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) March 19, 2009 (March 17, 2009)

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 1.01 Entry into a Material Definitive Agreement
	Item 2.02 Results of Operations and Financial Condition.
	Item 8.01 Other Events.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EX-99.1

Item 1.01 Entry into a Material Definitive Agreement

     On March 17, 2009, Fentura Financial, Inc. (the “Company”) entered into an agreement for the sale of its Davison State Bank subsidiary to a private, non-affiliated investor group for an undisclosed amount. The transaction, which is subject to the approval of the FDIC and the Michigan Office of Financial and Insurance Regulation, is expected to close in the third quarter of 2009. Davison State Bank was formed by the Company in 2000 and has approximately $45 million in assets. Additional information regarding the sale is contained in the press release attached hereto as Exhibit 99.1.

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 March 18, 2009, Fentura Financial, Inc. issued a news release to report its financial results for the quarter and year ended December 31, 2008. The release is furnished as Exhibit 99.1 hereto.

Item 8.01 Other Events.

     The Company announced the implementation of various cost cutting measures including a 5% across the board salary and wage reduction, position eliminations, and organizational realignment. Additional information regarding the actions taken by the Company is contained in the press release attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number
99.1	Press Release, dated March 18, 2009.

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: March 19, 2009

EXHIBIT INDEX

Exhibit Number
99.1	Press Release, dated March 18, 2009

EX-99.1

Exhibit 99.1

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

Contact:	Donald L. Grill Fentura Financial, Inc. (810) 714-3985
	March 18, 2009

For Immediate Release

FENTURA ANNOUNCES DIVESTITURE, REORGANIZATION, COST
CUTTING MEASURES AND YEAR END RESULTS

     Fentura Financial, Inc., a Fenton based bank holding company has entered into an agreement to sell Fentura subsidiary Davison State Bank to Hantz Holdings, Inc. which is affiliated with the Hantz Group, a Southfield based financial services company. The amount of the transaction, which is expected to close during the third quarter of 2009, was not disclosed. Davison State Bank is a $45 million bank located near Flint in Genesee County. The bank was formed in 2000, and has two offices which serve the banking needs of individuals and small businesses in the Davison area.

     According to Fentura CEO Donald L. Grill, “The sale of Davison State Bank allows Fentura to redeploy the capital received from the sale of the bank to further support and strengthen the financial condition of the remaining Fentura subsidiary banks”.

     John Hantz, Chairman of Hantz Holdings, Inc. explained that “Acquiring Davison State Bank will ultimately allow us to provide a comprehensive package of services that addresses our individual and small business customers’ total financial health. By our commitment of

significant capital to Davison State Bank, we intend to be a very well-capitalized bank so not only will we have the resources to serve our affiliated companies’ customers, but also to help new customers throughout Michigan in the future.” According to Hantz Holdings, Inc. President David Lamb, “Davison State Bank will continue to be a great service provider to the Davison community and will also provide a foundation for future expansion.” The bank will continue to operate as a traditional community bank headquartered in Davison and many backroom support services will continue to be provided by The State Bank, a subsidiary of Fentura Financial, Inc. This transaction is subject to regulatory approval.

     In response to the serious distress in the economy and the impact on the operating performance of the banks, Fentura also announced dramatic cost cutting measures designed to reduce operating expenses on an annualized basis by approximately $2,000,000 or 7% of total operating expenses. Cost reduction initiatives include position eliminations and work hour reductions, 5% across the board salary and wage reductions for all exempt and non-exempt employees, suspension of retirement plan contributions and expense reductions in numerous operating expense categories.

     Fentura Financial, Inc., also announced a major organizational realignment designed to improve the profitability and the operating efficiency of the company. The initiative affects holding company and subsidiary bank board structure, director responsibility and management organizational structure. As a first step the responsibilities and duties of the board of directors of Fentura Financial, Inc. and The State Bank have been consolidated into a single board. The consolidated board will appropriately include director representation from subsidiary banks and/or the major markets served by the company. Subsidiary boards will remain in place at West Michigan Community Bank and Livingston Community Bank. Similarly, the management

structure of the company will be modified to reflect a more centralized and consolidated organizational structure.

     The company also announced year end 2008 operating results. Fentura posted a $12.2 million loss in 2008 compared to a loss of $0.5 million in 2007. A goodwill impairment charge of $8.0 million, write downs of equity investments of $2.6 million, a reduction in net interest income of $2.5 million, an increase in loan losses and associated collection expenses of $1.2 million, all contributed to the loss in 2008. Salary and benefit reductions of $1.1 million provided a partial offset.

     The $8.0 million goodwill charge was a one-time, non-cash event and represents a complete write off of the goodwill recorded as part of the WMCB acquisition in 2004. Other equity investment write downs were due to the collapse of Main Street Bank, $.9 million and larger than anticipated losses at Valley Capital Bank in Arizona, $1.7 million.

