UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                For the quarterly period ended September 30, 2001

                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

        For the transition period from _______________ to _______________

                         Commission file number 0-23550

                              Fentura Bancorp, Inc.
             (Exact name of registrant as specified in its charter)


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

               One Fenton Sq, P.O. Box 725, Fenton, Michigan 48430
                    (Address of Principal Executive Offices)

                                 (810) 629-2263
                         (Registrant's telephone number)


                                      None
                 (Former name, former address and former fiscal
                       year, if changed since last report)

Check  whether  the  registrant  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the Exchange  Act of 1934 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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date: November 10, 2001

Class - Common Stock                         Shares Outstanding - 1,732,877

                                       1
<PAGE>
                              Fentura Bancorp, Inc.
                               Index to Form 10-Q



                                                                            Page

Part I - Financial Information

    Item 1 - Consolidated Financial Statements (Unaudited)                    3

    Item 2 - Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                9

    Item 3 - Quantitative and Qualitative Disclosures about Market Risk       19



Part II - Other Information                                                   21





                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION


Item 1. Consolidated Financial Statements
<TABLE>
  Fentura Bancorp, Inc.
  Consolidated Balance Sheets
----------------------------------------------------------------------------------------------------
                                                                        SEPT 30,       DEC. 31,
(000's omitted Except Per Share Data)                                     2001           2000
                                                                      (unaudited)
----------------------------------------------------------------------------------------------------
ASSETS
<S>                                                                       <C>            <C>
  Cash and due from banks                                                 $13,770        $13,459
  Federal funds sold                                                       38,050          7,250
                                                                     -------------------------------
    Total cash & cash equivalents                                          51,820         20,709
  Securities-available for sale                                            41,332         53,421
  Securities-held to maturity, (market value of $11,391
    at September 30, 2001 and $13,419 at December 31, 2000)                11,163         13,283
                                                                     -------------------------------
      Total securities                                                     52,495         66,704
  Loans:
    Commercial                                                            118,394        101,090
    Tax exempt development loans                                              971            835
    Real estate loans - mortgage                                            9,189         10,514
    Real estate loans - construction                                        8,243         17,471
    Consumer loans                                                         59,945         65,198
                                                                     -------------------------------
  Total loans                                                             203,070        195,108
  Less: Allowance for loan losses                                          (3,145)        (2,932)
                                                                     -------------------------------
  Net loans                                                               199,925        192,176
  Loans held for sale                                                       1,208            187
  Bank premises and equipment                                               7,771          6,547
  Accrued interest receivable                                               1,682          1,924
  Other assets                                                              4,331          4,643
                                                                     -------------------------------
    Total assets                                                         $319,232       $292,890
                                                                     ===============================

LIABILITIES
  Deposits:
    Non-interest bearing deposits                                         $44,197        $34,762
    Interest bearing deposits                                             232,198        213,894
                                                                     -------------------------------
      Total deposits                                                      276,395        248,656
  Federal funds purchased                                                       0          3,250
  Other borrowings                                                          2,638          2,581
  Accrued taxes, interest and other liabilities                             2,117          2,649
                                                                     -------------------------------
      Total liabilities                                                   281,150        257,136
                                                                     -------------------------------
SHAREHOLDERS' EQUITY
  Common stock - $2.5 par value
   1,732,877 shares issued (1,722,308 in Dec. 2000)                         4,332          4,305
  Surplus                                                                  26,266         26,016
  Retained earnings                                                         7,074          5,648
  Accumulated other comprehensive income (loss)                               410           (215)
                                                                     -------------------------------
    Total shareholders' equity                                             38,082         35,754
                                                                     -------------------------------
      Total Liabilities and Shareholders' Equity                         $319,232       $292,890
                                                                     ===============================
</TABLE>
See notes to consolidated financial statements.

                                       3
<PAGE>
<TABLE>
Fentura Bancorp, Inc.
Consolidated Statements of Income (Unaudited)
                                                           Three Months Ended                  Nine Months Ended
                                                             September 30,                       September 30,
 (000's omitted except per share data)                   2001             2000               2001             2000
--------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
<S>                                                      <C>              <C>                <C>             <C>
  Interest and fees on loans                             $4,355           $4,813             $13,436         $13,994
  Interest and dividends on
   investment securities:
    Taxable                                                 537              813               1,985           2,482
    Tax-exempt                                              165              160                 501             496
  Interest on federal funds sold                            311              181                 809             453
                                                   ----------------------------------- -----------------------------------
       Total interest income                              5,368            5,967              16,731          17,425

  INTEREST EXPENSE
    Deposits                                              2,212            2,342               7,118           6,836
    Short-term borrowings                                    27              217                 102             531
                                                   ----------------------------------- -----------------------------------
       Total interest expense                             2,239            2,559               7,220           7,367

  NET INTEREST INCOME                                     3,129            3,408               9,511          10,058
  Provision for loan losses                                 179              153                 572             523
                                                   ----------------------------------- -----------------------------------
    Net interest income after
     provision for loan losses                            2,950            3,255               8,939           9,535

  NON-INTEREST INCOME
    Service charges on deposit accounts                     511              484               1,541           1,437
    Fiduciary income                                        159              206                 484             527
    Other operating income                                  345              344               1,124           1,009
    Gain on sale of loans                                   170               60                 403             125
    Gains on sale of securities - AFS                       160                0                 317               0
                                                   ----------------------------------- -----------------------------------
      Total non-interest income                           1,345            1,094               3,869           3,098

  NON-INTEREST EXPENSE
    Salaries and benefits                                 1,643            1,472               4,728           4,413
    Occupancy of bank premises                              236              199                 657             597
    Equipment expense                                       376              377               1,056           1,158
    Other operating expenses                                880              844               2,707           2,682
                                                   ----------------------------------- -----------------------------------
      Total non-interest expense                          3,135            2,892               9,148           8,850

  INCOME BEFORE TAXES                                     1,160            1,457               3,660           3,783
  Applicable income taxes                                   354              437               1,093           1,060
                                                   ----------------------------------- -----------------------------------
  NET INCOME                                               $806           $1,020              $2,567          $2,723
                                                   =================================== ===================================

  Per share:
  Net income - basic                                      $0.47            $0.60               $1.49           $1.59
                                                          =====            =====               =====           =====
  Net income - diluted                                    $0.46            $0.59               $1.48           $1.59
                                                          =====            =====               =====           =====
  Dividends                                               $0.22            $0.21               $0.66           $0.63
                                                          =====            =====               =====           =====
</TABLE>
See notes to consolidated financial statements.

