UNITED STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-K

|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934 For fiscal year ended December 31, 2005
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|[_] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
         For the transition period from _______________ to _______________
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

Commission file number
000-23550

FENTURA
FINANCIAL,
INC.
(Exact name of
registrant as specified in its charter)

|Michigan(State or other jurisdiction ofincorporation or organization) | 38-2806518
(IRS Employer Identification No.)
|--------------------------------------------------------------------- | --------------------------------------------

|175 North Leroy, Fenton, Michigan(Address of Principal Executive Offices) | 48430-0725(Zip Code)
|------------------------------------------------------------------------- | --------------------

Registrants telephone number,
including area code (810) 750-8725

Securities registered
under Section 12(b) of the Exchange Act: None

Securities registered under
Section 12(g) of the Exchange Act: Common Stock

Indicate  by  check  mark
if the  registrant  is a  well-known  seasoned  issuer,  as  defined  in Rule  405 of the
Securities Act.    Yes [__] No [X]

Indicate  by check  mark
if the  registrant  is not  required  to file  reports  pursuant  to Section 13 or
Section 15(d) of the Act. Yes [__] No [X]

Indicate by check mark whether the
registrant (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [__] No

Indicate by check mark if disclosure
of delinquent filers in response to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [__]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated filer
[__]       Accelerated filer [__]       Non-accelerated filer  [X]

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Indicate by check mark
whether the  registrant is a shell  company (as defined in Rule 12b-2 of the Exchange
 Act). Yes [__]               No   [X]

State the aggregate market value of
the voting and nonvoting common equity held by nonaffiliates of the registrant computed by
reference to the price at which the common equity was sold, or the average bid and asked
prices of such common equity, as of the last business day of the registrants most
recently completed second quarter.

Aggregate Market Value
as of June 30, 2005: $47,284,205.

State the number of shares
outstanding of each of issuers classes of common equity, as of the latest
practicable date. 1,941,440 shares of Common Stock as of March 15, 2006.

DOCUMENTS INCORPORATED
BY REFERENCE

Portions of the Fentura Financial,
Inc. Proxy Statement for its annual meeting of shareholders to be held April 25, 2006 and
its Rule 14a-3 annual report are incorporated by reference into Parts II and III.

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Fentura Financial, Inc.

2005 Annual Report on
Form 10-K

Table Of Contents

|                                                                           
|---------------------------------------------------------------------------
|PART I                                                                     
|Item 1.  Description of Business                                           
|Item 1A  Risk Factors                                                      
|Item 1B  Unresolved Staff Comments                                         
|Item 2.  Description of Property                                           
|Item 3.  Legal Proceedings                                                 
|Item 4.  Submission of Matters to a Vote of Security Holders               
|Additional Item - Executive Officers of Registrant                         
|                                                                           
|PART II                                                                    
|Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters
|and Issuer Purchases of Equity Securities                                  
|Item 6.  Selected Financial Data                                           
|Item 7.  Management's Discussion and Analysis of Financial Condition and   
|Results of Operations                                                      
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk        
|Item 8.  Financial Statements and Supplementary Data                       
|Item 9.  Changes in and Disagreements with Accountants on Accounting       
|and Financial Disclosure                                                   
|Item 9A. Controls and Procedures                                           
|Item 9B. Other Information                                                 
|                                                                           
|PART III                                                                   
|Item 10. Directors and Executive Officers of the Registrant                
|Item 11. Executive Compensation                                            
|Item 12. Security Ownership of Certain Beneficial Owners and Management    
|and Related Stockholder Matters                                            
|Item 13. Certain Relationships and Related Transactions                    
|Item 14. Principal Accountant Fees and Services                            
|                                                                           
|PART IV                                                                    
|Item 15. Exhibits and Financial Statement Schedules                        
|                                                                           
|                                                                           
|SIGNATURES                                                                 
|EXHIBIT INDEX                                                              

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# PART I

# ITEM 1. DESCRIPTION OF
BUSINESS

# The Company

Fentura
Financial, Inc. (the Company or Fentura) is a bank holding
company headquartered in Fenton, Michigan that owns three subsidiary banks (see The
Banks below). All information in this Item 1 is as of December 31, 2005. The
Companys subsidiary banks operate 17 community banking offices offering a full range
of banking services principally to individuals, small business, and government entities
throughout mid-Michigan and western Michigan. At the close of business on December 31,
2005, the Company had assets of $619 million, deposits of $528 million, and
shareholders equity of $47 million. Trust assets under management totaled $140
million.

Fentura
was incorporated in 1987 to serve as the holding company of its sole subsidiary bank, The
State Bank (TSB or one of the Banks). TSB traces its origins to
its predecessor, The Commercial Savings Bank of Fenton, which was incorporated in 1898.
See The Banks below. On March 13, 2000 a second bank subsidiary, Davison State
Bank (DSB or one of the Banks) commenced operation. On March
15, 2004, Fentura acquired West Michigan Community Bank (WMCB or one of the
Banks).

The
Companys principal executive offices are located at 175 North Leroy, Fenton,
Michigan 48430-0725, and its telephone number is (810) 750-8725.

# The Banks

TSBs
original predecessor was incorporated as a state banking corporation under the laws of
Michigan on September 16, 1898 under the name The Commercial Savings Bank of
Fenton. In 1931, it changed its name to State Savings Bank of Fenton, and in 1988
became The State Bank. For over 100 years, TSB has been engaged in the general banking
business in the Fenton, Michigan area. TSB is headquarted in Fenton and considers its
primary service area to be portions of Genesee, Oakland, and Livingston counties in
Michigan. As of December 31, 2005, TSB operated four offices and an operations center in
the City of Fenton, Michigan, one office in the City of Linden, Michigan, one office in
the Village of Holly, Michigan, three offices in the Township of Grand Blanc, Michigan,
and one office in Brighton, Michigan. Its main office is located in downtown Fenton.

DSB
commenced operations on March 13, 2000, and is engaged in the general banking business in
the Davison, Michigan area. DSB is headquartered in Davison and considers its primary
service area to be portions of Genesee and Lapeer Counties. As of December 31, 2005, DSB
operated two offices in the City of Davison, Michigan and one office in Goodrich,
Michigan.

Fentura
acquired West Michigan Community Bank on March 15, 2004. WMCB is engaged in the general
banking business in Hudsonville, Michigan, and other portions of Ottawa County and western
Kent County, Michigan. WMCB is headquartered in Hudsonville and considers its primary
service areas to be portions of Kent and Ottawa counties. As of December 31, 2005, WMCB
operated two offices in the City of Hudsonville, Michigan, one office in the City of
Jenison, Michigan, one office in the City of Holland, Michigan and one office in the City
of Grandville, Michigan.

All
of the Banks are community-oriented providers of financial services engaged in the
business of general commercial banking. Their activities include investing in state and
federal securities, accepting demand deposits, savings and other time deposits, extending
retail, commercial, consumer and real estate loans to individuals and businesses,
providing safe deposit boxes and credit card services, transmitting funds and providing
other services generally associated with full service commercial banking. Lending is
focused on individuals and small businesses in the local markets served by the Banks. In
addition, TSB and WMCB operate trust departments offering a full range of fiduciary
services.

4

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All
three banks are state banks, chartered under the Michigan Banking Code. None are members
of the Federal Reserve, but the deposits of each are insured by the Federal Deposit
Insurance Corporation (the FDIC). See Supervision and Regulation
below.

