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 30, 2007 (October 26, 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))

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Press Release, dated October 26, 2007

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 26, 2007, Fentura Financial, Inc. issued a news release to report its financial results for the quarter and nine month period ended September 30, 2007. 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 26, 2007.

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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 30, 2007

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EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated October 26, 2007

4

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
	October 26, 2007

For Immediate Release

THIRD QUARTER FINANCIAL PERFORMANCE HIGHLIGHTS

Fentura Financial, Inc. reported an operating loss for the third quarter of 2007 totaling $2,107,000; a loss of $0.98 per diluted share. Net-income for the third quarter of 2006 totaled $1,336,000 or $0.62 per diluted share. As was reported to shareholders during the quarter, Fentura subsidiary banks experienced substantial deterioration in the construction and land development loan portfolios, principally in the residential construction sector. The residential housing industry continues to soften as new home sales and new housing starts have fallen dramatically below levels of prior years. In reviewing our exposure to construction and land development projects in light of these external events, management and the boards of directors concluded that it would be appropriate to substantially increase the reserve for loan losses. Accordingly, $5,144,000 was added to the reserve for loan losses during the quarter, an increase of $4,904,000 over the provision level of the third quarter of 2006. While housing industry stress on our construction and land development borrowers is severe, they comprise only $59,746,000 or 13% of the total loan portfolio of $455,621,000. The remaining loan portfolios are comprised of a diverse borrowing base of loans to individuals and small businesses of various types.

On a year-to-date basis, Fentura experienced a loss of $315,000 or a loss of $0.05 per diluted share compared to net income reported following the third quarter of 2006 of $3,801,000 or $1.78 per diluted share. Net-interest income of $15,889,000 reported at September 30, 2007 declined 9% from the $17,413,000 reported September 30, 2006. On a year-to-date basis, loan loss provision totaled $6,232,000 through September of 2007 versus $880,000 through September of 2006. Non-interest income of $5,863,000 improved for the nine month period ended September 30, 2007 registering a 4% increase over the $5,625,000 reported through September 30, 2006 due primarily to a 23% increase in trust and investment income. Improvement was also achieved in controlling operating expenses as total non-interest expense of $16,330,000 through September 30, 2007 reflected a 3% reduction from the $16,785,000 reported through the third quarter of 2006.

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The overall composition of the balance sheet was relatively unchanged from the prior year or the prior quarter. Total assets of $619,546,000 increased slightly from the total reported at the end of the second quarter 2007 of $619,119,000 and down slightly from the $622,964,000 reported at September 30, 2006. Similarly, total deposits of $529,934,000 were slightly below the $531,585,000 reported as of the third quarter of last year while net loans of $455,621,000 at September 30, 2007 registered a modest 2% increase over the $447,147,000 reported at the close of the third quarter last year. On a year-to-year basis, total shareholder equity increased just slightly to $50,063,000 versus $49,943,000 at the end of the third quarter last year.

According to Fentura’s CEO Donald L. Grill, “The sudden and dramatic decline in the housing sector during the past quarter necessitated unprecedented action on our part to divert earnings to provide for loan losses. While the repayment ability of our construction and land development borrowers has been severely hampered, discounted underlying collateral values will provide support for the collectablity of these non-performing assets. Many Michigan banks have experienced similar asset quality deterioration necessitating additional provision during the third quarter. While we are extremely disappointed with our third quarter results, we are pleased with the efforts being made to increase non-interest income and to reduce operating expenses.”

Fentura is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank headquartered in Fenton with offices serving in 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, and Jenison. 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. 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

	Sept 30			June 30			Mar 31			Dec 31			Sept 30
	2007			2007			2007			2006			2006
ASSETS
Cash and cash equivalents
Cash and due from banks	$	22,122		$	18,658		$	17,236		$	19,946		$	17,473
Short term investments		350			4,250			6,100			9,500			8,950
Total cash & cash equivalents		22,472			22,908			23,336			29,446			26,423
Securities:
Securities available for sale		80,250			88,816			88,783			91,104			92,557
Securities held to maturity		8,856			8,934			10,441			11,899			12,202
Total securities		89,106			97,750			99,224			103,003			104,759
Loans held for sale		2,349			1,066			2,352			2,226			2,079
Loans:
Commercial		303,533			298,359			298,338			272,401			268,305
Real estate — construction		62,787			62,722			64,973			78,927			82,414
Real estate — mortgage		40,926			37,842			35,562			36,867			37,963
Consumer		59,800			59,147			60,953			62,798			65,090
Total loans		467,046			458,070			459,826			450,993			453,772
Less: Allowance for loan losses		(11,425	)		(7,174	)		(6,962	)		(6,692	)		(6,625	)
Net loans		455,621			450,896			452,864			444,301			447,147
Bank owned life insurance		6,974			6,920			6,872			6,815			6,736
Bank premises and equipment		19,442			19,383			19,509			16,854			16,564
Federal Home Loan Bank stock		2,032			2,032			2,032			2,032			2,172
Accrued interest receivable		3,362			3,272			3,313			2,985			3,079
Goodwill		7,955			7,955			7,955			7,955			7,955
Acquisition intangibles		551			616			683			759			835
Other assets		9,682			6,321			6,812			5,922			5,215
TOTAL ASSETS	$	619,546		$	619,119		$	624,952		$	622,298		$	622,964
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		75,280			81,606			77,790			74,887			75,564
Interest bearing deposits		454,654			451,012			453,559			453,668			456,021
Total deposits		529,934			532,618			531,349			528,555			531,585
Short-term borrowings		5,250			1,074			450			1,500			1,251
Federal Home Loan Bank Advances		11,030			11,030			11,052			11,052			11,091
Repurchase agreements		5,000			5,000			10,000			10,000			10,000
Subordinated debentures		14,000			14,000			14,000			14,000			14,000
Accrued interest, taxes & other liabilities		4,269			3,070			5,797			5,873			5,094
Total liabilities		569,483			566,792			572,648			570,980			573,021
STOCKHOLDERS’ EQUITY
Common stock — no par value 5,000,000 shares authorized		42,304			42,538			42,476			42,158			41,978
Retained earnings		8,180			10,827			10,524			10,118			9,149
Accumulated other comprehensive income (loss)		(421	)		(1,038	)		(696	)		(958	)		(1,184	)
Total stockholders’ equity		50,063			52,327			52,304			51,318			49,943
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	619,546		$	619,119		$	624,952		$	622,298		$	622,964
* Common stock shares issued & outstanding		2,159,536			2,164,049			2,162,107			2,152,862			2,147,408
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		3.03	%		0.66	%		1.03	%		1.13	%		0.44	%
Allowance for Loan Losses as a % of Non-Performing Loans		80.44	%		227.44	%		146.02	%		131.16	%		333.58	%
Accruing Loans Past Due 90 Days More to Total Loans		0.20	%		0.01	%		0.11	%		0.51	%		0.02	%
Non-Performing Assets as a % of Total Assets		2.92	%		1.01	%		1.12	%		1.08	%		0.48	%
Quarterly Average Balances:
Total Loans		462,981			461,450			452,274			452,334			451,301
Total Earning Assets		564,033			564,364			569,289			569,756			577,454
Total Shareholders’ Equity		52,434			53,224			51,968			51,253			48,844
Total Assets		618,763			619,249			622,594			620,960			630,713
Diluted Shares Outstanding		2,162,669			2,165,667			2,160,899			2,155,400			2,149,598