                                       4
<PAGE>
<TABLE>
Fentura Bancorp, Inc.
Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

                                                              Nine Months                Nine Months
                                                                 Ended                      Ended
-------------------------------------------------------------------------------------------------------
                                                               Sept 30,                    Sept 30,
(000's omitted)                                                  2001                        2000
-------------------------------------------------------------------------------------------------------
COMMON STOCK
<S>                                                              <C>                         <C>
  Balance, beginning of period                                   $4,305                      $3,555
   Issuance of shares under
      Director stock purchase plan,
      Stock purchase plan, and
      Dividend reinvestment program                                  27                          25
   Impact of 20% stock dividend                                       0                         713
                                                            ----------------            ---------------
  Balance, end of period                                          4,332                       4,293

SURPLUS
  Balance, beginning of period                                   26,016                      18,317
    Issuance of shares under
      Director stock purchase plan,
      Stock purchase plan, and
      Dividend reinvestment program                                 250                         330
    Impact of 20% stock dividend                                      0                       7,267
                                                            ----------------            ---------------
  Balance, end of period                                         26,266                      25,914

RETAINED EARNINGS
  Balance, beginning of period                                    5,648                      11,078
    Net income                                                    2,567                       2,723
    Cash dividends declared                                      (1,141)                     (1,075)
    Impact of 20% stock dividend                                      0                      (7,985)
                                                            ----------------            ---------------
  Balance, end of period                                          7,074                       4,741

ACCUMULATED OTHER COMPREHENSIVE
  INCOME (LOSS)
  Balance, beginning of period                                     (215)                     (1,085)
    Change in unrealized gain (loss)
    on securities, net of tax                                       625                         277
                                                            ----------------            ---------------
  Balance, end of period                                            410                        (808)
                                                            ----------------            ---------------
TOTAL SHAREHOLDERS' EQUITY                                      $38,082                     $34,140
                                                            ================            ===============
</TABLE>
See notes to consolidated financial statements.

                                       5
<PAGE>
<TABLE>
Fentura Bancorp, Inc.
Consolidated Statements of Cash Flows (Unaudited)

                                                                   Nine Months Ended
                                                                     September 30,
----------------------------------------------------------------------------------------
(000's omitted)
                                                                   2001        2000
----------------------------------------------------------------------------------------

OPERATING ACTIVITIES:
<S>                                                                <C>         <C>
  Net income                                                       $2,567      $2,723
 Adjustments to reconcile net income to cash
    Provided by Operating Activities:
      Depreciation and amortization                                   672         692
      Provision for loan losses                                       572         523
      Amortization (accretion) on securities                           (5)        (27)
      Loans originated for sale                                   (30,542)     (6,472)
      Proceeds from the sale of loans                              29,924       6,681
      Gain in sales of loans                                         (403)          0
      Gain on sales of securities - AFS                              (317)          0
      Decrease (increase) in interest receivable                      242        (441)
      Decrease (increase) in other assets                             312       1,059
      Increase (decrease) in accrued taxes,
        Interest, and other liabilities                              (532)         93
                                                                ------------------------
Total Adjustments                                                     (77)      2,108
                                                                ------------------------
Net Cash Provided By (Used In) Operating Activities                 2,490       4,831
                                                                ------------------------

Cash Flows From Investing Activities:

  Net decrease in deposits with other banks                             0           0
  Proceeds from maturities of investment activities - HTM           3,773       3,503
  Proceeds from maturities of investment activities - AFS           4,074       2,299
  Proceeds from calls of investment securities - AFS               18,596           0
  Proceeds from sales of investment securities - AFS               10,431           0
  Purchases of investment securities - HTM                         (1,738)     (3,000)
  Purchases of investment securities - AFS                        (19,613)       (500)
  Net increase in loans                                            (8,321)    (12,255)
  Capital expenditures                                             (2,263)     (1,149)
                                                                ------------------------
Net Cash Provided By (Used in) Investing Activities                 4,939     (11,102)

Cash Flows From Financing Activities:

  Net increase (decrease) in deposits                              27,739       8,010
  Net increase (decrease) in borrowings                            (3,193)     10,943
  Proceeds from stock issuance                                        277         350
  Cash dividends                                                   (1,141)     (1,075)
                                                                ------------------------
Net Cash Provided By (Used In) Financing Activities                23,682      18,228

NET INCREASE IN CASH AND CASH EQUIVALENTS                         $31,111     $11,957

CASH AND CASH EQUIVALENTS - BEGINNING                             $20,709     $13,614
CASH AND CASH EQUIVALENTS - ENDING                                $51,820     $25,571
                                                                ========================

CASH PAID FOR:
  INTEREST                                                         $7,278      $6,598
  INCOME TAXES                                                     $1,518      $1,102
</TABLE>
See notes to consolidated financial statements.

                                       6
<PAGE>
<TABLE>
Fentura Bancorp, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)


                                                         Three Months Ended          Nine Months Ended
(000's Omitted)                                            September 30,               September 30,
                                                         2001         2000          2001          2000
                                                     -------------------------------------------------------
<S>                                                        <C>       <C>            <C>          <C>
Net Income                                                 $806      $1,020         $2,567       $2,723
Other comprehensive income (loss), net of tax:
  Unrealized holding gains (losses) arising
    During period                                          $348        $469           $834         $277
  Less: reclassification adjustment for
    gains included in net income                           $106          $0           $209           $0
                                                     -------------------------------------------------------
Other comprehensive income (loss)                          $242        $469           $625         $277
                                                     -------------------------------------------------------
Comprehensive income                                     $1,048      $1,489         $3,192       $3,000
                                                     =======================================================
</TABLE>

Fentura Bancorp, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 1.  Basis of presentation

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  and the  instructions  for Form - 10Q and  Article  9 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
notes  required  by  generally  accepted  accounting   principles  for  complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the nine months ended  September 30, 2001
are not necessarily  indicative of the results that may be expected for the year
ending   December  31,  2001.   All  share  and  per  share  amounts  have  been
retroactively  adjusted to reflect the 20% stock  dividend paid on May 26, 2000.
For further  information,  refer to the  consolidated  financial  statements and
footnotes thereto included in the  Corporation's  annual report on Form 10-K for
the year ended December 31, 2000.

                                       7
<PAGE>
Note 2. Earnings per common share

A reconciliation  of the numerators and denominators  used in the computation of
basic  earnings  per common  share and  diluted  earnings  per  common  share is
presented below. Earnings per common share are presented below for the three and
nine months ended September 30, 2001 and 2000:
<TABLE>
                                                  Three Months Ended             Nine Months Ended
                                                     September 30,                 September 30,
                                                     2001        2000           2001           2000
                                                     ----        ----           ----           ----
Basic Earnings Per Common Share:
 Numerator
<S>                                              <C>          <C>             <C>           <C>
  Net Income                                     $806,000     $1,020,000      $2,567,000    $2,723,000
                                                 ========     ===========     ==========    ==========

Denominator
 Weighted average common shares
  Outstanding                                   1,730,576      1,711,226       1,727,556     1,714,456
                                                =========      =========       =========     =========

Basic earnings per common share                     $0.47          $0.60           $1.49         $1.59
                                                    =====          =====           =====         =====

Diluted Earnings Per Common Share:
 Numerator
  Net Income                                    $ 806,000     $1,020,000      $2,567,000    $2,723,000
                                                =========     ==========      ==========    ==========

Denominator
 Weighted average common shares
  Outstanding for basic earnings per
  Common share                                  1,730,576      1,711,226       1,727,556     1,714,456

Add:  Dilutive effects of assumed
  Exercises of stock options                        3,528          3,341           3,574         3,403
                                                    -----          -----           -----         -----

 Weighted average common shares
  And dilutive potential common
  Shares outstanding                            1,734,104      1,714,567       1,731,130     1,717,859
                                                =========      =========       =========     =========

Diluted earnings per common share                   $0.46          $0.59           $1.48         $1.59
                                                    =====          =====           =====         =====
</TABLE>

Stock  options  for 6,975 and 10,219  shares of common  stock for the nine month
period  ended  September  30,  2001 and 2000 and the 6,975 and 10,219  shares of
common stock for the three month period ended  September  30, 2001 and 2000 were
not considered in computing  diluted earnings per common share because they were
not dilutive.