As
of December 31, 2005, TSB employed 141 full time personnel, including 46 officers, and an
additional 39 part time employees; DSB employed 12 full time personnel, including 5
officers, and an additional 15 part time employees; WMCB employed 43 full time personnel,
including 16 officers, and an additional 15 part time employees. All Banks consider their
employee relations to be excellent.

# Competition

The
financial services industry is highly competitive. The Banks compete with other commercial
banks, many of which are subsidiaries of bank holding companies, for loans, deposits,
trust accounts, and other business on the basis of interest rates, fees, convenience and
quality of service. The Banks also compete with a variety of other financial services
organizations including savings and loan associations, finance companies, mortgage banking
companies, brokerage firms, credit unions and other financial organizations. Many of the
Banks competitors have substantially greater resources than the Banks.

# Supervision and
Regulation

The
following is a summary of certain statutes and regulations affecting the Company and the
Banks. This summary is qualified in its entirety by such statutes and regulations. A
change in applicable laws or regulations may have a material effect on the Company, the
Banks and the business of the Company and the Banks.

# General

Financial
institutions and their holding companies are extensively regulated under federal and state
law. Consequently, the growth and earnings performance of the Company and the Banks can be
affected not only by management decisions and general economic conditions, but also by the
statutes administered by, and the regulations and policies of, various governmental
regulatory authorities. Those authorities include, but are not limited to, the Board of
Governors of the Federal Reserve System (the Federal Reserve Board), the FDIC,
the Commissioner of the Michigan Office of Financial and Insurance Services
(Commissioner), the Internal Revenue Service, and state taxing authorities.
The effect of such statutes, regulations and policies can be significant, and cannot be
predicted with a high degree of certainty.

Federal
and state laws and regulations generally applicable to financial institutions and their
holding companies regulate, among other things, the scope of business, investments,
reserves against deposits, capital levels relative to operations, lending activities and
practices, the nature and amount of collateral for loans, the establishment of branches,
mergers, consolidations and dividends. The system of supervision and regulation applicable
to the Company and the Banks establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDICs deposit
insurance funds, the depositors of the Banks, and the public, rather than shareholders of
the Banks or the Company.

Federal
law and regulations establish supervisory standards applicable to the lending activities
of the Banks, including internal controls, credit underwriting, loan documentation and
loan-to-value ratios for loans secured by real property.

The
Companys common stock is registered under the Securities Exchange Act of 1934, as
amended (the Exchange Act). It is therefore subject to the information, proxy
solicitation, insider trading and other restrictions and requirements of the SEC under the
Exchange Act. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act provides for numerous changes to the reporting, accounting,
corporate governance and business practices of companies as well as financial and other
professionals who have involvement with the U.S. public markets. The SEC continues to
issue new and proposed rules implementing various provisions of the Sarbanes-Oxley Act.

5

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# The Company

General.  
          In August of 2000, the Company became a financial holding company, within the
          meaning of the Gramm-Leach-Bliley Act of 1999 (GLB Act). On January
          13, 2004, the Company relinquished its financial holding company status. This
          was necessary in order to complete the acquisition of West Michigan Community
          Bank, which at that time did not meet the capital and other requirements for a
          bank subsidiary of a financial holding company. Relinquishing the financial
          holding company status had no adverse effect of any kind on Fenturas
          operations. The Company is registered with, and subject to regulation by, the
          Federal Reserve Board under the Bank Holding Company Act, as amended (the
          BHCA). Under the BHCA, the Company is subject to periodic
          examination by the Federal Reserve Board, and is required to file with the
          Federal Reserve Board periodic reports of its operations and such additional
          information as the Federal Reserve Board may require.

In
accordance with Federal Reserve Board policy, the Company is expected to act as a source
of financial strength to the Banks and to commit resources to support the Banks in
circumstances where the Company might not do so absent such policy. In addition, if the
Commissioner deems a Banks capital to be impaired, the Commissioner may require the
Bank to restore its capital by a special assessment upon the Company as the Banks
sole shareholder. If the Company were to fail to pay any such assessment, the directors of
the Bank would be required, under Michigan law, to sell the shares of the Banks
stock owned by the Company to the highest bidder at either a public or private auction and
use the proceeds of the sale to restore the Banks capital.

Investments
and Activities. In general, any direct or indirect acquisition by the
Company of any voting shares of any bank which would result in the Companys direct
or indirect ownership or control of more than 5% of any class of voting shares of such
bank, and any merger or consolidation of the Company with another financial holding
company or bank holding company, will require the prior written approval of the Federal
Reserve Board under the BHCA.

The
merger or consolidation of an existing bank subsidiary of the Company with another bank,
or the acquisition by such a subsidiary of assets of another bank, or the assumption of
liability by such a subsidiary to pay any deposits in another bank, will require the prior
written approval of the responsible Federal depository institution regulatory agency under
the Bank Merger Act. In addition, in certain such cases an application to, and the prior
approval of, the Federal Reserve Board under the BHCA and/or the Commissioner under the
Michigan Banking Code, may be required.

With
certain limited exceptions, the BHCA prohibits any bank company from engaging, either
directly or indirectly through a subsidiary, in any activity other than managing or
controlling banks unless the proposed non-banking activity is one that the Federal Reserve
Board has determined to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. Under current Federal Reserve Board regulations, such
permissible non-banking activities include such things as mortgage banking, equipment
leasing, securities brokerage, and consumer and commercial finance company operations.
Well-capitalized and well-managed bank holding companies may engage de novo in
certain types of non-banking activities without prior notice to, or approval of, the
Federal Reserve Board, provided that written notice of the new activity is given to the
Federal Reserve Board within 10 business days after the activity is commenced. If a bank
holding company wishes to engage in a non-banking activity by acquiring a going concern,
prior notice and/or prior approval will be required, depending upon the activities in
which the company to be acquired is engaged, the size of the company to be acquired and
the financial and managerial condition of the acquiring bank holding company.

Eligible
bank holding companies that elect to operate as financial holding companies may engage in,
or own shares in companies engaged in, a wider range of non-banking activities, including
securities and insurance activities and any other activity that the Federal Reserve Board,
in consultation with the Secretary of the Treasury, determines by regulation or order is
financial in nature, incidental to any such financial activity or complementary to any
such financial activity and does not pose a substantial risk to the safety or soundness of
depository institutions or the financial system generally. The Bank Holding Company Act
generally does not place territorial restrictions on the domestic activities of non-bank
subsidiaries of bank or financial holding companies.

6

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Capital
Requirements. The Federal Reserve Board uses capital adequacy guidelines in
its examination and regulation of bank holding companies. If capital falls below minimum
guidelines, a bank holding company may, among other things, be denied approval to acquire
or establish additional banks or non-bank businesses. These capital guidelines are
comparable to those established by the regulatory authorities for the Banks
discussed below.

Dividends.  
          The Company is a corporation separate and distinct from the Banks. Most of the
          Companys revenues are received by it in the form of dividends paid by the
          Banks. Thus, the Companys ability to pay dividends to its shareholders is
          indirectly limited by statutory restrictions on the Banks ability to pay
          dividends described below. Further, in a policy statement, the Federal Reserve
          Board has expressed its view that a bank holding company experiencing earnings
          weaknesses should not pay cash dividends exceeding its net income or which can
          only be funded in ways that weaken the bank holding companys financial
          health, such as by borrowing. Additionally, the Federal Reserve Board possesses
          enforcement powers over bank holding companies and their non-bank subsidiaries
          to prevent or remedy actions that represent unsafe or unsound practices or
          violations of applicable statutes and regulations. Among these powers is the
          ability to proscribe the payment of dividends by banks and bank holding
          companies. Similar enforcement powers over the Banks are possessed by the FDIC.
          The prompt corrective action provisions of federal law and
          regulation authorizes the Federal Reserve Board to restrict the payment of
          dividends by the Company for an insured bank which fails to meet specified
          capital levels.

