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) January 31, 2008 (January 29, 2008)

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 January 29, 2008, Fentura Financial, Inc. issued a news release to report its financial results for the quarter and year ended December 31, 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 January 29, 2008.

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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: January 31, 2008

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EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated January 29, 2008

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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
	January 29, 2008

For Immediate Release

FOURTH QUARTER 2007 FINANCIAL PERFORMANCE HIGHLIGHTS

Fentura Financial, Inc. reported an operating loss for the fourth quarter of 2007 totaling $152,000 or a loss of $0.07 per diluted share. Net-income for the fourth quarter of 2006 totaled $1,507,000 or $0.70 per diluted share. As was reported to shareholders following the third quarter of 2007, fourth quarter operating results were again impacted by Fentura subsidiary banks providing additional reserves to their allowance for loan losses. Provisions totaled $1,234,000 for the quarter ended December 31, 2007 compared to the $240,000 reported for the fourth quarter of 2006. Management and the boards of directors concluded that it was necessary to increase the provision for loan losses based upon the allowance for loan loss computation, loan portfolio trends, increased charge offs and the continued softening of the Michigan economy. The dramatic decline in the housing industry has had a negative impact on the construction and land development portfolios of the banks. Such loans comprise approximately 12% of the total gross loan portfolio of $471,403,000. The remainder of the portfolio is comprised of a diverse borrowing base of loans to individuals and small businesses of various types.

For the year ended December 31, 2007, Fentura experienced an operating loss of $467,000 or a loss of $0.22 per diluted share compared to net income of $5,308,000 reported for the year ending December 31, 2006 or $2.47 per diluted share. Net-interest income of $20,593,000 reported at December 31, 2007 declined 10.5% from the $23,008,000 reported at December 31, 2006. Provision for loan losses totaled $7,466,000 during 2007 versus $1,120,000 reported for 2006. Non-interest income of $7,579,000 reported for the year ended December 31, 2007 declined modestly compared to the $7,643,000 reported for 2006, primarily due to a decline in gains on the sale of mortgage loans and a drop in total service charges on deposit accounts. Improvement was achieved in controlling operating expenses as total non-interest expense of

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$21,834,000 for 2007 reflected a 1% reduction from the $21,986,000 reported for the twelve months ended December 31, 2006.

According to Fentura’s CEO Donald L. Grill, “During 2007, we witnessed a dramatic contraction in the residential housing industry. New home sales, housing starts and home values dropped precipitously creating excess inventory and dramatically impacting the financial capability and repayment capacity of many of our construction and land development borrowers. In response, our banks added substantially to the allowance for loan losses, principally during the third quarter. The additional provision for loan loss expense offset traditional operating earnings and resulted in a loss for the full year.”

Total assets of $628,019,000 as of December 31, 2007 increased 1.0% from the $622,298,000 reported at the end 2006. Similarly, gross loans increased at year end 2007 to $471,403,000 compared to the $450,993,000 reported at December 31, 2006, an increase of 4.5%. New commercial loans were the primary contributor to the loan growth. Total deposits of $543,503,000 at December 31, 2007 were 2.8% above the $528,555,000 reported as of December 31, 2006 due to growth of interest bearing deposits. At December 31, 2007 total shareholder equity declined modestly at $49,496,000 compared to the $51,318,000 reported at year end 2006 based on the operating losses reported for the year.

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, 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

	Dec 31			Sept 30			June 30			Mar 31			Dec 31
	2007			2007			2007			2007			2006
ASSETS
Cash and cash equivalents
Cash and due from banks	$	22,734		$	22,122		$	18,658		$	17,236		$	19,946
Short term investments		7,300			350			4,250			6,100			9,500
Total cash & cash equivalents		30,034			22,472			22,908			23,336			29,446
Securities:
Securities available for sale		74,881			80,250			88,816			88,783			91,104
Securities held to maturity		8,685			8,856			8,934			10,441			11,899
Total securities		83,566			89,106			97,750			99,224			103,003
Loans held for sale		1,655			2,349			1,066			2,352			2,226
Loans:
Commercial		313,642			303,533			298,359			298,338			272,401
Real estate — construction		59,805			62,787			62,722			64,973			78,927
Real estate — mortgage		39,817			40,926			37,842			35,562			36,867
Consumer		58,139			59,800			59,147			60,953			62,798
Total loans		471,403			467,046			458,070			459,826			450,993
Less: Allowance for loan losses		(8,554	)		(11,425	)		(7,174	)		(6,962	)		(6,692	)
Net loans		462,849			455,621			450,896			452,864			444,301
Bank owned life insurance		7,042			6,974			6,920			6,872			6,815
Bank premises and equipment		20,101			19,442			19,383			19,509			16,854
Federal Home Loan Bank stock		2,032			2,032			2,032			2,032			2,032
Accrued interest receivable		2,813			3,362			3,272			3,313			2,985
Goodwill		7,955			7,955			7,955			7,955			7,955
Acquisition intangibles		485			551			616			683			759
Other assets		9,487			9,682			6,321			6,812			5,922
TOTAL ASSETS	$	628,019		$	619,546		$	619,119		$	624,952		$	622,298
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		75,148			75,280			81,606			77,790			74,887
Interest bearing deposits		468,355			454,654			451,012			453,559			453,668
Total deposits		543,503			529,934			532,618			531,349			528,555
Short-term borrowings		649			5,250			1,074			450			1,500
Federal Home Loan Bank Advances		11,030			11,030			11,030			11,052			11,052
Repurchase agreements		5,000			5,000			5,000			10,000			10,000
Subordinated debentures		14,000			14,000			14,000			14,000			14,000
Accrued interest, taxes & other liabilities		4,341			4,269			3,070			5,797			5,873
Total liabilities		578,523			569,483			566,792			572,648			570,980
STOCKHOLDERS’ EQUITY
Common stock — no par value
5,000,000 shares authorized		42,478			42,304			42,538			42,476			42,158
Retained earnings		7,488			8,180			10,827			10,524			10,118
Accumulated other comprehensive income (loss)		(470	)		(421	)		(1,038	)		(696	)		(958	)
Total stockholders’ equity		49,496			50,063			52,327			52,304			51,318
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	628,019		$	619,546		$	619,119		$	624,952		$	622,298
Common stock shares issued & outstanding		2,163,385			2,159,536			2,164,049			2,162,107			2,152,862
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		2.86	%		3.03	%		0.66	%		1.03	%		1.13	%
Allowance for Loan Losses as a % of Non-Performing Loans		63.18	%		80.44	%		227.44	%		146.02	%		131.16	%
Accruing Loans Past Due 90 Days More to Total Loans		0.01	%		0.20	%		0.01	%		0.11	%		0.51	%
Non-Performing Assets as a % of Total Assets		2.84	%		2.92	%		1.01	%		1.12	%		1.08	%
Quarterly Average Balances:
Total Loans		472,205			462,981			461,450			452,274			452,334
Total Earning Assets		565,614			564,033			564,364			569,289			569,756
Total Shareholders’ Equity		50,001			52,434			53,224			51,968			51,253
Total Assets		622,766			618,763			619,249			622,594			620,960
Diluted Shares Outstanding		2,162,039			2,162,669			2,165,667			2,160,899			2,155,400