Note 3. Commitments and contingencies

There are various contingent liabilities that are not reflected in the financial
statements  including claims and legal actions arising in the ordinary course of
business.  In the opinion of management,  after consultation with legal counsel,
the  ultimate  disposition  of these  matters is not expected to have a material
effect on the  Corporation's  consolidated  financial  condition  or  results of
operations.

                                       8
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Results of Operations

As  indicated  in the  income  statement,  earnings  for the nine  months  ended
September 30, 2001 were $2,567,000 compared to $2,723,000 for the same period in
2000.  Earnings  decreased as a result of an decrease in net interest income and
an increase in operating  expenses.  The Corporation  continues to focus on core
banking activities and new opportunities in our current and surrounding markets.
Management  believes  that the  softening  of the  economy  that has taken place
throughout  2001 and projected for the reminder could continue to place pressure
on current and future earnings.

The banking  industry  uses standard  performance  indicators to help evaluate a
banking  institution's  performance.  Return on  average  assets is one of these
indicators.  For the nine months  ended  September  30,  2001 the  Corporation's
return on average  assets  was 1.12%  compared  to 1.22% for the same  period in
2000. For the three months ended September 30, 2001 the Corporation's  return on
average  assets was 1.03%  compared  to 1.35% for the same  period in 2000.  Net
income per  share-basic  was $1.49 in the first nine months of 2001  compared to
$1.59 for the same period in 2000.

Net Interest Income

Net  interest  income and average  balances  and yields on major  categories  of
interest-earning  assets and  interest-bearing  liabilities  for the nine months
ended September 30, 2001 and 2000 are summarized in Table 3. Net interest income
and average balances and yields on major categories of  interest-earning  assets
and  interest-bearing  liabilities for the three months ended September 30, 2001
and 2000 are  summarized in Table 2. The effects of changes in average  interest
rates and average balances are detailed in Table 1 below.

Table 1
<TABLE>
                                                      NINE MONTHS ENDED
                                                        SEPTEMBER 30,
                                                    2001 COMPARED TO 2000
                                                     INCREASE (DECREASE)
                                                           DUE TO:
                                             -------------------------------------
                                                            YIELD/
(000'S OMITTED)                                  VOL         RATE        TOTAL
----------------------------------------------------------------------------------
<S>                                             <C>         <C>          <C>
TAXABLE SECURITIES                              ($386)      ($111)       ($497)
TAX-EXEMPT SECURITIES                              (6)         12            6
FEDERAL FUNDS SOLD                                725        (369)         356

TOTAL LOANS                                       899      (1,068)        (169)
LOANS HELD FOR SALE                              (388)         (2)        (390)
                                             -------------------------------------

    TOTAL EARNING ASSETS                          844      (1,538)        (694)


INTEREST BEARING DEMAND DEPOSITS                  (66)         (5)         (71)
SAVINGS DEPOSITS                                  100        (294)        (194)
TIME CD'S $100,000 AND OVER                       105        (104)           1
OTHER TIME DEPOSITS                               360         186          546
OTHER BORROWINGS                                 (425)         (4)        (429)
                                             -------------------------------------

    TOTAL INTEREST BEARING LIABILITIES             74        (221)        (147)
                                             -------------------------------------

         NET INTEREST INCOME                    $770      ($1,317)     ($547)
                                             =====================================
</TABLE>

                                       9
<PAGE>
As indicated in Table 1, during the nine months ended  September  30, 2001,  net
interest  income  decreased  compared  to the same  period in 2000,  principally
because of the decrease in prime rate that allowed all of the variable rate loan
products to reprice at a lower rate.  Interest  expense  decreased mildly due to
the  lowering in core  deposit  rates due to the rate  decreases  and the lagged
effect of repricing certificates of deposit at maturity.

Net interest income (displayed  without  consideration of full tax equivalency),
average balance sheet amounts, and the corresponding yields for the three months
ended  September 30, 2001 and 2000 are shown in Table 2. Net interest income for
the three months ended  September 30, 2001 was $3,129,000 a decrease of $279,000
over the same period in 2000.  This  represents a decrease of 8.2%.  The primary
factor  contributing  to the net  interest  income  decrease was  reductions  in
interest rates by the Federal Reserve Board.

Net interest income, average balance sheet amounts, and the corresponding yields
for the nine months ended  September 30, 2001 and 2000 are shown in Table 3. Net
interest  income for the nine months ended  September 30, 2001 was  $9,511,000 a
decrease of $547,000 over the same period in 2000. This represents a decrease of
5.4%.  The primary  factor  contributing  to the decrease  was the  reduction in
interest rates by the Federal Reserve Board.

Management  expects  the  continued  softening  of the  economy  throughout  the
remainder  of 2001.  Accordingly,  the  Corporation  will seek to  strategically
manage the balance sheet structure to create  stability in net interest  income.
The  Corporation  will  aggressively  seek  out  new  loan  opportunities  while
continuing to maintain sound credit quality.

As  indicated in Table 2, for the three months  ended  September  30, 2001,  the
Corporation's   net  interest   margin  (without   consideration   of  full  tax
equivalency)  was 4.28%  compared  with 4.86% for the same period in 2000.  This
decline is attributable to the impact of interest rates reduction by the Federal
Reserve Board and the increase in interest expense due to certificate of deposit
growth.  The decrease in interest  rates impacts the net interest  income in the
short term because loans have  repriced  quicker than deposits thus reducing net
interest income.

Average earning assets increased 3.9% or approximately $10,850,000 comparing the
third  quarter  of 2001 to the same time  period  in 2000.  Loans,  the  highest
yielding  component of earning  assets,  represented  69.7% of earning assets in
2001 compared to 68.6% in 2000. Average interest bearing  liabilities  increased
1.5% or  $3,442,000  comparing the third quarter of 2001 to the same time period
in 2000.  Non-interest  bearing  deposits  amounted to 14.9% of average  earning
assets in the third  quarter of 2001 compared with 13.3% in the same time period
of 2000.

Management  continually monitors the Corporation's balance sheet to insulate net
interest income from significant  swings caused by interest rate volatility.  If
market rates continue to change in 2001,  corresponding changes in funding costs
will be  considered  to avoid any  potential  negative  impact  on net  interest
income.  The Corporation's  policies in this regard are further discussed in the
section titled "Interest Rate Sensitivity Management".