In
addition to the restrictions on dividends imposed by the Federal Reserve Board, the
Michigan Business Corporation Act provides that dividends may be legally declared or paid
only if after the distribution a corporation, such as the Company, can pay its debts as
they come due in the usual course of business and its total assets equal or exceed the sum
of its liabilities plus the amount that would be needed to satisfy the preferential rights
upon dissolution of any holders of preferred stock whose preferential rights are superior
to those receiving the distribution.

# The Banks

General.  
          The Banks are Michigan banking corporations, and their deposit accounts are
          insured by the Bank Insurance Fund (the BIF) of the FDIC. As
          BIF-insured Michigan chartered banks, the Banks are subject to the examination,
          supervision, reporting and enforcement requirements of the Commissioner, as the
          chartering authority for Michigan banks, and the FDIC, as administrator of BIF.
          These agencies and the federal and state laws applicable to the Banks and their
          operations, extensively regulate various aspects of the banking business
          including, among other things, permissible types and amounts of loans,
          investments and other activities, capital adequacy, branching, interest rates on
          loans and on deposits, the maintenance of non-interest bearing reserves on
          deposit accounts, and the safety and soundness of banking practices.

Deposit
Insurance. As FDIC-insured institutions, the Banks are required to pay
deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based
assessment system under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums, based upon their respective levels of
capital and results of supervisory evaluation. Institutions classified as well-capitalized
(as defined by the FDIC) and considered healthy pay the lowest premium while
institutions that are less than adequately capitalized (as defined by the FDIC) and
considered of substantial supervisory concern pay the highest premium. Risk classification
of all insured institutions is made by the FDIC for each semi-annual assessment period.

7

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In
early 2006, Congress passed the Federal Deposit Insurance Reform Act of 2005, which made
certain changes to the Federal deposit insurance program. These changes included merging
the BIF and the Savings Association Insurance Fund (the SAIF), increasing
retirement account coverage to $250,000 and providing for inflationary adjustments to
general coverage beginning in 2010, providing the FDIC with authority to set the
funds reserve ratio within a specified range, and requiring dividends to banks if
the reserve ratio exceeds certain levels. The new statute grants banks an assessment
credit based on their share of the assessment base on December 31, 1996, and the
amount of the credit can be used to reduce assessments in any year subject to certain
limitations. The FDIC is required to issue regulations implementing the new Act.

FICO
Assessments. The Banks, as members of the BIF, are subject to assessments
to cover the payments on outstanding obligations of the Financing Corporation
(FICO). FICO was created to finance the recapitalization of the Federal
Savings and Loan Insurance Corporation, the predecessor to the SAIF, which insures the
deposits of thrift institutions. From now until the maturity of the outstanding FICO
obligations in 2019, BIF members and SAIF members will share the cost of the interest on
the FICO bonds on a pro rata basis. It is estimated that FICO assessments during
this period will be less than 0.025% of deposits.

Commissioner
Assessments. Michigan banks are required to pay supervisory fees to the
Commissioner to fund the operations of the Commissioner. The amount of supervisory fees
paid by a bank is based upon the banks total assets, as reported to the
Commissioner.

Capital
Requirements. The FDIC has established the following minimum capital
standards for state-chartered, FDIC insured non-member banks, such as the Banks: a
leverage requirement consisting of a minimum ratio of Tier 1 capital to total average
assets of 3% for the most highly-rated banks with minimum requirements of 4% to 5% for all
others, and a risk-based capital requirement consisting of a minimum ratio of total
capital to total risk-weighted assets of 8%, at least one-half of which must be Tier 1
capital. Tier 1 capital consists principally of shareholders equity. These capital
requirements are minimum requirements. Higher capital levels will be required if warranted
by the particular circumstances or risk profiles of individual institutions.

Federal
law provides the federal banking regulators with broad power to take prompt corrective
action to resolve the problems of undercapitalized institutions. The extent of the
regulators powers depends on whether the institution in question is well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, or critically undercapitalized.
Federal regulations define these capital categories as follows:

|                               | TotalRisk-BasedCapital Ratio | Tier 1Risk-BasedCapital Ratio | Leverage Ratio
|------------------------------ | ---------------------------- | ----------------------------- | --------------
|Well capitalized               |                              | 10% or above                  |               
|Adequately capitalized         |                              | 8% or above                   |               
|Undercapitalized               |                              | Less than 8%                  |               
|Significantly undercapitalized |                              | Less than 6%                  |               
|Critically undercapitalized    |                              | --                            |               

As
of December 31, 2005, each of the Banks ratios exceeded minimum requirements for the
well capitalized category.

Depending
upon the capital category to which an institution is assigned, the regulators
corrective powers include: requiring the submission of a capital restoration plan; placing
limits on asset growth and restrictions on activities; requiring the institution to issue
additional capital stock (including additional voting stock) or to be acquired;
restricting transactions with affiliates; restricting the interest rate the institution
may pay on deposits; ordering a new election of directors of the institution; requiring
that senior executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest certain
subsidiaries; prohibiting the payment of principal or interest on subordinated debt; and
ultimately, appointing a receiver for the institution.

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In
general, a depository institution may be reclassified to a lower category than is
indicated by its capital levels if the appropriate federal depository institution
regulatory agency determines the institution to be otherwise in an unsafe or unsound
condition or to be engaged in an unsafe or unsound practice. This could include a failure
by the institution, following receipt of a less-than-satisfactory rating on its most
recent examination report, to correct the deficiency.

Dividends.  
          Under Michigan law, the Banks are restricted as to the maximum amount of
          dividends they may pay on their common stock. The Banks may not pay dividends
          except out of net income after deducting their losses and bad debts. A Michigan
          state bank may not declare or pay a dividend unless the bank will have surplus
          amounting to at least 20% of its capital after the payment of the dividend.

Federal
law generally prohibits a depository institution from making any capital distribution
(including payment of a dividend) or paying any management fee to its holding company
if the depository institution would thereafter be undercapitalized. The FDIC may prevent
an insured bank from paying dividends if the bank is in default of payment of any
assessment due to the FDIC. In addition, the FDIC may prohibit the payment of dividends by
an insured bank, if such payment is determined, by reason of the financial condition of
the bank, to be an unsafe and unsound banking practice.

Insider
Transactions. The Banks are subject to certain restrictions imposed by the
Federal Reserve Act on any extensions of credit to the Company or its subsidiaries, on
investments in the stock or other securities of the Company or its subsidiaries and the
acceptance of the stock or other securities of the Company or its subsidiaries as
collateral for loans. Certain limitations and reporting requirements are also placed on
extensions of credit by the Banks to their directors and officers, to directors and
officers of the Company and its subsidiaries, to principal shareholders of the Company,
and to related interests of such directors, officers and principal
shareholders. In addition, federal law and regulations may affect the terms upon which any
person becoming a director or officer of the Company or one of its subsidiaries or a
principal shareholder of the Company may obtain credit from banks with which the Banks
maintain a correspondent relationship.