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
	2007			2007			2007			2007			2006			2007			2006
Interest income:
Interest & fees on loans	$	8,612		$	8,796		$	8,917		$	8,647		$	8,920		$	34,972		$	35,131
Interest & dividends on securities:
Taxable		713			786			801			917			865			3,217			3,461
Tax-exempt		158			169			180			215			202			722			809
Interest on federal funds sold		52			40			44			167			124			303			515
Total interest income		9,535			9,791			9,942			9,946			10,111			39,214			39,916
Interest expense:
Deposits		4,306			4,147			3,990			3,961			3,964			16,404			14,743
Borrowings		525			547			560			585			552			2,217			2,165
Total interest expense		4,831			4,694			4,550			4,546			4,516			18,621			16,908
Net interest income		4,704			5,097			5,392			5,400			5,595			20,593			23,008
Provision for loan losses		1,234			5,144			649			439			240			7,466			1,120
Net interest income after provision for loan losses		3,470			(47	)		4,743			4,961			5,355			13,127			21,888
Non-interest income:
Service charges on deposit accounts		874			860			836			851			958			3,421			3,708
Gain on sale of mortgage loans		133			65			119			84			171			401			615
Trust & investment services income		462			471			461			507			382			1,901			1,554
Loss on sale of securities		2			—			—			—			—			2			(2	)
Other income and fees		245			574			612			423			507			1,854			1,768
Total non-interest income		1,716			1,970			2,028			1,865			2,018			7,579			7,643
Non-interest expense:
Salaries & employee benefits		2,876			2,868			3,193			3,247			2,894			12,183			12,738
Occupancy		533			543			510			503			459			2,090			1,858
Furniture and equipment		549			532			534			525			539			2,139			2,140
Loan and collection		465			111			85			91			93			753			320
Advertising and promotional		90			125			159			112			130			486			624
Other operating expenses		991			1,057			1,117			1,018			1,086			4,183			4,306
Total non-interest expense		5,504			5,236			5,598			5,496			5,201			21,834			21,986
Income before federal income taxes		(318	)		(3,313	)		1,173			1,330			2,172			(1,128	)		7,545
Federal income taxes		(166	)		(1,206	)		329			382			665			(661	)		2,237
Net Income	$	(152	)	$	(2,107	)	$	844		$	948		$	1,507		$	(467	)	$	5,308
Per Share Data:
Basic earnings	$	(0.07	)	$	(0.98	)	$	0.39		$	0.44		$	0.70		$	(0.22	)	$	2.48
Diluted earnings	$	(0.07	)	$	(0.98	)	$	0.39		$	0.44		$	0.70		$	(0.22	)	$	2.47
Cash dividends declared	$	0.25		$	0.25		$	0.25		$	0.25		$	0.25		$	1.00		$	0.94
Performance Ratios:
Return on Average Assets		-0.02	%		-0.34	%		0.55	%		0.62	%		0.96	%		-0.08	%		0.85	%
Return on Average Equity		-0.30	%		-4.02	%		6.36	%		7.40	%		11.66	%		-0.89	%		10.82	%
Net Interest Margin (FTE)		3.37	%		3.66	%		3.91	%		3.94	%		3.90	%		3.72	%		4.11	%
Book Value Per Share	$	22.88		$	23.22		$	24.18		$	24.19		$	24.08		$	22.88		$	24.08
Net Charge-offs		4,105			892			437			169			173			5,603			729
Ratio of Net charge-offs to Gross Loans		0.87	%		0.19	%		0.10	%		0.04	%		0.04	%		1.18	%		0.16	%