                                       10
<PAGE>
Table 2
<TABLE>
                                                                 THREE MONTHS ENDED SEPTEMBER 30,
AVERAGE BALANCES AND RATES                                   2001                               2000
(000's omitted)                                   AVERAGE    INCOME/    YIELD/     AVERAGE      INCOME/    YIELD/
ASSETS                                           BALANCE     EXPENSE     RATE       BALANCE     EXPENSE     RATE
                                                -------------------------------------------------------------------
 Investment securities:
<S>                                                <C>            <C>     <C>         <C>            <C>     <C>
   U.S. Treasury and Government Agencies           $33,657        $488    5.75%       $50,410        $797    6.29%
   State and Political                              14,568         165    4.49%        14,026         160    4.54%
   Other                                             4,086          49    4.76%         1,077          16    5.91%
                                                --------------------------------   --------------------------------
   Total Investment Securities                      52,311         702    5.32%        65,513         973    5.91%
   Fed Funds Sold                                   35,590         311    3.47%        11,420         181    6.31%
 Loans:
   Commercial                                      123,710       2,629    8.43%       106,136       2,577    9.66%
   Tax Free                                            772          10    5.14%           492           7    5.66%
   Real Estate-Mortgage                              9,138         251   10.90%        15,363         390   10.10%
   Consumer                                         64,335       1,391    8.58%        69,186       1,650    9.49%
                                                --------------------------------   --------------------------------
 Total loans                                       197,955       4,281    8.58%       191,177       4,624    9.62%
 Allowance for Loan Loss                            (3,111)                            (3,283)
 Net Loans                                         194,844       4,281    8.72%       187,894       4,624    9.79%
                                                --------------------------------   --------------------------------
Loans Held for Sale                                  4,186          74    7.01%        10,645         189    7.06%
                                                --------------------------------   --------------------------------
 TOTAL EARNING ASSETS                             $290,042      $5,368    7.34%      $278,755      $5,967    8.52%
                                                -------------------------------------------------------------------
 Cash Due from Banks                                10,938                             11,589
 All Other Assets                                   13,997                             13,784
                                                -----------                        -----------
TOTAL ASSETS                                      $311,866                           $300,845
                                                -----------                        -----------
LIABILITIES & SHAREHOLDERS' EQUITY:
  Deposits:
   Non-Interest bearing - DDA                      $40,514                            $37,082
   Interest bearing - DDA                           36,589         156    1.69%        40,264         188    1.86%
   Savings Deposits                                 76,720         491    2.54%        66,689         574    3.42%
   Time CD's $100,000 and Over                      32,704         402    4.88%        32,639         522    6.36%
   Other Time CD's                                  83,061       1,163    5.56%        74,405       1,058    5.66%
                                                --------------------------------   --------------------------------
 Total Deposits                                    269,588       2,212    3.26%       251,079       2,342    3.71%
 Other Borrowings                                    1,952          27    5.49%        13,587         217    6.35%
                                                --------------------------------   --------------------------------
  INTEREST BEARING LIABILITIES                    $231,026      $2,239    3.85%      $227,584      $2,559    4.47%
                                                -------------------------------------------------------------------
 All Other Liabilities                               2,206                              2,433
 Shareholders' Equity                               38,120                             33,746
                                                -----------                        -----------
 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY         $311,866                           $300,845
                                                -----------            ---------   -----------            ---------
Net Interest Rate Spread                                                  3.49%                              4.04%
Impact of Non-Interest Bearing Funds on Margin                            0.79%                              0.82%
                                                                       ---------                          ---------
Net Interest Income /Margin                                     $3,129    4.28%                    $3,408    4.86%
                                                           =====================              =====================
</TABLE>
                                       11
<PAGE>
<TABLE>
Table 3
                                                                 NINE MONTHS ENDED SEPTEMBER 30,
AVERAGE BALANCES AND RATES                                   2001                               2000
(000's omitted)                                   AVERAGE    INCOME/    YIELD/     AVERAGE      INCOME/    YIELD/
ASSETS                                           BALANCE     EXPENSE     RATE       BALANCE     EXPENSE     RATE
                                                -------------------------------------------------------------------
 Investment securities:
<S>                                                <C>           <C>      <C>         <C>           <C>      <C>
   U.S. Treasury and Government Agencies           $41,543       1,890    6.08%       $50,868       2,435    6.39%
   State and Political                              14,232         501    4.71%        14,395         496    4.60%
   Other                                             2,285          95    5.56%         1,077          47    5.83%
                                                --------------------------------   --------------------------------
   Total Investment Securities                      58,060       2,486    5.72%        66,340       2,978    6.00%
   Fed Funds Sold                                   25,525         809    4.24%         9,796         453    6.18%
 Loans:
   Commercial                                      120,306       8,059    8.96%       104,227       7,469    9.57%
   Tax Free                                            799          31    5.19%           543          23    5.66%
   Real Estate-Mortgage                             11,290         822    9.73%        15,159       1,131    9.97%
   Consumer                                         65,257       4,342    8.90%        68,227       4,799    9.40%
                                                --------------------------------   --------------------------------
 Total loans                                       197,652      13,254    8.97%       188,156      13,422    9.53%
 Allowance for Loan Loss                            (2,027)                            (3,141)
 Net Loans                                         194,625      13,254    9.10%       185,015      13,422    9.69%
                                                --------------------------------   --------------------------------
Loans Held for Sale                                  3,467         182    7.02%        10,811         572    7.07%
                                                --------------------------------   --------------------------------
 TOTAL EARNING ASSETS                             $284,704     $16,731    7.86%      $275,103     $17,425    8.46%
                                                -------------------------------------------------------------------
 Cash Due from Banks                                10,881                             11,191
 All Other Assets                                   13,865                             13,288
                                                -----------                        -----------
TOTAL ASSETS                                      $306,423                           $296,441
                                                -----------                        -----------
LIABILITIES & SHAREHOLDERS' EQUITY:
  Deposits:
   Non-Interest bearing - DDA                      $38,292                            $34,711
   Interest bearing - DDA                           36,180         487    1.80%        41,007         558    1.82%
   Savings Deposits                                 71,476       1,541    2.88%        67,506       1,735    3.43%
   Time CD's $100,000 and Over                      35,007       1,487    5.68%        32,696       1,486    6.07%
   Other Time CD's                                  83,646       3,603    5.76%        74,829       3,057    5.46%
                                                --------------------------------   --------------------------------
 Total Deposits                                    264,601       7,118    3.60%       250,749       6,836    3.64%
 Other Borrowings                                    2,174         102    6.27%        10,878         531    6.52%
                                                --------------------------------   --------------------------------
  INTEREST BEARING LIABILITIES                    $228,483      $7,220    4.22%      $226,916      $7,367    4.34%
                                                -------------------------------------------------------------------
 All Other Liabilities                               2,284                              1,717
 Shareholders' Equity                               37,364                             33,097
                                                -----------                        -----------
 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY         $306,423                           $296,441
                                                -----------            ---------   -----------            ---------
Net Interest Rate Spread                                                  3.63%                              4.12%
Impact of Non-Interest Bearing Funds on Margin                            0.83%                              0.76%
                                                                       ---------                          ---------
Net Interest Income /Margin                                     $9,511    4.47%                   $10,058    4.88%
                                                           =====================              =====================
</TABLE>
                                       12
<PAGE>
ALLOWANCE AND PROVISION FOR LOAN LOSSES

The allowance  for loan losses (ALL)  reflects  management's  judgment as to the
level  considered  appropriate to absorb losses  inherent in the loan portfolio.
Fentura's  subsidiary banks'  methodology in determining the adequacy of the ALL
includes a review of  individual  loans,  historical  loss  experience,  current
economic  conditions,  portfolio trends, and other pertinent  factors.  Although
reserves have been allocated to various portfolio  segments,  the ALL is general
in nature and is available for the  portfolio in its entirety.  At September 30,
2001,  the ALL was  $3,145,000,  or 1.55% of total  loans.  This  compares  with
$2,932,000,  or 1.50%,  at  December  31,  2000.  The  increase  of the ALL as a
percentage of total loans  reflects a modest  increase in the allowance for loan
losses and increased loan totals.  Management  feels that the allowance to gross
loans is  appropriate  given the changes in the  portfolio mix and overall asset
quality.