Safety
and Soundness Standards. The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally insured depository
institutions. These guidelines establish standards for internal controls, information
systems, internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

Investments
and Other Activities. Under federal law and FDIC regulations, FDIC -insured
state banks are prohibited, subject to certain exceptions, from making or retaining equity
investments of a type, or in an amount, that are not permissible for a national bank.
Federal law, as implemented by FDIC regulations, also prohibits FDIC insured state banks
and their subsidiaries, subject to certain exceptions, from engaging as principal in any
activity that is not permitted for a national bank or its subsidiary, respectively, unless
the bank meets, and continues to meet, its minimum regulatory capital requirements and the
FDIC determines the activity would not pose a significant risk to the deposit insurance
fund of which the bank is a member. Impermissible investments and activities must be
divested or discontinued within certain time frames set by the FDIC in accordance with
federal law. These restrictions are not currently expected to have a material impact on
the operations of the Banks.

Consumer
Protection Laws. The Banks businesses include making a variety of
types of loans to individuals. In making these loans, the Banks are subject to State usury
and regulatory laws and to various federal statutes, including the privacy of consumer
financial information provisions of the Gramm-Leach-Bliley Act and regulations promulgated
thereunder, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Real Estate Settlement Procedures Act, and the Home Mortgage Disclosure
Act, and the regulations promulgated thereunder, which prohibit discrimination, specify
disclosures to be made to borrowers regarding credit and settlement costs, and regulate
the mortgage loan servicing activities of the Banks, including the maintenance and
operation of escrow accounts and the transfer of mortgage loan servicing. In receiving
deposits, the Banks are subject to extensive regulation under State and federal law and
regulations, including the Truth in Savings Act, the Expedited Funds Availability Act, the
Bank Secrecy Act, the Electronic Funds Transfer Act, and the Federal Deposit Insurance
Act. Violation of these laws could result in the imposition of significant damages and
fines upon the Bank and its directors and officers.

9

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Branching
Authority. Michigan banks, such as the Banks, have the authority under
Michigan law to establish branches anywhere in the State of Michigan, subject to receipt
of all required regulatory approvals. Banks may establish interstate branch networks
through acquisitions of other banks. The establishment of de novo interstate branches or
the acquisition of individual branches of a bank in another state (rather than the
acquisition of an out-of-state bank in its entirety) is allowed only if specifically
authorized by state law.

Michigan
permits both U.S. and non-U.S. banks to establish branch offices in Michigan. The Michigan
Banking Code permits, in appropriate circumstances and with the approval of the Michigan
Office of Financial and Insurance Services, Division of Financial Institutions,
(1) acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and
loan associations located in other states, (2) sale by a Michigan bank of branches to
an FDIC-insured bank, savings bank or savings and loan association located in a state in
which a Michigan bank could purchase branches of the purchasing entity,
(3) consolidation of Michigan banks and FDIC-insured banks, savings banks or savings
and loan associations located in other states having laws permitting such consolidation,
(4) establishment of branches in Michigan by FDIC-insured banks located in other
states, the District of Columbia or U.S. territories or protectorates having laws
permitting a Michigan bank to establish a branch in such jurisdiction, and
(5) establishment by foreign banks of branches located in Michigan.

# ITEM 1A. Risk Factors.

You
should carefully consider the following risk factors, together with the other information
provided in this Annual Report on Form 10-K.

The
Company may need additional capital in the future and adequate financing may not be
available to it on acceptable terms, or at all.

On
March 15, 2004, the Company completed its acquisition of West Michigan Community Bank. At
the time it was acquired, West Michigan Community Bank was operating under a Memorandum of
Understanding (MOU) with the FDIC and the Michigan Office of Financial and Insurance
Services. The MOU was lifted in July 2004, and the bank is no longer under special
scrutiny by the FDIC or OFIS and is considered well capitalized under federal banking
regulations. However, projections for West Michigan Community Bank indicate that it could
require capital infusions in the near term to remain a well capitalized bank. The Company
raised some capital in 2005 through an offering of its common stock to Michigan residents
(resulting in approximately $783,000 of gross proceeds to the Company) and the
issuance of $2 million aggregate principal amount of floating rate preferred securities
through the Companys newly-formed, wholly-owned trust, Fentura Financial Capital
Trust II. However, additional capital may be required in the future, which may not be
available to the Company on acceptable terms or at all. If the Company is unable to obtain
the funding it needs, it may be unable to develop its products and services, take
advantage of future opportunities, or respond to competitive pressures, which could have a
material adverse effect on its financial condition and profitability.

The
Company has credit risk inherent in its asset portfolio, and its allowance for loan
losses may not be sufficient to cover actual loan losses.

The
Banks loan customers may not repay their loans according to their respective terms,
and any collateral securing the payment of these loans may be insufficient to assure
repayment. As a result, the Banks may experience significant credit losses which could
have a material adverse effect on the Companys operating results.

10

---



To
offset this risk, the Company makes various assumptions and judgments about the
collectibility of the loan portfolios of the Banks, including the creditworthiness of
borrowers and the value of the real estate and other assets that may serve as collateral
for the repayment of loans. In determining the size of the allowance for loan losses, the
Company relies on its experience and its evaluation of current economic conditions. If its
assumptions prove to be incorrect, its current allowance for loan losses may not be
sufficient to cover any loan losses inherent in its loan portfolio and adjustments may be
necessary to allow for different economic conditions or adverse developments in its loan
portfolio. Material additions to the allowance would materially decrease net income.

In
the near term, the Companys strategy is to continue to expand commercial lending
activities in the markets in which its Banks are currently operating. The Company may also
pursue opportunities to expand into new markets outside its traditional markets by
establishing offices staffed by commercial loan officers who come from other commercial
banks in these new markets. The Company cannot be sure that its loan loss experience with
any new borrowers in these newer markets will be consistent with its loan loss experience
in its traditional markets. Its actual loan loss experience in these markets may cause the
Company to increase its reserves.

The
allowance for loan losses is based upon ranges of estimates and is not intended to imply
either limitations on the usage of the allowance or precision of the specific amounts. The
Company does not view the allowance for loan losses as being divisible among the various
categories of loans. The entire allowance is available to absorb any future losses without
regard to the category or categories in which the charged-off loans are classified. In
addition, federal and state regulators periodically review the Companys allowance
for loan losses and may require it to increase the provision for loan losses or recognize
additional loan charge-offs. Any increase in the allowance for loan losses or loan
charge-offs required by these regulatory agencies could have a material adverse effect on
the results of operations and financial condition of the Company.

The
Company has credit risk inherent in its securities portfolio.

The
Company maintains diversified securities portfolios, which include obligations of the U.S.
Treasury and government-sponsored agencies as well as securities issued by states and
political subdivisions, corporate securities, and mortgage-backed securities. The Company
may also invest in capital securities, which include preferred stocks and trust preferred
securities. At December 31, 2005, the Company owned (stated at fair
value) approximately $1 million of common stock in other entities, which primarily
represents its minority investments in four Michigan banks.

The
Company seeks to limit credit losses in its securities portfolios by generally purchasing
only highly rated securities (rated A or higher by a major debt rating
agency) or by conducting significant due diligence on the issuer for unrated
securities. However, the Company may, in the future, experience losses in its securities
portfolio which may be other than temporary in nature and result in charges that could
materially adversely affect its results of operations.

The
Companys mortgage-banking revenues are susceptible to substantial variations
dependent largely upon factors that the Company does not control, such as market interest
rates.

The
Companys mortgage-banking revenues are earned in the form of gains on the sale of
real estate mortgage loans. The amount of gains realized by the Company primarily depends
on the volume of loans the Company sells, which depends on the Companys ability to
originate real estate mortgage loans and the demand for fixed-rate obligations and other
loans that are outside of its established interest-rate risk parameters. Net gains on real
estate mortgage loans are also dependent upon economic and competitive factors, which are
largely outside of the Companys control, as well as the Companys ability to
effectively manage exposure to changes in interest rates and can often be a volatile part
of its overall revenues. As market interest rates continue to rise or stabilize in 2006 or
future periods, which they are generally expected to do, the Companys level of
mortgage loan activity, particularly refinancing activity, could decline, resulting in
lower levels of real estate mortgage loan originations, sales, and gains on such sales.

