACT: RONALD L. JUSTICE
FENTURA FINANCIAL, INC.
(810)714-3902

February 1, 2007

For Immediate Release

FENTURA FINANCIAL, INC. ANNOUNCES A 15% INCREASE IN
QUARTERLY NET INCOME AND A 5% INCREASE IN NET
INCOME FOR 2006

          Fenton, Michigan—February 1, 2007—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 reported that improved net interest income from loan growth and increases in trust and investment revenues and deposit service fees contributed to a 5% increase in net income for the year ended December 31, 2006.

	Financial highlights for 2006 compared to 2005 include:
1.	Fourth quarter net income increased 15% compared to the same period in 2005.
2.	Yearly total interest income increased 17.8% driven by increases in interest income on loans.
3.	Non-interest income increased 11.1% during 2006, with increases in service charges on deposits and income from trust and investment services.
4.	Total loans including loans held for sale increased $12,821,000 or 2.91% during 2006. 5. A solid 4.11% net interest margin was achieved for 2006. 6. Return on average equity was 10.82% for the year.
7.	While non-performing assets increased to 1.08% of total assets, overall asset quality remains strong.

          According to President and CEO, Donald L. Grill, “2006 was another record year for Fentura Financial, Inc. and its affiliate banks. Considering the challenges presented by the Michigan economy, I am proud that the Fentura team was able to continue to grow profitably, control costs, and manage asset quality at a level that resulted in such fine performance.”

Components of Fourth Quarter Results

          For the fourth quarter ended December 31, 2006, net income totaled $1,506,000 or $0.70 per diluted share, compared to $1,310,000, or $0.62 per diluted share achieved during the fourth quarter of 2005 an increase of 15%. Contributing to the improved earnings was a non-interest income increase of $374,000 or 22.7% to $2,018,000 compared to the $1,644,000 reported for the same period in 2005 based on improved levels of service charges on deposits and trust and

investment services income in 2006. Non-interest income increases were partially offset by non-interest expenses which increased by a modest $67,000 or 1.3% comparing the two periods. Non-interest expenses increased in 2006 due to the occupancy expenses associated with the opening of a new community office of The State Bank in Grand Blanc, Michigan. Net interest income after provision for loan losses was flat comparing the two periods.

          Provision for loan losses was $240,000 for the three months ended December 31, 2006 compared to $387,000 for the same period in 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 provision was lower in 2006, the allowance for loan and lease losses to gross loans of 1.48% at December 31, 2006 was higher than the 1.43% reported at December 31, 2005.

Year-to-Date Results

          Net income for the year totaled $5,308,000 or $2.47 per diluted share, compared to $5,054,000 or $2.40 per diluted share for 2005. Contributing to the increase in net income was net interest income which totaled $23,008,000 for the twelve month period ending December 31, 2006, an increase of $428,000 or 1.9% compared to the $22,580,000 reported for the same period in 2005. Total interest income increased $6,038,000 or 17.8% in 2006 from interest earned on new loans and due to increases in certain loan rate levels driven by increased market interest rates. The increase in interest income was partially offset by an interest expense increase of $5,610,000. Deposit interest rates were also impacted by the changes in market rates and competitive pressures, which caused the increase in interest expense in 2006. The net interest margin derived from the net interest income as a percent of average earning assets declined from the 4.23% reported in 2005 but remained strong at 4.11%.

          Non-interest income at $7,643,000 for the twelve months ended December 31, 2006 increased $761,000 or 11.1% compared to the $6,882,000 reported in 2005. Contributing to the improved non-interest income, service charges on deposits increased 7.6% during the period and income from trust and investment services increased 34.3% in 2006 based on growth of trust, brokerage, and financial planning services.

          Non-interest expense increased $1,186,000 or 5.7% to $21,986,000 during 2006 compared to the $20,800,000 reported for 2005. Increased salary and benefit expenses and occupancy expense associated with the opening of a new community office of The State Bank contributed to the increase in total non-interest expense.

          Provision for loan losses was $1,120,000 for the twelve months ended December 31, 2006 compared to $1,389,000 for 2005. The allowance for loan and lease losses to gross loans of 1.48% at December 31, 2006 was estimated as adequate based on the analysis described previously, and was higher than the 1.43% reported at December 31, 2005.