The  provision for loan losses was $572,000 in the first nine months of 2001 and
$523,000  for the same  time  period  in 2000.  The  Corporation  increased  the
provision in 2001  compared to 2000 to fund the  allowance  for loan losses to a
level  management  feels is  necessary  to  cover  losses  inherent  in the loan
portfolio, particularly considering the growth in the loan portfolio in the 2001
period.

Table 4 also  summarizes loan losses and recoveries for the first nine months of
2000 and 2001. During the first nine months of 2001 the Corporation  experienced
net  charge-offs of $359,000,  compared with net charge-offs of $523,000 for the
nine months ended September 30, 2000. Accordingly,  the net charge-off ratio for
the first nine  months of 2001 was .18%  compared to .09% for the same period in
2000.

The Corporation  maintains formal policies and procedures to control and monitor
credit risk.  Management  believes the  allowance for loan losses is adequate to
meet normal credit risks in the loan portfolio. The Corporation's loan portfolio
has no  significant  concentrations  in any one  industry  nor any  exposure  in
foreign loans.  The Corporation has not extendcredit to finance highly leveraged
transactions  nor does it intend to do so in the future.  Employment  levels and
other  economic  conditions  in  the  Corporation's  local  markets  may  have a
significant impact on the level of loan losses. Management continues to identify
and devote attention to credits that may not be performing as agreed. Therefore,
in light of the  aforementioned,  management  expects a modest  reduction to the
allowance  for loan losses as a  percentage  to gross loans in 2001.  Of course,
deterioration of economic  conditions could have an impact on the  Corporation's
credit quality which could impact the need for greater provision for loan losses
and the level of ALL as a percentage  of gross loans.  Non-performing  loans are
discussed further in the section titled "Non-Performing Assets".

<TABLE>
Table 4           ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
                                                          Nine Months Ended        Nine Months Ended
                                                            September 30             September 30,
(000's omitted)                                                 2001                     2000
                                                       --------------------------------------------------
<S>                                                             <C>                      <C>
Balance at Beginning of Period                                  $2,932                   $2,961
                                                       --------------------------------------------------
Charge-Offs:
    Commercial, Financial and Agriculture                          (54)                     (18)
    Real Estate-Mortgage                                             0                        0
    Installment Loans to Individuals                              (416)                    (333)
      Total Charge-Offs                                           (470)                    (351)
                                                       --------------------------------------------------
Recoveries:
    Commercial, Financial and Agriculture                            3                      106
    Real Estate-Mortgage                                             2                        0
    Installment Loans to Individuals                               106                       69
      Total Recoveries                                             111                      175
                                                       --------------------------------------------------
Net Charge-Offs                                                   (359)                    (176)
                                                       --------------------------------------------------
Provision                                                          572                      523
                                                       --------------------------------------------------
Balance at End of Period                                        $3,145                   $3,308
                                                       ==================================================
Ratio of Net Charge-Offs to Gross Loans                          0.18%                    0.09%
                                                       ==================================================
</TABLE>
                                       13
<PAGE>
NON-INTEREST INCOME
<TABLE>
TABLE 5
                                                   Three Months Ended          Nine Months Ended
Analysis of Non-Interest Income                       September 30                September 30
(000's omitted)                                    2001          2000          2001          2000
-------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>        <C>            <C>
Service Charges on Deposit Accounts                  $511          $484       $1,541         $1,437
Gain on Sale of Mortgages                            $170           $60         $403           $125
Mortgage Servicing Fees                                $0           $62          $35           $190
Fiduciary Income                                     $159          $206         $484           $527
Other Operating Income                               $345          $282       $1,089           $819
Gain on sale of securities - AFS                     $160            $0         $317             $0
                                               --------------------------------------------------------
  Total Non-Interest Income                        $1,345        $1,094       $3,869         $3,098
                                               ========================================================
</TABLE>

Non-interest  income  increased in the nine months ended  September  30, 2001 as
compared to the same period in 2000, primarily due to an increase in the gain on
sale of  mortgage  loans,  and an  increase  in the  gain on sale of  investment
securities.  Non-interest  income  increased  in the  third  quarter  of 2001 as
compared  to the  same  quarter  in 2000,  primarily  due to  increase  in other
operating  income,  gain on sale of mortgages and gain on the sale of investment
securities.  Overall non-interest income was $3,869,000 in the nine months ended
September  30, 2001 compared to  $3,098,000  for the same period in 2000.  These
figures  represent  an  increase  of 24.9%.  Table 5  provides  a more  detailed
breakdown  of the  components  of  non-interest  income than can be found in the
income statement on page 4.

The most  significant  category  of  non-interest  income is service  charges on
deposit  accounts.  These fees were  $1,541,000 in the first nine months of 2001
compared to $1,437,000 for the same period of 2000.  This represents an increase
of 7.2%.  The  service  charges  for the third  quarter  of 2001  were  $511,000
compared to $484,000 in the same period in 2000.  Increases are  attributable to
service charges from growth in core deposits.

Gains on the sale of  mortgage  loans  originated  by the  Banks and sold in the
secondary  market were $403,000 in the nine months ended  September 30, 2001 and
$125,000 in the same  period in 2000.  For the third  quarter of 2001,  gains on
sale of mortgages were $170,000 compared to $60,000 for the same period in 2000.
The change is due to an  increase in loans sold in the  secondary  market due to
the increase in residential mortgage refinance activity and new loan volumes due
to the downward movement of market interest rates.

Mortgage servicing fees were $35,000 in the nine months ended September 30, 2001
compared  to  $190,000  in the same time  period in 2000.  This is a decline  of
$156,000 or 82.1%. Mortgage servicing fees for the third quarter of 2001 were $0
compared to $62,000 in the same period of 2000. The decline is  attributable  to
the sale of a significant  portion of the  Corporation's  serviced loans, in the
last quarter of 2000. There is also a significant  decline  comparing these fees
from the first quarter of 2001 at $34,000 to the second  quarter 2001 at $1,000.
This  decline  is also  attributable  to the sale that took  place at the end of
2000.  Servicing  income was  recognized in January of 2001 until these serviced
loans were actually transferred to the purchaser.

Fiduciary income  decreased  $43,000 in the nine months ended September 30, 2001
comparing  to the same period in the prior year.  This 8.2%  decrease in fees is
attributable to the decline in the value of assets under  management  within the
Corporation's Trust Department.

Investment gains on the sale of securities  totaled $317,000 for the nine months
ended September 30, 2001 compared to $0 for the same period in 2000. The gain on
the sale of securities was taken to reposition the investment  portfolio through
the laddering of maturities.

Other operating income increased $270,000 to $1,089,000 in the first nine months
of 2001  compared  to  $819,000  in the same  time  period  in 2000.  This is an
increase  of 32.9%.  Other  operating  income  for the third  quarter of 2001 of
$345,000 compared to $282,000 in the same period of 2000. Other operating income
increased  due to  increases  in income from the sale of official  checks and an
increase in income from the sale of consumer investment products.