11

---



Fluctuations
in interest rates and economic conditions could reduce the Companys profitability
and negatively affect its capital and liquidity.

The
Company realizes income primarily from the difference between interest earned on loans and
investments and the interest paid on deposits and borrowings. The Companys interest
income and interest expense are affected by general economic conditions and by the
policies of regulatory authorities. While the Company has taken measures intended to
manage the risks of operating in a changing interest rate environment, there can be no
assurance that these measures will be effective in avoiding undue interest rate risk. The
Company expects that it will periodically experience gaps in the interest rate
sensitivities of its assets and liabilities, meaning that either its interest-bearing
liabilities will be more sensitive to changes in market interest rates than its
interest-earning assets, or vice versa. In either event, if market interest rates should
move contrary to its position, this gap will work against it, and its earnings
may be negatively affected.

The
Company is unable to predict fluctuations of market interest rates, which are affected by,
among other factors, changes in the following:

| |  | inflation
or deflation rates;
| | - | -----------------------------

| |  | levels
of business activity;
| | - | ----------------------------

| |  | recession;
| | - | ----------

| |  | unemployment
levels;
| | - | --------------------

| |  | money
supply;
| | - | -------------

| |  | domestic
or foreign events; and
| | - | -------------------------------

| |  | instability
in domestic and foreign financial markets.
| | - | ------------------------------------------------------

In
addition, substantially all of its loans are to businesses and individuals in mid-Michigan
and West Michigan, and any decline in the economy of either of these areas could adversely
affect it.

The
Companys operations may be adversely affected if the Company is unable to secure
adequate funding. The Companys use of wholesale funding sources exposes it to
liquidity risk and potential earnings volatility.

The
Company relies on wholesale funding to a modest extent, including its revolving credit
facility, Federal Home Loan Bank borrowings, and brokered deposits, to augment its core
deposits to fund its business. Because wholesale funding sources are affected by general
market conditions, the availability of funding from wholesale lenders may be dependent on
the confidence these investors have in the Companys commercial and consumer finance
operations. The continued availability to the Company of these funding sources is
uncertain, and it may be difficult to retain or replace brokered deposits at attractive
rates as they mature. The Companys liquidity will be constrained if it is unable to
renew its wholesale funding sources or if adequate financing is not available in the
future at acceptable rates of interest or at all. The Company may not have sufficient
liquidity to continue to fund new loans, and the Company may need to liquidate loans or
other assets unexpectedly in order to repay obligations as they mature.

The
Company relies heavily on its management team, and the unexpected loss of key managers
may adversely affect its operations.

The
Companys success to date has been influenced strongly by its ability to attract and
to retain senior management experienced in banking and financial services. The ability to
retain executive officers and the current management teams of each of its lines of
business will continue to be important to successful implementation of its strategies. The
Company does not have employment or non-compete agreements with any of these key
employees, except that the Company entered into non-compete agreements with each of the
directors of West Michigan Financial Corp. in connection with the Companys
acquisition of West Michigan Financial Corp. and its subsidiaries (including West Michigan
Community Bank). The unexpected loss of services of any key management personnel, or the
inability to recruit and retain qualified personnel in the future, could have an adverse
effect on the Companys business and financial results.

12

---



Competition
with other financial institutions could adversely affect the Companys profitability.

The
Company faces vigorous competition from banks and other financial institutions, including
savings and loan associations, savings banks, finance companies, mortgage banking
companies, credit unions, and other financial organizations. A number of these banks and
other financial institutions have substantially greater resources and lending limits,
larger branch systems, and a wider array of banking services. To a limited extent, the
Company also competes with other providers of financial services, such as money market
mutual funds, brokerage firms, consumer finance companies, and insurance companies, which
are not subject to the same degree of regulation as that imposed on the Banks. As a
result, these non-bank competitors may have an advantage over the Company in providing
certain services, and this competition may reduce or limit the Companys margins on
banking services, reduce its market share, and adversely affect its results of operations
and financial condition.

Changes
in economic conditions could adversely affect the Companys loan portfolio.

The
Companys success depends to a great extent upon general economic conditions. The
Company has in general experienced a slowing economy in Michigan since 2001. Unlike larger
banks that are more geographically diversified, the Company provides banking services to
customers primarily in mid-Michigan and, with the March 2004 acquisition of West Michigan
Community Bank, in West Michigan. The Companys loan portfolio, the ability of the
borrowers to repay these loans, and the value of the collateral securing these loans will
be impacted by local economic conditions.

An
economic slowdown could have many adverse consequences, including the following:

| |  | Loan
delinquencies may increase;
| | - | --------------------------------

| |  | Problem
assets and foreclosures may increase;
| | - | ---------------------------------------------

| |  | Demand
for the Company's products and services may decline; and
| | - | ---------------------------------------------------------------

| |  | Collateral
for the Companys loans may decline in value, in turn reducing customers borrowing
power and reducing the value of assets and collateral associated with existing loans.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition to local economic conditions in Michigan, the Companys success will also
depend in part upon the state of the national economy. A general downturn in the local or
national economy may impact the Companys operations. In addition, the effect of
possible future terrorist attacks or war on the Company or the local or national economy
cannot be known or predicted.

The
Company may be unable to maintain its historical growth rate, which may adversely impact
its results of operation and financial condition.

To
achieve its growth, the Company has opened additional branches and acquired other
financial institutions and branches. The Company may be unable to sustain its historical
rate of growth or may not even be able to grow at all, and the Company may encounter
difficulties obtaining the funding necessary to support its growth. Various factors, such
as economic conditions, competition, and regulatory considerations, may impede or prohibit
the opening of new branch offices. In addition, the Company may have difficulty
identifying suitable financial institutions and other non-banking entities that the
Company desires to acquire that are available for sale. Further, its inability to attract
and retain experienced bankers may adversely affect its internal growth. A significant
decrease in its historical rate of growth may adversely impact its results of operations
and financial condition.

13

---



The
Company operates in a highly regulated environment and may be adversely affected by
changes in federal and local laws and regulations.

The
Company is subject to extensive regulation, supervision, and examination by federal and
state banking authorities. Any change in applicable regulations or federal or state
legislation could have a substantial impact on it and its Banks and their operations.
Additional legislation and regulations may be enacted or adopted in the future that could
significantly affect its powers, authority, and operations, which could increase its costs
of doing business and, as a result, give an advantage to its competitors who may not be
subject to similar legislative and regulatory requirements. Further, regulators have
significant discretion and power to prevent or remedy unsafe or unsound practices or
violations of laws by banks and bank holding companies in the performance of their
supervisory and enforcement duties. The exercise of regulatory power may have a negative
impact on the Companys results of operations and financial condition. The effect of
this regulation can be significant and cannot be predicted with a high degree of
certainty.

The
Company may face challenges in managing its operational risks as the Company grows.

Like
other financial services companies, the Company faces a number of operational risks,
including the potential for processing errors, internal or external fraud, failure of
computer systems, and external events beyond its control such as natural disasters. Acts
of fraud are difficult to detect and deter, and the Company cannot assure investors that
its risk management procedures and controls will prevent losses from fraudulent activity.
The Companys growth may strain its existing managerial resources and internal
monitoring, accounting, and reporting systems.

The
Companys ability to pay dividends on its common stock is limited not only by its
profitability, but also by bank regulation.