          Total loans including loans held for sale were $453,219,000 at December 31, 2006, an increase of $12,821,000 or 2.9% compared to the $440,398,000 reported at December 31, 2005. The year-to-year increase in total loans was primarily attributable to the $20,444,000 or 6.2%

growth of commercial and real estate construction loans. Loan growth, as well as an increase in bank premises and equipment from the new community office at The State Bank contributed to the $3,209,000 increase in total assets to $622,298,000 at December 31, 2006 compared to the $619,089,000 reported for 2005.

          The return on average assets for the Company at .85% for the year ended December 31, 2006 was unchanged from the .85% reported for 2005. The return on average shareholders’ equity for 2006 was 10.82% compared to 11.09% reported for 2005. Cash dividends paid to shareholders during 2006 increased 6.8% to $.94 per share compared to the $.88 per share paid in 2005. The 2006 fourth quarter dividend represents the 74^th consecutive regular quarterly dividend paid since the Holding Company was formed in 1988.

          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.

All per share information reflects a 10% stock dividend paid on August 4, 2006 for shareholders of record July 31, 2006.

# # #

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.

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

	Dec 31			Sept 30			June 30			Mar 31			Dec 31
	2006			2006			2006			2006			2005
ASSETS
Cash and cash equivalents
Cash and due from banks	$	19,946		$	17,473		$	19,346		$	19,156		$	21,327
Short term investments		9,500			8,950			6,900			8,650			9,750
Total cash & cash equivalents		29,446			26,423			26,246			27,806			31,077
Securities:
Securities available for sale		91,104			92,557			92,646			93,217			99,542
Securities held to maturity		11,899			12,202			16,958			15,395			14,851
Total securities		103,003			104,759			109,604			108,612			114,393
Loans held for sale		2,226			2,079			679			1,695			1,042
Loans:
Commercial		272,401			268,305			265,097			260,054			254,498
Real estate — construction		78,927			82,414			87,908			86,449			76,386
Real estate — mortgage		36,867			37,963			37,076			36,347			37,627
Consumer		62,798			65,090			66,896			69,534			70,845
Total loans		450,993			453,772			456,977			452,384			439,356
Less: Allowance for loan losses		(6,692	)		(6,625	)		(6,682	)		(6,518	)		(6,301	)
Net loans		444,301			447,147			450,295			445,866			433,055
Bank owned life insurance		6,815			6,736			6,683			6,642			6,579
Bank premises and equipment		16,854			16,564			16,665			15,350			14,617
Federal Home Loan Bank stock		2,032			2,172			2,432			2,300			2,300
Accrued interest receivable		2,985			3,079			2,837			2,830			2,676
Goodwill		7,955			7,955			7,955			7,955			7,955
Acquisition intangibles		759			835			912			988			1,075
Other assets		5,922			5,215			4,857			4,276			4,320
TOTAL ASSETS	$	622,298		$	622,964		$	629,165		$	624,320		$	619,089
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		74,887			75,564			77,463			77,652			76,792
Interest bearing deposits		453,668			456,021			456,937			456,313			451,262
Total deposits		528,555			531,585			534,400			533,965			528,054
Short-term borrowings		1,500			1,251			6,565			20			1,537
Federal Home Loan Bank Advances		11,052			11,091			12,130			14,189			14,228
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		5,873			5,094			4,026			4,420			4,375
Total liabilities		570,980			573,021			581,121			576,594			572,194
STOCKHOLDERS’ EQUITY
Common stock — no par value
5,000,000 shares authorized		42,158			41,978			41,810			34,798			34,491
Retained earnings		10,118			9,149			8,358			14,431			13,729
Accumulated other comprehensive income (loss)		(958	)		(1,184	)		(2,124	)		(1,503	)		(1,325	)
Total stockholders’ equity		51,318			49,943			48,044			47,726			46,895
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	622,298		$	622,964		$	629,165		$	624,320		$	619,089
* Common stock shares issued & outstanding		2,152,862			2,147,408			2,142,496			2,130,564			2,124,427
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		1.13	%		0.44	%		0.44	%		0.46	%		0.67	%
Allowance for Loan Losses as a % of Non-Performing Loans		131.16	%		333.58	%		330.14	%		312.91	%		213.09	%
Accruing Loans Past Due 90 Days More to Total Loans		0.51	%		0.02	%		0.04	%		0.02	%		0.02	%
Non-Performing Assets as a % of Total Assets		1.08	%		0.48	%		0.44	%		0.35	%		0.56	%
Quarterly Average Balances:
Total Loans		452,334			451,301			455,734			446,889			436,632
Total Earning Assets		569,756			577,454			573,687			570,751			559,834
Total Shareholders’ Equity		51,253			48,844			48,223			47,937			47,497
Total Assets		620,960			630,713			622,474			619,398			610,275
Diluted Shares Outstanding		2,155,400			2,149,598			2,135,056			2,137,265			2,128,215