                                       14
<PAGE>
Non-Interest Expense
<TABLE>
TABLE 6
                                                  Three Months Ended        Nine Months Ended
Analysis of Non-Interest Expense                     September 30,            September 30,
-----------------------------------------------------------------------       -------------
(000's omitted)
                                                  2001        2000       2001         2000
------------------------------------------------------------------------------------------------
<S>                                               <C>         <C>         <C>         <C>
Salaries and  Benefits                            $1,643      $1,472      $4,728      $4,413
Equipment                                           $376        $377      $1,056      $1,158
Net Occupancy                                       $236        $199        $657        $597
Office Supplies                                      $83         $74        $192        $235
Loan & Collection Expense                            $48         $44        $130        $250
Advertising                                          $88         $63        $256        $189
Other Operating Expense                             $661        $663      $2,129      $2,008
                                              --------------------------------------------------
  Total Non-Interest Expense                      $3,135      $2,892      $9,148      $8,850
                                              ==================================================
</TABLE>

Total non-interest expense was $9,148,000 in the nine months ended September 30,
2001 compared with  $8,850,000 in the same period of 2000. This is a increase of
3.4%.  This  increase is largely  attributable  to an  increase in salaries  and
benefits expense and net occupancy expenses.

Salary and benefit costs, Fentura's largest non-interest expense category,  were
$4,728,000  in  the  nine  months  ended  September  30,  2001,   compared  with
$4,413,000,  or an increase of 7.1%, for the same time period in 2000. Increased
costs are primarily a result of modest increase in the number of employees.  The
third quarter  showed a increase in the salaries and benefits due to increase in
employee  benefit costs,  and an increase in salary costs in connection with the
opening of the second bank, Davison State Bank.

During  the nine  months  ended  September  30,  2001  equipment  expenses  were
$1,056,000  compared to  $1,158,000  for the same period in 2000,  a decrease of
8.8%.  The  equipment  expenses  for the third  quarter  of 2001  were  $376,000
compared to $377,000 in the same period of 2000.  The  decreases in expenses are
attributable  to  reductions  in equipment  maintenance  contracts and equipment
depreciation which decreased due to the roll off of fully depreciated assets.

Occupancy  expenses at $657,000 increased in the nine months ended September 30,
2001  comparing  to the same  period  in 2000 by  $60,000  or  10.1%.  Occupancy
expenses for the third  quarter of 2001 were  $236,000  compared to $199,000 for
the third  quarter of 2000.  The  increases  are  attributable  to  increases in
facility  repairs,  remodeling of the The State Bank main office and the opening
and  operation of the Davison  State Bank new main  office,  which opened in the
second quarter of 2001 and maintenance contracts expense.

During the nine months  ended  September  30, 2001  office  supplies  expense at
$192,000  decreased  $43,000  comparing  to the $235,000 in expense for the same
period in 2000.  Office  supplies  for the third  quarter  of 2001 were  $83,000
compared to $74,000 in the same period of 2000. The decrease is  attributable to
volume decreases of regular office supplies and preprinted forms in 2001.

Loan and collection  expenses,  at $130,000,  were down $120,000 during the nine
months ended  September 30, 2001  comparing to the same time period in 2000. The
decrease  is  primarily  attributable  to the scaling  back of indirect  lending
functions.  The loan and  collection  expenses in the third quarter of 2001 were
$48,000  compared  to  $44,000  for the same  period in 2000.  The  decrease  is
primarily  attributable  to a decrease  in legal  expenses  in  connection  with
collection  efforts and a decrease in fees paid to dealers for indirect  lending
transactions.

Other operating  expenses were $2,129,000 in the nine months ended September 30,
2001  compared to  $2,008,000  in the same time  period in 2000,  an increase of
$121,000 or 6.0%. The increase is  attributable  to an increase in the amount of
overdrawn  deposit  account  charge-offs and an increase in legal and consulting
expenses.  Other operating  expenses for the third quarter of 2001 were $661,000
compared to $663,000 in the same period of 2000.

                                       15
<PAGE>
Financial Condition

Proper  management of the volume and  composition of the  Corporation's  earning
assets and funding  sources is  essential  for  ensuring  strong and  consistent
earnings  performance,  maintaining  adequate liquidity and limiting exposure to
risks  caused  by  changing  market  conditions.  The  Corporation's  investment
securities  portfolio is  structured  to provide a source of  liquidity  through
maturities and generate an income stream with relatively low levels of principal
risk. The Corporation does not engage in securities trading.  Loans comprise the
largest component of earning assets and are the  Corporation's  highest yielding
assets.  Client  deposits are the primary  source of funding for earning  assets
while  short term debt and other  sources of funds  could be  utilized if market
conditions and liquidity needs change.

The  Corporation's  total assets  equaled $319  million for  September  30, 2001
compared to December  31, 2000 total  assets of $293  million.  Loans  comprised
63.6% of total  assets at September  30, 2001  compared to 66.6% at December 31,
2000.  Loans grew $8 million with commercial  loans leading the advance by $17.0
million  and the other  loan  categories  experiencing  reductions  The ratio of
non-interest  bearing deposits to total deposits was 16.0% at September 30, 2001
compared to 14.0% at December 31, 2000.  Interest  bearing  deposit  liabilities
totaled $232 million at September  30, 2001 compared to $214 million at December
31, 2000.  Deposits grew $27.7 million and Fed Funds  Purchased  decreased  $3.2
million to make up the change in interest  bearing  liabilities at September 30,
2001.

Bank  premises and equipment  increased  $1,224,000 to $7.8 million at September
30,  2001  comparing  to $6.5  million at December  31,  2000.  The  increase is
attributable  to the  renovation  of an existing  facility and the  construction
completion of a new headquarters for Davison State Bank.

NON-PERFORMING ASSETS

Non-performing  assets  include  loans on which  interest  accruals have ceased,
loans  which  have  been   renegotiated,   and  real  estate  acquired   through
foreclosure. Past due loans are loans which were delinquent 90 days or more, but
have not been placed on  non-accrual  status.  Table 7 represents  the levels of
these assets at September 30, 2001 and December 31, 2000.

Non-performing  assets  decreased at September 30, 2001 compared to December 31,
2000.  This  decrease  is  attributable  to a  decrease  in both  loans that are
non-accrual and loans which are past due 90 days or more and still accruing. The
non-accrual  loans decreased because of both charge-offs taken in the first half
of 2001 and loans which were made current by the borrower, and loans past due 90
days or more and still  accruing  decreased  due to the  collection  of payments
making certain loans current.

The level and  composition  of  non-performing  assets are  affected by economic
conditions  in  the   Corporation's   local  markets.   Non-performing   assets,
charge-offs,  and provisions for loan losses tend to decline in a strong economy
and  increase  in  a  weak  economy,  potentially  impacting  the  Corporation's
operating results.  In addition to non-performing  loans,  management  carefully
monitors  other  credits  that are current in terms of  principal  and  interest
payments but, in  management's  opinion,  may deteriorate in quality if economic
conditions  change.  Based on the current  softening of the economy,  management
continues to closely monitor credit quality.