Most
of the Companys revenues are received in the form of dividends paid to it by its
subsidiary Banks. Thus, its ability to pay dividends to the holders of its common stock is
indirectly limited by statutory restrictions on the ability of its subsidiary Banks to pay
dividends to it. Further, in a policy statement, the Federal Reserve Board has expressed
its view that a bank holding company experiencing earnings weaknesses should not pay cash
dividends exceeding its net income or that can only be funded in ways that weaken the bank
holding companys financial health, such as by borrowing. In addition, the Federal
Reserve Board possesses enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or
violations of applicable statutes and regulations. Among these powers is the ability to
proscribe the payment of dividends by banks and bank holding companies. The FDIC has
similar enforcement powers over the Companys subsidiary Banks. Federal law has
prompt corrective action provisions that authorize the Federal Reserve Board
to restrict its payment of dividends for an insured bank that fails to meet specified
capital levels.

In
addition to the restrictions on dividends imposed by federal banking regulation, the
Michigan Business Corporation Act provides that dividends may be legally declared or paid
only if, after the distribution, the Company is able to pay its debts as they become due
in the usual course of business and its total assets equal or exceed the sum of its total
liabilities plus the amount that would be needed to satisfy the preferential rights upon
dissolution of any holders of preferred stock whose preferential rights are superior to
those receiving the dividend.

In
addition, under Michigan banking laws, the Companys Banks may not pay dividends
except out of net income after deducting their losses and bad debts. Each Bank may not
declare or pay a dividend unless it will have surplus amounting to at least 20% of its
capital after the payment of the dividend.

14

---



There
is a only limited trading market for the Companys common stock.

The
Companys common stock is reported on the OTC Bulletin Board under the symbol
FETM. The development and maintenance of an active trading market depends,
however, upon the existence of willing buyers and sellers, the presence of which is beyond
the Companys control or the control of any market maker. Although the Company is
publicly traded and file reports with the SEC, the volume of trading activity in its stock
is relatively limited. Even if a more active market develops, there can be no assurance
that such a market will continue.

# ITEM 1B. Unresolved
Staff Comments.

| | Not
applicable.
| | ---------------

# ITEM 2. DESCRIPTION OF
PROPERTY

The
Companys executive offices are located at 175 North Leroy Street, Fenton, Michigan,
which is also the main office of The State Bank. The State Bank also has the following
community offices (all of which are in Michigan):

| |  | Branch
 15095 Silver Parkway, Fenton (owned)
| | - | ---------------------------------------------

| |  | Branch
 18005 Silver Parkway, Fenton (leased)
| | - | ----------------------------------------------

| |  | Loan
Extension Office  101 North Leroy Street, Fenton (owned)
| | - | --------------------------------------------------------------

| |  | Branch
 107 Main Street, Linden (owned)
| | - | ----------------------------------------

| |  | Branch
 4043 Grange Hall Road, Holly (leased)
| | - | ----------------------------------------------

| |  | Branch
 7606 S Saginaw, Grand Blanc (owned)
| | - | --------------------------------------------

| |  | Branch
 8185 Holly Road, Grand Blanc (leased)
| | - | ----------------------------------------------

| |  | Loan
Extension Office  8245 Holly Road, Grand Blanc (leased)
| | - | -------------------------------------------------------------

| |  | Branch
 315 E. Grand River Ave, Brighton (leased)
| | - | --------------------------------------------------

| |  | Operations
Center  3202 Owen Road, Fenton (owned)
| | - | --------------------------------------------------

Davison
State Bank is headquartered in Davison, Michigan, at 625 S. State Street. Davison State
Bank also has the following community offices (both of which are in Michigan):

| |  | Branch
- 8503 Davison Road, Davison (leased)
| | - | --------------------------------------------

| |  | Branch
- 7521 S. State Road, Goodrich (leased)
| | - | ----------------------------------------------

West
Michigan Community Bank is headquartered in Hudsonville, Michigan, at 5367 School Avenue.
West Michigan Community Bank also has the following community offices (all of which are in
Michigan):

| |  | Branch
 3467 Kelly Street, Hudsonville (owned)
| | - | -----------------------------------------------

| |  | Branch
 81 E. 8th Street, Holland (leased)
| | - | -------------------------------------------

| |  | Branch
 437 Baldwin Road, Jenison (owned)
| | - | ------------------------------------------

| |  | Branch
 4471 Wilson Ave., S.W., Grandville (leased)
| | - | ----------------------------------------------------

The
Company owns the headquarters of each of its three Banks and many of the other bank
offices (as noted above). The balance of the bank offices are leased from third parties.
All properties have maintenance contracts and are maintained in good condition.

# ITEM 3. LEGAL PROCEEDINGS

From
time to time, the Company and its subsidiaries are parties to various legal proceedings
incident to their business. At December 31, 2005, there were no legal proceedings which
management anticipates would have a material adverse effect on the Company.

15

---



# ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

No
matters were submitted during the fourth quarter of 2005 to a vote of security holders
through the solicitation of proxies or otherwise.

# ADDITIONAL ITEM EXECUTIVE
OFFICERS OF REGISTRANT

The
following information concerning executive officers of the Company has been omitted from
the Registrants proxy statement pursuant Instruction 3 to Regulation S-K, Item
401(b).

Officers
of the Company are appointed annually by the Board of Directors of the Company and serve
at the pleasure of the Board of Directors. Certain of the officers named below are
appointed annually by the Board of Directors of one or the other of the Banks and serve at
the pleasure of the Board of the Bank that appointed them. The Bank officers are included
in the listing of executive officers of the Company because of the nature of the office
they hold. Information concerning these executive officers is given below:

| | Donald
L. Grill(age 58) was appointed as President and Chief Executive Officer of the
Company and of The State Bank in late 1996. From 1983 to 1996, Mr. Grill was employed by
First of America Bank Corporation and served as President and Chief Executive Officer of
First of America Bank  Frankenmuth.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Robert
E. Sewick (age 56) was appointed President and CEO of West Michigan Community
Bank on March 15, 2004, and was appointed Senior Vice President of the Company on December
1, 2004. Prior to the appointment, Mr. Sewick was Senior Vice President and Senior Lender
of The State Bank. Prior to joining The State Bank in June of 1999, he was Senior Vice
President and Regional Credit officer for Huntington National Bank for Western Michigan.
Mr, Sewick has over 30 years of banking experience.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Ronald
L. Justice (age 41) is the CEO of Davison State Bank and the Secretary and Senior
Vice President of the Company. Prior to holding these positions, he served as the CFO of
the Company and its subsidiary Banks. Prior to that, Mr. Justice held other positions
with The State Bank.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dennis
E. Leyder(age 52) was named Executive Vice President of The State Bank and was
appointed Senior Vice President of the Company on December 1, 2004. In his new capacity at
The State Bank, he is responsible for all retail banking, marketing, trust and investment
management. Mr. Leyder has over 23 years of banking experience, all in Genesee County.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Holly
J Pingatore(age 48) was named Senior Vice President of the Company on December
1, 2004. Her responsibilities include data processing, bank operations, product support,
and network services. Prior to such appointment, she was Senior Vice President of The
State Bank. Prior to joining The State Bank in 1999, Ms. Pingatore served in various
capacities at a large Michigan based regional bank.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Douglas
J. Kelley(age 37) was appointed Chief Financial Officer of the Company in 2003
and was appointed Senior Vice President of the Company on December 1, 2004. Prior to being
named Chief Financial Officer, he served as Controller and CFO of The State Bank and
Davison State Bank since 2001. Prior to joining the Banks, Mr. Kelley was an Assistant
Vice President and Accounting Officer with Citizens Bank. Mr. Kelley has over 16 years of
banking experience.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

---



# PART II

# ITEM 5. MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES

The
market, dividend, and holders of record information required by this item appears under
the caption Fentura Financial, Inc. Common Stock and Table 16 on page 55 under
the title MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, of the Companys 2005 Rule 14a-3 annual report, and is
incorporated herein by reference.