     Net interest income declined $2.5 million due to a reduction in interest income of $6.1 million, partially offset by a reduction of $3.6 million in interest expense. Interest income declined primarily due to a 1.10% drop in the average rate earned on commercial loans. This drop was due to declining interest rates charged on loans and an increase in nonperforming loans versus 2007.

     The provision for loan losses and expenses incurred collecting problem loans increased $1.2 million in 2008 to $9.4 million. The increase of the 2008 provision for loan loss was to provide specific reserves for non-performing construction and land development loans, increased charge-offs and the continuing decline in the Michigan economy. Management believes the allowance for loan losses at December 31, 2008 of $11.8 million was sufficient to cover all known losses in the loan portfolio as of that date. The provision for loan losses and collection

expenses were $8.2 million and $1.4 million in 2007 and 2006, respectively.

     The economy had a major impact on the balance sheet of the company during 2008. Total assets declined $49.4 million or 7.9%, loans declined $12.1 million and deposits declined $33.8 million. Total stockholders equity declined 27%, primarily due to the goodwill charge and operating losses mentioned above. However, the risk based capital ratios all remain in line with prior years and exceed regulatory requirements.

     Fentura Financial, Inc. is a bank holding company headquartered in Fenton, Michigan. Subsidiary banks include The State Bank also headquartered in Fenton, Davison State Bank headquartered in Davison, West Michigan Community Bank headquartered in Hudsonville 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.

     Hantz Holdings, Inc. is a proposed bank holding company affiliated with the Hantz Group headquartered in Southfield. The Hantz Group provides a wide variety of financial services for consumers and small businesses including financial and retirement planning, property & casualty insurance for consumers, business and individual tax services, estate planning as well as retirement and health care plans for business and commercial insurance through16 Michigan offices.

# # #

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			Jun 30			Mar 31			Dec 31
	2008			2008			2008			2008			2007
ASSETS
Cash and cash equivalents
Cash and due from banks	$	20,953		$	13,979		$	16,147		$	19,314		$	22,734
Short term investments		—			5,600						2,700			7,300
Total cash & cash equivalents		20,953			19,579			16,147			22,014			30,034
Securities:
Securities available for sale		52,722			54,921			58,028			62,394			71,792
Securities held to maturity		7,955			8,099			8,179			8,682			8,685
Total securities		60,677			63,020			66,207			71,076			80,477
Loans held for sale		690			1,461			448			1,463			1,655
Loans:
Commercial		311,520			308,029			318,109			314,065			313,642
Real estate — construction		51,823			54,730			51,569			60,709			59,805
Real estate — mortgage		39,027			38,746			37,023			38,321			39,817
Consumer		56,939			57,298			58,155			58,436			58,139
Total loans		459,309			458,803			464,856			471,531			471,403
Less: Allowance for loan losses		(11,773	)		(11,342	)		(12,778	)		(9,389	)		(8,554	)
Net loans		447,536			447,461			452,078			462,142			462,849
Bank owned life insurance		7,282			7,201			7,150			7,087			7,042
Bank premises and equipment		18,669			19,006			19,307			19,568			20,101
Federal Home Loan Bank stock		2,032			2,032			2,032			2,032			2,032
Accrued interest receivable		2,405			2,509			2,506			2,487			2,813
Goodwill		—			7,955			7,955			7,955			7,955
Acquisition intangibles		293			335			377			419			485
Equity Investment		1,360			2,392			2,631			2,921			3,089
Other Real Estate Owned		6,349												2,003
Other assets		10,358			14,407			9,069			10,548			7,484
TOTAL ASSETS	$	578,604		$	587,358		$	585,907		$	609,712		$	628,019
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits		73,685			73,867			78,867			71,574			75,148
Interest bearing deposits		436,043			434,257			426,605			451,896			468,355
Total deposits		509,728			508,124			505,472			523,470			543,503
Short-term borrowings		1,500			2,375			3,458			716			649
Federal Home Loan Bank Advances		14,707			15,007			14,007			14,031			11,030
Repurchase agreements		—			—			—			5,000			5,000
Subordinated debentures		14,000			14,000			14,000			14,000			14,000
Note Payable		1,000			—			—			—			—
Accrued interest, taxes & other liabilities		1,545			1,651			2,471			3,117			4,341
Total liabilities		542,480			541,157			539,408			560,334			578,523
STOCKHOLDERS’ EQUITY
Common stock — no par value 5,000,000 shares authorized		42,778			42,738			42,695			42,649			42,478
Retained earnings		(4,677	)		4,987			4,691			6,860			7,488
Accumulated other comprehensive income (loss)		(1,977	)		(1,524	)		(887	)		(131	)		(470	)
Total stockholders’ equity		36,124			46,201			46,499			49,378			49,496
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	578,604		$	587,358		$	585,907		$	609,712		$	628,019
		—			—			—			—			—
Common stock shares issued & outstanding		2,185,765			2,180,571			2,175,184			2,171,681			2,163,385
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans		5.44	%		5.02	%		5.26	%		4.30	%		2.86	%
Allowance for Loan Losses as a % of Non-Performing Loans		47.02	%		49.06	%		52.17	%		4.62	%		63.18	%
Accruing Loans Past Due 90 Days More to Total Loans		0.11	%		0.84	%		0.47	%		0.78	%		0.01	%
Non-Performing Assets as a % of Total Assets		5.50	%		5.15	%		4.73	%		3.91	%		2.79	%
Quarterly Average Balances:
Total Loans		459,958			465,995			469,244			470,940			472,205
Total Earning Assets		525,214			545,317			546,930			566,398			565,614
Total Shareholders’ Equity		46,835			47,223			49,744			49,852			50,001
Total Assets		586,765			594,381			599,082			622,673			622,766
Diluted Shares Outstanding		2,174,226			2,175,786			2,172,177			2,167,415			2,162,039