                                       16
<PAGE>
<TABLE>
Table 7

Non-Performing Assets and Past Due Loans

                                                   Sept. 30,     December 31,
                                                      2001           2000
                                                 ------------------------------
<S>                                                  <C>            <C>
Non-Performing Loans:
  Loans Past Due 90 Days or More & Still
    Accruing                                         $236,000       $489,000
  Non-Accrual Loans                                   426,000        731,000
  Renegotiated Loans                                        0              0
                                                 ------------------------------
    Total Non-Performing Loans                        662,000      1,220,000
                                                 ------------------------------
Other Non-Performing Assets:
  Other Real Estate                                         0              0
  REO in Redemption                                         0              0
  Other Non-Performing  Assets                         70,000        159,000
                                                 ------------------------------
    Total Other Non-Performing Assets                  70,000        159,000
                                                 ------------------------------
Total Non-Performing Assets                          $732,000     $1,379,000
                                                 ==============================
Non-Performing Loans as a % of
  Total Loans                                          0.36%           0.63%
Allowance for Loan Losses as a % of
  Non-Performing Loans                               475.08%         240.33%
Accruing Loans Past Due 90 Days or
  More to Total Loans                                  0.12%           0.25%
Non-performing Assets as a % of
  Total Assets                                          .23%           0.47%
</TABLE>

LIQUIDITY AND INTEREST RATE RISK MANAGEMENT

Asset/Liability  management is designed to assure  liquidity and reduce interest
rate risks. The goal in managing  interest rate risk is to maintain a strong and
relatively  stable  net  interest  margin.  It  is  the  responsibility  of  the
Asset/Liability  Management  Committee  (ALCO) to set policy  guidelines  and to
establish  short-term  and  long-term  strategies  with respect to interest rate
exposure  and  liquidity.  The  ALCO,  which  is  comprised  of key  members  of
management,  meets  regularly to review  financial  performance  and  soundness,
including  interest rate risk and liquidity  exposure in relation to present and
prospective markets, business conditions,  and product lines.  Accordingly,  the
committee  adopts  funding  and balance  sheet  management  strategies  that are
intended to maintain  earnings,  liquidity,  and growth  rates  consistent  with
policy and prudent business standards.

Liquidity  maintenance  together with a solid  capital base and strong  earnings
performance are key objectives of the Corporation.  The Corporation's  liquidity
is derived from a strong  deposit  base  comprised  of  individual  and business
deposits.  Deposit  accounts  of  customers  in the mature  market  represent  a
substantial  portion of deposits of  individuals.  The Banks'  deposit base plus
other  funding  sources   (federal  funds  purchased,   other   liabilities  and
shareholders'  equity)  provided  primarily  all funding needs in the first nine
months of 2001.  While  these  sources of funds are  expected  to continue to be
available to provide funds in the future, the mix and availability of funds will
depend upon future economic  conditions.  The  Corporation  does not foresee any
difficulty in meeting its funding requirements.

Primary  liquidity is provided  through  short-term  investments  or  borrowings
(including  federal  funds sold and  purchased)  while  secondary  liquidity  is
provided by the  investment  portfolio.  As of September  30, 2001 federal funds
sold represented  11.9% of total assets,  compared to 2.5% at December 31, 2000.
The Corporation  regularly  monitors  liquidity to ensure adequate cash flows to
cover unanticipated reductions in the availability of funding sources.

                                       17
<PAGE>
Interest rate risk is managed by controlling  and limiting the level of earnings
volatility  arising from rate  movements.  The  Corporation  regularly  performs
reviews and analysis of those  factors  impacting  interest  rate risk.  Factors
include maturity and re-pricing frequency of balance sheet components, impact of
rate changes on interest margin and prepayment  speeds,  market value impacts of
rate  changes,  and other  issues.  Both  actual and  projected  performance  is
reviewed,  analyzed, and compared to policy and objectives to assure present and
future financial viability.

As  indicated  in the  statement  of  cash  flows,  cash  flows  from  financing
activities  increased  $23,682,000  in the first nine  months of 2001 due to the
increase in  deposits.  Comparatively,  in the first nine  months of 2000,  cash
flows from financing  activities  increased  $18,228,000 because of increases in
deposits and  borrowings.  Cash flows from investing  activities were $4,939,000
during the first nine months of 2001.  The increases in investing  activities at
the end of the third  quarter  of 2001,  were  offset  by  maturing  and  called
investment securities.

CAPITAL MANAGEMENT

Total  shareholders'  equity  rose 6.5% to  $38,082,000  at  September  30, 2001
compared with  $35,754,000  at December 31, 2000.  The  Corporation's  equity to
asset ratio was 11.9% at September 30, 2001 and 12.2% at December 31, 2000.  The
increase  in the amount of  capital  was  obtained  primarily  through  retained
earnings.  In the first nine months of 2001, the Corporation  increased its cash
dividends  by 4.8% to $.66 per share  compared  with $.63 in the same  period in
2000.

As  indicated  on the balance  sheet at December  31, 2000 the  Corporation  had
accumulated other  comprehensive  loss of $215,000 compared to accumulated other
comprehensive  income at  September  30, 2001 of  $410,000.  The  increase to an
income  position is  attributable  to the downward  movement of market  interest
rates and the interest rate structures on those securities held in the available
for sale portfolio.

Regulatory Capital Requirements

Bank  holding  companies  and their bank  subsidiaries  are  required by banking
industry  regulators to maintain certain levels of capital.  These are expressed
in the form of certain  ratios.  These  ratios are based on the degree of credit
risk in the Corporation's assets. All assets and off-balance sheet items such as
outstanding loan commitments are assigned risk factors to create an overall risk
weighted  asset  total.  Capital is  separated  into two levels,  Tier I capital
(essentially  total  common  shareholders'  equity  less  goodwill)  and Tier II
capital  (essentially  the allowance  for loan losses  limited to 1.25% of gross
risk-weighted assets). Capital levels are then measured as a percentage of total
risk weighted assets. The regulatory minimum for Tier I capital to risk weighted
assets is 4% and the  minimum  for Total  capital  (Tier I plus Tier II) to risk
weighted  assets is 8%. The Tier I  leverage  ratio  measures  Tier I capital to
average  assets  and  must be a  minimum  of 4%.  As  reflected  in  Table 9, at
September 30, 2001 and at December 31, 2000, the  Corporation was well in excess
of the minimum  capital and leverage  requirements  necessary to be considered a
"well capitalized" banking company.

The FDIC has adopted a risk-based  insurance  premium  system based in part on a
bank's  capital  adequacy.   Under  this  system  a  depository  institution  is
classified as well  capitalized,  adequately  capitalized,  or  undercapitalized
according  to  its  regulatory   capital  levels.   Subsequently,   a  financial
institution's  premium  levels  are  based  on  these  classifications  and  its
regulatory  supervisory  rating  (the  higher the  classification  the lower the
premium).  It is the Corporation's goal to maintain capital levels sufficient to
receive a designation of "well capitalized".

                                       18
<PAGE>
<TABLE>
Table 8

                                                              Capital Ratios
                               -----------------------------------------------------------------------------
                                  Regulatory Minimum                   Fentura Bancorp, Inc.
                                For "Well Capitalized"     Sept. 30,      December 31,        Sept. 30,
                                                              2001            2000              2000
  Total Capital to risk
<S>                                       <C>                <C>             <C>               <C>
      Weighted assets                     10%                17.03%          16.20%            15.71%
  Tier 1  Capital to risk                 6%                 15.77%          15.00%            14.46%
      Weighted assets
  Tier 1 Capital to average
      Assets                              5%                 12.10%          12.10%            11.97%
</TABLE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information concerning quantitative and qualitative disclosures about market
risk  contained on pages 40 through 42 in Fentura's  Annual Report on Form 10-K,
is here incorporated by reference.

Fentura Bancorp, Inc. faces market risk to the extent that both earnings and the
fair value of its  financial  instruments  are  affected  by changes in interest
rates. The Corporation  manages this risk with static GAP analysis and has begun
simulation  modeling.  For the  nine  months  of  2001,  the  results  of  these
measurement  techniques were within the  Corporation's  policy  guidelines.  The
Corporation does not believe that there has been a material change in the nature
of the Corporation's primary market risk exposures,  including the categories of
market risk to which the Corporation is exposed and the particular  markets that
present the primary risk of loss to the  Corporation,  or in how those exposures
are managed in 2001 compared to 2000.