On
October 14, 2005, the Company sold 100 shares of its common stock for cash to a Michigan
resident. These shares were issued in an intrastate offering exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Section
3(a)(11) thereof and Rule 147 promulgated by the SEC thereunder. The Company relied
on this exemption due to the fact that it is a resident of and doing business within the
State of Michigan and that no part of the issue was or is being offered or sold to persons
that are not residents of Michigan within the time period specified in Rule 147. The
shares were sold at a purchase price of $34.00 per share. No underwriting discounts or
commissions were paid in connection with the sale of these shares.

# ITEM 6. SELECTED
FINANCIAL DATA

The
information required by this item appears under the title MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  SELECTED
FINANCIAL DATA, appearing in Table 1 on page 36 of the Companys 2005 Rule
14a-3 annual report, and is incorporated herein by reference.

# ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

The
information required by this item appears under the title MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, appearing
on pages 36 through 55 of the Companys 2005 Rule 14a-3 annual report, and is
incorporated herein by reference.

# ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The
information required by this item appears under the headings Liquidity and Interest
Rate Risk Management on pages 49 and 50 and Quantitative and Qualitative
Disclosure About Market Risk on page 51 and 52 under the title
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS of the Companys 2005 Rule 14a-3 annual report, and is incorporated
herein by reference.

# ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

The
consolidated financial statements of the Company and Report of Crowe Chizek and Company
LLC, Independent Registered Public Accounting Firm, appear on pages 2 through 7 of the
Financial Statements portion of the Companys 2005 Rule 14a-3 annual report, and are
incorporated herein by reference.

# ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE

| | None
| | ----

17

---



# ITEM 9A CONTROLS AND
PROCEDURES

| | (a) | Evaluation
of Disclosure Controls and Procedures.
| | --- | -------------------------------------------------

The
Companys Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of the Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15(d)-15(e)) as of the end of the period
covered by this Form 10-K Annual Report, have concluded that the Companys disclosure
controls and procedures were adequate and effective to ensure that material information
relating to the Company would be made known to them by others within the Company,
particularly during the period in which this Form 10-K Annual Report was being prepared.

| | (b) | Changes
in Internal Controls.
| | --- | -----------------------------

During
the fourth quarter ended December 31, 2005, there have been no changes in the
Companys internal control over financial reporting that have materially affected or
are reasonably likely to materially affect the Companys internal control over
financial reporting.

# ITEM 9B OTHER INFORMATION

| | None
| | ----

# PART III

# ITEM 10. DIRECTORS AND
EXECUTIVE OFFICERS OF THE REGISTRANT

The
Companys executive officers are identified under Additional Item in Part
I of this Report on Form 10-K. The other information required by this item appears under
the captions 2006 Election of Directors, The Corporations Board of
Directors, Committees of the Corporation Board, and Compliance
with Section 16 Reporting on pages 3, 8, 9, 10 and 17, respectively, of the
Companys 2006 Notice of Annual Shareholders Meeting and Proxy Statement, and is
incorporated herein by reference.

The
Board of Directors of the Company has determined that Kenneth R. Elston, a director and
member of the Audit Committee, qualifies as an Audit Committee financial
expert as defined in rules adopted by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002 and is independent pursuant to NASD listing
standards.

The
Board of Directors of the Company has adopted a Code of Ethics, which details principles
and responsibilities governing ethical conduct for all Company directors and executive
officers. The Code of Ethics is filed as an Exhibit to this Annual Report on Form 10-K.

# ITEM 11. EXECUTIVE
COMPENSATION

The
information required by this item appears under the captions Director
Compensation, Executive Compensation, Retirement and Change in
Control Arrangements and Shareholder Return Performance Graph on pages
7, 10, 11, 13 and 16, respectively, of the Companys 2006 Notice of Annual
Shareholders Meeting and Proxy Statement, and is incorporated herein by reference.

# ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The
information required by this item appears under the caption Stock Ownership of
Directors, Executive Officers and Certain Major Shareholders on page 3 of the
Companys 2006 Notice of Annual Shareholders Meeting and Proxy Statement, and is
incorporated herein by reference.

Securities
Authorized for Issuance Under Equity Compensation Plans. The Company had the following
equity compensation plans at December 31, 2005:

18

---



# EQUITY COMPENSATION
PLAN INFORMATION

|Plan Category         | Number of securities to
be issued upon exerciseof outstanding options 
(1) | Weighted-average  
 exercise price of outstanding options
(2) | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflectedin column (1))
(3)
|--------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation   |                                                                            |                                                               |                                                                                                                                               
|plans approved by     |                                                                           
|security holders      |                                                                            | 42,302                                                        |                                                                                                                                               
|                      |                                                                           
|Equity compensation   |                                                                           
|plans not approved by |                                                                           
|security holders      |                                                                            | 0                                                             |                                                                                                                                               
|                      |                                                                           
|Total                 |                                                                            | 42,302                                                        |                                                                                                                                               
|                      |                                                                           

These
equity compensation plans are more fully described in Note 11 to the Consolidated
Financial Statements.

# ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

The
information required by this item appears under the caption Other Information 
Transactions with Certain Interested Parties on page 17 of the Companys 2006
Notice of Annual Shareholders Meeting and Proxy Statement, and is incorporated herein by
reference.

# ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES

The
information required by this item appears under the caption Relationship with
Independent Public Accountants on page 14 and 15 of the Companys 2006 Notice
of Annual Shareholders Meeting and Proxy Statement and is here incorporated by reference.

# PART IV

# ITEM 15. EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES

|(a) | 1. | Financial Statements:
The
following consolidated financial statements of the Company and Report of Crowe Chizek and
Company LLC, Independent Registered Public Accounting Firm, are incorporated by reference
under Item 8 Financial Statements and Supplementary Data of this document: 
      Consolidated Balance Sheets
      Consolidated Statements of Income
      Consolidated Statements of
Comprehensive Income
      Consolidated Statements of Changes in Stockholders Equity
      Consolidated Statements of
Cash Flows
      Notes to the Consolidated Financial statements
      Report of Crowe Chizek and Company LLC, Independent Registered Public Accounting Firm
|--- | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Financial
Statement SchedulesAll schedules are omitted  see Item 15(c) below.
| | -- | ------------------------------------------------------------------------------

19

---



| | 3. | Exhibits: 
The
exhibits listed on the Exhibit Index following the signature page of this
report are filed herewith and are incorporated herein by reference.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Exhibits:
The
Exhibit Index follows the signature page of this report and is incorporated
herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------

|(c) | Financial
Statement Schedules: 
All
financial statement schedules normally required by Article 9 of Regulation S-X are omitted
since they are either not applicable or the required information is shown in the
consolidated financial statements or notes thereto.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---



# Signatures

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, dated March 22, 2006.

| |  | Fentura Financial, Inc.    
(Registrant)By   /s/ Donald L. Grill        
        Donald L. Grill
        On behalf of the registrant
           and as President & CEOBy   /s/ Douglas J. Kelley        
        Douglas J. Kelley
        Chief Financial Officer
           (Principal Accounting Officer)
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated. Each
director of the Registrant, whose signature appears below, hereby appoints Forrest A.
Shook and Donald L. Grill, and each of them severally, as his or her attorney-in-fact, to
sign his or her name and on his or her behalf, as a director of the Registrant, and to
file with the Commission any and all amendments to this report on Form 10-K.