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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
	2008			2008			2008			2008			2007			2008			2007
Interest income:
Interest & fees on loans	$	7,063		$	7,582		$	7,457		$	8,104		$	8,612		$	30,206		$	34,964
Interest & dividends on securities:
Taxable		476			523			565			628			713			2,192			3,217
Tax-exempt		159			161			151			117			158			588			722
Interest on federal funds sold		1			42			16			98			52			157			311
Total interest income		7,699			8,308			8,189			8,947			9,535			33,143			39,214
Interest expense:
Deposits		2,944			3,109			3,285			4,027			4,306			13,365			16,404
Borrowings		362			366			439			496			525			1,663			2,217
Total interest expense		3,306			3,475			3,724			4,523			4,831			15,028			18,621
Net interest income		4,393			4,833			4,465			4,424			4,704			18,115			20,593
Provision for loan losses		2,774			736			3,811			1,081			1,234			8,402			7,466
Net interest income after provision for loan losses		1,619			4,097			654			3,343			3,470			9,713			13,127
Non-interest income:
Service charges on deposit accounts		667			782			715			774			874			2,938			3,421
Gain on sale of mortgage loans		78			42			100			118			133			338			402
Trust & investment services income		386			458			518			456			462			1,818			1,901
Gain (Loss) on sale of securities		—			—			—			—			2			—			2
Income (Loss) on Equity Investment		(1,032	)		(239	)		(290	)		(168	)		(163	)		(1,729	)		(199	)
Other income and fees		532			302			510			378			408			1,722			2,052
Total non-interest income		631			1,345			1,553			1,558			1,716			5,087			7,579
Non-interest expense:
Salaries & employee benefits		2,507			2,683			2,935			3,002			2,876			11,127			12,183
Occupancy		522			492			531			551			533			2,096			2,090
Furniture and equipment		470			478			536			494			549			1,978			2,139
Loan and collection		320			173			378			166			465			1,037			753
Advertising and promotional		59			114			145			104			90			422			486
Loss on Equity Impairment		—			233			36			574			—			843			—
Goodwill Impairment Charge		7,955			—			—			—			—			7,955			—
Other operating expenses		1,084			1,045			954			1,013			991			4,096			4,183
Total non-interest expense		12,917			5,218			5,515			5,904			5,504			29,554			21,834
Income (loss) before federal income taxes		(10,667	)		224			(3,308	)		(1,003	)		(318	)		(14,754	)		(1,128	)
Federal income taxes (benefit)		(1,003	)		(71	)		(1,140	)		(375	)		(166	)		(2,589	)		(661	)
Net Income (loss)	$	(9,664	)	$	295		$	(2,168	)	$	(628	)	$	(152	)	$	(12,165	)	$	(467	)
Per Share Data:
Basic earnings	$	(4.45	)	$	0.14		$	(1.00	)	$	(0.29	)	$	(0.07	)	$	(5.60	)	$	(0.22	)
Diluted earnings	$	(4.45	)	$	0.14		$	(1.00	)	$	(0.29	)	$	(0.07	)	$	(5.60	)	$	(0.22	)
Cash dividends declared	$	—		$	—		$	—		$	—		$	0.25		$	—		$	1.00
Performance Ratios:
Return on Average Assets		-1.65	%		0.01	%		-1.45	%		-0.41	%		-0.02	%		-2.03	%		-0.08	%
Return on Average Equity		-20.69	%		0.16	%		-17.49	%		-1.26	%		-0.30	%		-25.20	%		-0.89	%
Net Interest Margin (FTE)		3.50	%		3.60	%		3.35	%		3.20	%		3.37	%		3.40	%		3.72	%
Book Value Per Share	$	—		$	21.19		$	21.38		$	22.81		$	22.88		$	—		$	22.88
Net Charge-offs		3,012			2,172			422			247			4,105			5,184			5,604
Ratio of Net charge-offs to Gross Loans		0.65	%		0.47	%		0.09	%		0.05	%		0.87	%		1.13	%		1.19	%

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