The Corporation's  market risk exposure is mainly comprised of its vulnerability
to interest rate risk. Prevailing interest rates and interest rate relationships
in the future will be primarily  determined by market  factors which are outside
of the Corporation's  control. All information provided in this section consists
of  forward  looking  statements.  Reference  is made to the  section  captioned
"Forward  Looking  Statements" in this quarterly  report for a discussion of the
limitations on the Corporation's responsibility for such statements.

INTEREST RATE SENSITIVITY MANAGEMENT

Interest rate sensitivity  management seeks to maximize net interest income as a
result  of  changing  interest  rates,   within  prudent  ranges  of  risk.  The
Corporation  attempts to accomplish  this objective by  structuring  the balance
sheet so that re-pricing  opportunities exist for both assets and liabilities in
roughly equivalent amounts at approximately the same time intervals.  Imbalances
in these  re-pricing  opportunities  at any  point in time  constitute  a bank's
interest  rate   sensitivity.   The  Corporation   currently  does  not  utilize
derivatives in managing interest rate risk.

An  indicator  of  the  interest  rate  sensitivity  structure  of  a  financial
institution's  balance sheet is the difference between rate sensitive assets and
rate sensitive liabilities, and is referred to as "GAP".

Table 9 sets forth the distribution of re-pricing of the  Corporation's  earning
assets and interest  bearing  liabilities as of September 30, 2001, the interest
rate sensitivity GAP, as defined above, the cumulative interest rate sensitivity
GAP, the interest  rate  sensitivity  GAP ratio (i.e.  interest  rate  sensitive
assets  divided by  interest  rate  sensitive  liabilities)  and the  cumulative
sensitivity  GAP  ratio.  The table  also sets  forth the time  periods in which
earning assets and  liabilities  will mature or may re-price in accordance  with
their contractual terms.

                                       19
<PAGE>
<TABLE>
Table 9                                     GAP ANALYSIS SEPTEMBER 30, 2001

(000's Omitted)                                    Within       Three      One to       After
                                                   Three       Months       Five        Five
                                                   Months     One Year      Years       Years       Total
                                                -------------------------------------------------------------
Earning Assets:
<S>                                              <C>         <C>         <C>         <C>         <C>
  Federal Funds Sold                             $  38,050   $       0   $       0   $       0   $  38,050
  Investment Securities                              4,802       8,924      17,890      20,879      52,495
  Loans                                             90,859      14,247      76,361      21,603     203,070
  Loans Held for Sale                                1,208           0           0           0       1,208
                                                -------------------------------------------------------------
    Total Earning Assets                          $134,919   $   23,171  $  94,251   $  42,482    $294,823
                                                =============================================================

Interest Bearing Liabilities:
  Interest Bearing Demand Deposits               $  37,360   $       0   $       0   $       0   $  37,360
  Savings Deposits                                  78,128           0           0           0      78,128
  Time Deposits Less than $100,000                  15,663      42,791      24,871         185      83,510
  Time Deposits Greater than $100,000               18,032      11,998       3,171           0      33,201
  Other Borrowings                                   1,500          10         245         883       2,638
                                                -------------------------------------------------------------
    Total Interest Bearing Liabilities            $150,683   $  54,799   $  28,287   $    1,068   $234,837
                                                =============================================================
Interest Rate Sensitivity GAP                    $ (15,764)  $ (31,628)  $  65,964   $  41,414   $  59,986
Cumulative Interest Rate
  Sensitivity GAP                                $ (15,764)  $ (47,392)  $  18,572)  $  59,986
Interest Rate Sensitivity GAP                        (0.90)      (0.42)       3.33       39.78
Cumulative Interest Rate
  Sensitivity GAP Ratio                              (0.90)      (0.77)       1.08        1.26
</TABLE>

As indicated in Table 9, the short-term (one year and less) cumulative  interest
rate  sensitivity  gap  is  negative.  Accordingly,  if  market  interest  rates
increase, this negative gap position would have a short- term negative impact on
interest  margin.  Conversely,  if market rates  continue to decline this should
theoretically  have a  short-term  positive  impact.  However,  gap  analysis is
limited  and may not  provide an  accurate  indication  of the impact of general
interest  rate  movements on the net interest  margin  since the  re-pricing  of
various  categories of assets and  liabilities  is subject to the  Corporation's
needs,  competitive pressures,  and the needs of the Corporation's customers. In
addition, various assets and liabilities indicated as re-pricing within the same
period  may in fact  re-price  at  different  times  within  such  period and at
different rate volumes.  These  limitations are evident when considering our Gap
position at  September  30, 2000 and the change in net  interest  income for the
nine months ended  September  30, 2001 compared to the same time period in 2000.
At September 30, 2000 the Corporation was negatively gapped through one year and
since that time  interest  rates have  lowered  considerably,  yet net  interest
income  declined  comparing  the first nine months of 2001 to the same period in
2000. This occurred because certain deposit  categories,  specifically  interest
bearing  demand and  savings,  did not  re-price at the same time or at the same
level as asset portfolios. Additionally, simulation modeling, which measures the
impact of upward and downward movements of interest rates on interest margin and
the market value of equity,  indicates that an upward movement of interest rates
would not significantly reduce net interest income.

                                       20
<PAGE>
FORWARD LOOKING STATEMENTS

This report contains  "forward  looking  statements" as that term is used in the
securities  laws.  All  statements  regarding our expected  financial  position,
performance,  business and  strategies  are forward  looking  statements.  These
statements are based on management's beliefs, assumptions, current expectations,
estimates and projections about the financial  services  industry,  the economy,
and about the  Corporation  itself.  Words  such as  "anticipates,"  "believes,"
"estimates,"   "expects,"   "forecasts,"   "intends,"   "is  likely,"   "plans,"
"projects,"  variations  of such words and similar  expressions  are intended to
identify such forward looking statements. These statements are not guarantees of
future  performance  and involve  certain risks,  uncertainties  and assumptions
("Future Factors") which are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence.  Therefore, actual results and outcomes may
materially differ from what may be expressed or forecast in such forward looking
statements. The Corporation undertakes no obligation to update, amend or clarify
forward looking  statements as a result of new  information,  future events,  or
otherwise.

Future Factors that could cause a difference  between an ultimate actual outcome
and a preceding forward looking statements contained in this report include, but
are not limited to,  changes in interest rate and interest  rate  relationships,
demands for products and services,  the degree of competition by traditional and
non-traditional competitors,  changes in banking laws or regulations, changes in
tax laws,  changes in prices, the impact of technological  advances,  government
and regulatory policy changes,  the outcome of pending and future litigation and
contingencies,  trends in customer's behaviors as well as their ability to repay
loans,  and  the  local  economy.  Further  information  concerning  us and  our
business,   including  additional  factors  that  could  materially  affect  our
financial  results,  is included in our other  filings with the  Securities  and
Exchange Commission.


                           PART II - OTHER INFORMATION

                                      None

                                       21
<PAGE>
                                   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 thereunto duly authorized.


                                            Fentura Bancorp, Inc.



Date  November 14, 2001                     By /s/ Donald L. Grill
                                                 Donald L. Grill
                                                 President & CEO


Date  November 14, 2001                     By /s/ Ronald L. Justice
                                                 Ronald L. Justice
                                                 Chief Financial Officer







                                       22