|Signature                                             | Capacity | Date                          
|----------------------------------------------------- | -------- | ------------------------------
|                                                      |          |                               
|/s/ Forrest A. Shook

Forrest A. Shook  |          | Chairman of the Board Director
|                                                      |          |                               
|/s/ Donald L. Grill

Donald L. Grill    |          | Director                      
|                                                      |          |                               
|Kenneth R. Elston                       |          | Director                      
|                                                      |          |                               
|/s/ J. David Karr
J. David Karr         |          | Director                      
|                                                      |          |                               
|Thomas P. McKenney                      |          | Director                      
|                                                      |          |                               
|/s/ Thomas L. Miller
Thomas L. Miller   |          | Director                      
|                                                      |          |                               
|/s/ Brian P. Petty
Brian P. Petty       |          | Director                      
|                                                      |          |                               
|/s/ Ian W. Schonsheck
Ian W. Schonsheck |          | Director                      

12

---



# FENTURA FINANCIAL, INC. 2005 Annual Report on
Form 10-KEXHIBIT INDEX

|Exhibit No. | Exhibit
|----------- | -------
|           

|2 | Agreement
 and  Plan of  Merger  By and  Among  Fentura  Financial,  Inc.,  West  Michigan
 Financial                 Corporation  and West  Michigan  Community  Bank dated as of
October 14, 2003,  and joined in by WMFC                 Acquisition  Subsidiary,  Inc.
and Amendment No. 1 thereto (Incorporated by reference to Exhibits 2.1
                and 2.2 to the Registrant's Current Report on Form 8-K dated March 15,
2004).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3(i) | Articles
of Incorporation of Fentura Financial, Inc. (Incorporated by reference                to
Form 10-SB Registration Number 0-23550)
|---- | -----------------------------------------------------------------------------------------------------------------------------------------

|3(ii) | Bylaws
of Fentura Financial, Inc. (Incorporated by reference to Form 10-SB
               Registration Number 0-23550)
|----- | ----------------------------------------------------------------------------------------------------------------------

|3(iii) | Amendment
to the Articles of Incorporation of Fentura Financial, Inc.                (Incorporated
by reference to Exhibit 3(iii) to the Form 10-K Filed March                20, 2001)
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3(iv) | Amendment
to the Articles of Incorporation of Fentura Financial, Inc.                (Incorporated
by reference to Exhibit 3 filed with Form 10-Q for the quarter                ended March
31, 2002)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 | Amended
and Restated Automatic Dividend Reinvestment Plan (Incorporated by reference to
Registration Statement on Form S-3  Registration No. 333-75194)
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 | Directors
Stock Purchase Plan (Incorporated by reference to Form 10K-SB filed on March 17, 1996)
|---- | ------------------------------------------------------------------------------------------------

|10.2 | Non-Employee
 Director Stock Option Plan (Incorporated by reference to Form 10K-SB filed on March 17,
 1996)
|---- | ------------------------------------------------------------------------------------------------------------

|10.3 | Form
of Non-Employee Director Stock Option Agreement  (Incorporated by reference to Form
10Q-SB filed                 on May 2, 1996)
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Retainer
Stock Plan for Directors (Incorporated by reference to Form 10K-SB filed on March 17,
1996)
|---- | ----------------------------------------------------------------------------------------------------

|10.5 | Employee
Stock Option Plan(Incorporated by reference to Form 10K-SB filed on March 17, 1996)
|---- | --------------------------------------------------------------------------------------------

|10.6 | Form
of Employee  Stock  Option Plan  Agreement  (Incorporated  by  reference to Form 10K-SB
filed on                 March 17, 1996)
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|10.7 | Executive
Stock Bonus Plan (Incorporated by reference to Form 10K-SB filed on March 17, 1996)
|---- | ---------------------------------------------------------------------------------------------

|10.8 | Stock
 Purchase  Plan between The State Bank and Donald E. Johnson,  Jr.,  Mary Alice J.
Heaton,  and                 Linda J. LeMieux  dated  November 17, 1996  (Incorporated
 by reference to Exhibit  10.19 to the Form  10K-SB filed March 20, 1997)
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 | Severance
 Compensation Agreement between the Registrant,  The State Bank, and Donald L.  Grill
dated                 March 20, 1997  (Incorporated by reference to Exhibit 10.20 to the
Form 10Q-SB filed May 12, 1997)
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

---



|10.10 | Form
of  Severance  Compensation  Agreement  between  the  Registrant,  The State  Bank,  and
 Ronald                 Justice.  (Incorporated by reference to Exhibit 10.10 to the Form
10-K filed March 28, 2005)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 | Severance
 Compensation  Agreement between the Registrant,  West Michigan  Community Bank, and
Robert                 Sewick dated March 9, 2006.  (Filed herewith)
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 | Severance
 Compensation  Agreement  between the  Registrant  and Dennis  Leyder  dated March 9,
2006.                 (Incorporated by reference to Exhibit 99.1 to the Form 8-K filed
March 10, 2006)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 | Severance
 Compensation  Agreement  between the  Registrant  and Douglas  Kelley dated March 9,
2006.                 (Incorporated by reference to Exhibit 99.2 to the Form 8-K filed
March 10, 2006)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 | Severance
 Compensation  Agreement  between the Registrant and Holly  Pingatore  dated March 9,
2006.                 (incorporated by reference to Exhibit 99.3 to the Form 8-K filed
March 10, 2006)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 | Amendment
and Restatement of The State Bank Incentive  Supplemental  Executive  Retirement
 Agreement                 dated May 20, 1999, for Donald L. Grill, dated March 10, 2006.
 (Filed herewith)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 | Amendment
 and  Restatement  of the  Incentive  Supplemental  Executive  Retirement  Agreement
 dated                 August 13, 1999, for Robert Sewick, dated March 10, 2006.  (Filed
herewith)
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 | Nonqualified
 Deferred  Compensation  Plan.  (Incorporated  by reference to Exhibit 10.12 to the Form
                10-K filed March 28, 2005)
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 | Fentura
Bancorp,  Inc.  Employee  Deferred  Compensation  and Stock Ownership Plan.
 (Incorporated by                 reference to Exhibit 10.13 to the Form 10-K filed March
28, 2005)
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13 | Rule
14a-3 Annual Report to Security Holders (This report, except for those portions which are
expressly incorporated by reference in this filing, is furnished for the information of
the Securities and Exchange Commission and is not deemed filed as a part of this Report)
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14 | Code
of Ethics for Directors and Executive Officers (Filed herewith)
|-- | --------------------------------------------------------------------

|21.1 | Subsidiaries
of the Registrant (Filed herewith)
|---- | -----------------------------------------------

|23.1 | Consent
of Independent Registered Public Accounting Firm (Filed herewith)
|---- | -------------------------------------------------------------------------

|24 | Powers
of Attorney.  Contained on the signature page of this report.
|-- | --------------------------------------------------------------------

|31.1 | Certificate
 of President  and Chief  Executive  Officer of Fentura  Financial,  Inc.  pursuant to 15
                U.S.C. Section 7241, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Certificate
of Chief  Financial  Officer of Fentura  Financial,  Inc.  pursuant to 15 U.S.C.  Section
                7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 | Certificate
 of Chief  Executive  Office  and Chief  Financial  Officer of  Fentura  Financial,  Inc.
                pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906
of the  Sarbanes-Oxley Act of 2002
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23