* 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															Nine months ended
	Sept 30			June 30			March 31			Dec 31			Sept 30			Sept 30			Sept 30
	2007			2007			2007			2006			2006			2007			2006
Interest income:
Interest & fees on loans	$	8,796		$	8,917		$	8,647		$	8,920		$	8,929		$	26,360		$	26,211
Interest & dividends on securities:
Taxable		786			801			917			865			860			2,504			2,595
Tax-exempt		169			180			215			202			205			564			608
Interest on federal funds sold		40			44			167			124			218			251			391
Total interest income		9,791			9,942			9,946			10,111			10,212			29,679			29,805
Interest expense:
Deposits		4,147			3,990			3,961			3,964			3,943			12,098			10,778
Borrowings		547			560			585			552			567			1,692			1,614
Total interest expense		4,694			4,550			4,546			4,516			4,510			13,790			12,392
Net interest income		5,097			5,392			5,400			5,595			5,702			15,889			17,413
Provision for loan losses		5,144			649			439			240			240			6,232			880
Net interest income after provision for loan losses		(47	)		4,743			4,961			5,355			5,462			9,657			16,533
Non-interest income:
Service charges on deposit accounts		860			836			851			958			989			2,547			2,750
Gain on sale of mortgage loans		65			119			84			171			124			268			444
Trust & investment services income		471			461			507			382			372			1,439			1,172
Loss on sale of securities		—			—			—			—			(2	)		—			(2	)
Other income and fees		574			612			423			507			457			1,609			1,261
Total non-interest income		1,970			2,028			1,865			2,018			1,940			5,863			5,625
Non-interest expense:
Salaries & employee benefits		2,868			3,193			3,247			2,894			3,197			9,308			9,844
Occupancy		543			510			503			459			457			1,556			1,399
Furniture and equipment		532			534			525			539			541			1,591			1,600
Loan and collection		111			85			91			93			72			287			227
Advertising and promotional		125			159			112			130			140			396			494
Other operating expenses		1,057			1,117			1,018			1,086			1,096			3,192			3,221
Total non-interest expense		5,236			5,598			5,496			5,201			5,503			16,330			16,785
Income before federal income taxes		(3,313	)		1,173			1,330			2,172			1,899			(810	)		5,373
Federal income taxes		(1,206	)		329			382			665			563			(495	)		1,572
Net Income	$	(2,107	)	$	844		$	948		$	1,507		$	1,336		$	(315	)	$	3,801
*Per Share Data:
Basic earnings	$	(0.98	)	$	0.39		$	0.44		$	0.70		$	0.62		$	(0.15	)	$	1.78
Diluted earnings	$	(0.98	)	$	0.39		$	0.44		$	0.70		$	0.62		$	(0.15	)	$	1.77
Cash dividends declared	$	0.25		$	0.25		$	0.25		$	0.25		$	0.23		$	0.75		$	0.71
Performance Ratios:
Return on Average Assets		-0.34	%		0.55	%		0.62	%		0.96	%		0.84	%		-0.05	%		0.81	%
Return on Average Equity		-4.02	%		6.36	%		7.40	%		11.66	%		10.85	%		-0.60	%		10.51	%
Net Interest Margin (FTE)		3.66	%		3.91	%		3.94	%		3.90	%		4.01	%		3.84	%		4.15	%
Book Value Per Share	$	23.22		$	24.18		$	24.19		$	24.08		$	23.25		$	23.22		$	23.25
Net Charge-offs		892			437			169			173			297			1,498			556
Ratio of Net charge-offs to Gross Loans		0.19	%		0.10	%		0.04	%		0.04	%		0.12	%		0.32	%		0.12	%

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