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

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

	Three Months ended															Twelve months ended
	Dec 31			Sept 30			June 30			March 31			Dec 31			Dec 31			Dec 31
	2006			2006			2006			2006			2005			2006			2005
Interest income:
Interest & fees on loans	$	8,920		$	8,929		$	8,852		$	8,430		$	8,154		$	35,131		$	29,670
Interest & dividends on securities:
Taxable		865			860			852			883			786			3,461			3,250
Tax-exempt		202			205			196			207			90			809			794
Interest on federal funds sold		124			218			79			94			110			515			164
Total interest income		10,111			10,212			9,979			9,614			9,140			39,916			33,878
Interest expense:
Deposits		3,964			3,943			3,594			3,241			2,941			14,743			9,390
Borrowings		552			567			540			507			473			2,165			1,908
Total interest expense		4,516			4,510			4,134			3,748			3,414			16,908			11,298
Net interest income		5,595			5,702			5,845			5,866			5,726			23,008			22,580
Provision for loan losses		240			240			240			400			387			1,120			1,389
Net interest income after provision for loan losses		5,355			5,462			5,605			5,466			5,339			21,888			21,191
Non-interest income:
Service charges on deposit accounts		958			989			950			831			874			3,708			3,445
Gain on sale of mortgage loans		171			124			157			163			212			615			842
Trust & investment services income		382			372			417			383			315			1,554			1,157
Loss on sale of securities		—			(2	)		—			—			(41	)		(2	)		(149	)
Other income and fees		507			457			364			420			284			1,768			1,587
Total non-interest income		2,018			1,940			1,888			1,797			1,644			7,643			6,882
Non-interest expense:
Salaries & employee benefits		2,894			3,197			3,313			3,334			2,920			12,738			11,983
Occupancy		459			457			510			432			348			1,858			1,673
Furniture and equipment		539			541			551			508			504			2,140			2,080
Loan and collection		93			72			84			71			133			320			388
Advertising and promotional		130			140			201			153			118			624			627
Other operating expenses		1,087			1,096			1,054			1,071			1,112			4,306			4,049
Total non-interest expense		5,202			5,503			5,713			5,569			5,135			21,986			20,800
Income before federal income taxes		2,171			1,899			1,780			1,694			1,848			7,545			7,273
Federal income taxes		665			563			522			487			538			2,237			2,219
Net Income	$	1,506		$	1,336		$	1,258		$	1,207		$	1,310		$	5,308		$	5,054
*Per Share Data:
Basic earnings	$	0.70		$	0.62		$	0.59		$	0.56		$	0.62		$	2.48		$	2.41
Diluted earnings	$	0.70		$	0.62		$	0.59		$	0.56		$	0.62		$	2.47		$	2.40
Cash dividends declared	$	0.25		$	0.23		$	0.23		$	0.23		$	0.23		$	0.94		$	0.88
Performance Ratios:
Return on Average Assets		0.96	%		0.84	%		0.81	%		0.79	%		0.85	%		0.85	%		0.85	%
Return on Average Equity		11.66	%		10.85	%		10.46	%		10.21	%		10.94	%		10.82	%		11.09	%
Net Interest Margin (FTE)		3.90	%		4.01	%		4.17	%		4.26	%		4.11	%		4.11	%		4.23	%
Book Value Per Share	$	24.08		$	23.25		$	20.38		$	20.38		$	22.07		$	24.08		$	22.07
Net Charge-offs		173			297			76			183			380			729			589
Ratio of Net charge-offs to Gross Loans		0.04	%		0.12	%		0.06	%		0.04	%		0.09	%		0.16	%		0.13	%

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