# 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 March 31, 2005

OR

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

For the transition
period from _______________ to _______________

Commission file number
000-23550

Fentura Financial, Inc.

registrant as specified in its charter)

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

175 N Leroy, P.O. Box
725, Fenton, Michigan 48430(Address of Principal
Executive Offices)

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

Indicate by check mark whether the
registrant (1) has 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

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).  ___ Yes _X_ 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: May 1, 2005

Class  Common
Stock           Shares Outstanding
 1,898,310

---



# Fentura Financial Inc.Index to Form 10-Q

|                                                                                               | Page
|---------------------------------------------------------------------------------------------- | ----
|                                                                                              
|Part I-- Financial Information                                                                 |     
|                                                                                              
|Item 1-- Consolidated Financial Statements (Unaudited)                                         |     
|                                                                                              
|Item 2-- Management's Discussion and Analysis of Financial Condition and Results of Operations |     
|                                                                                              
|Item 3 - Quantitative and Qualitative Disclosures about Market Risk                            |     
|                                                                                              
|Item 4-- Controls and Procedures                                                               |     
|                                                                                              
|Part II-- Other Information                                                                    |     
|                                                                                              
|Item 1-- Legal Proceedings                                                                     |     
|                                                                                              
|Item 2-- Unregistered Sales of Equity Securities and Use of Proceeds                           |     
|                                                                                              
|Item 3-- Defaults Upon Senior Securities                                                       |     
|                                                                                              
|Item 4--Submission of Matters to a Vote of Security Holders                                    |     
|                                                                                              
|Item 5-- Other Information                                                                     |     
|                                                                                              
|Item 6-- Exhibits                                                                              |     
|                                                                                              
|Signatures                                                                                     |     
|                                                                                               |     
|                                                                                              
|Exhibit Index                                                                                  |     

2

---



# PART I 
FINANCIAL INFORMATION

# ITEM 1. CONSOLIDATED
FINANCIAL STATEMENTS    Fentura
Financial, Inc.   Consolidated Balance Sheets

|                                                    | 
|--------------------------------------------------- | 
|
|                                                    | 
|ASSETS                                              | 
|Cash and due from banks                             | 
|Federal funds sold                                  | 
|                                                    | 
|Total cash & cash equivalents                       | 
|Securities-available for sale                       | 
|Securities-held to maturity, (fair value of $19,092 | 
|at March 31, 2005 and $18,788 at December 31, 2004) | 
|                                                    | 
|Total securities                                    | 
|Loans held for sale                                 | 
|Loans:                                              | 
|Commercial                                          | 
|Real estate loans - construction                    | 
|Real estate loans - mortgage                        | 
|Consumer loans                                      | 
|                                                    | 
|Total loans                                         | 
|Less: Allowance for loan losses                     | 
|                                                    | 
|Net loans                                           | 
|Bank Owned Life Insurance                           | 
|Bank premises and equipment                         | 
|Federal Home Loan Bank stock                        | 
|Accrued interest receivable                         | 
|Goodwill                                            | 
|Acquisition intangibles                             | 
|Other assets                                        | 
|                                                    | 
|Total assets                                        | 
|                                                    | 
|                                                   
|LIABILITIES                                         | 
|Deposits:                                           | 
|Non-interest bearing deposits                       | 
|Interest bearing deposits                           | 
|                                                    | 
|Total deposits                                      | 
|Borrowings                                          | 
|Federal Home Loan Bank Advances                     | 
|Repurchase Agreements                               | 
|Subordinated debentures                             | 
|Accrued taxes, interest and other liabilities       | 
|                                                    | 
|Total liabilities                                   | 
|                                                    | 
|SHAREHOLDERS' EQUITY                                | 
|Common stock - no par value                         | 
|1,895,419 shares issued (1,889,463 in Dec. 2004)    | 
|Retained earnings                                   | 
|Accumulated other comprehensive income (loss)       | 
|                                                    | 
|Total shareholders' equity                          | 
|                                                    | 
|Total Liabilities and Shareholders' Equity          | 
|                                                    | 

See notes to consolidated financial
statements.

3

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# Fentura Financial, Inc. Consolidated Statements
of Income (Unaudited)

|                                      | 
|------------------------------------- | 
|
|                                      | 
|
|                                      | 
|
|                                      | 
|INTEREST INCOME                       | 
|Interest and fees on loans            | 
|Interest and dividends on securities: | 
|Taxable                               | 
|Tax-exempt                            | 
|Interest on federal funds sold        | 
|                                      | 
|Total interest income                 | 
|                                     
|INTEREST EXPENSE                      | 
|Deposits                              | 
|Borrowings                            | 
|                                      | 
|Total interest expense                | 
|                                      | 
|                                     
|NET INTEREST INCOME                   | 
|Provision for loan losses             | 
|                                      | 
|Net interest income after             | 
|Provision for loan losses             | 
|                                     
|NONINTEREST INCOME                    | 
|Service charges on deposit accounts   | 
|Gain on sale of mortgage loans        | 
|Trust and investment services income  | 
|Loss on sale of securities            | 
|Loss on sale of fixed assets          | 
|Other income and fees                 | 
|                                      | 
|Total noninterest income              | 
|                                     
|NONINTEREST EXPENSE                   | 
|Salaries and employee benefits        | 
|Occupancy                             | 
|Furniture and equipment               | 
|Loan and collection                   | 
|Advertising and promotional           | 
|Other operating expenses              | 
|                                      | 
|Total noninterest expense             | 
|                                      | 
|                                     
|INCOME BEFORE TAXES                   | 
|Federal income taxes                  | 
|                                      | 
|NET INCOME                            | 
|                                      | 
|Per share:                            | 
|Net income - basic                    | 
|                                      | 
|Net income - diluted                  | 
|                                      | 
|Cash Dividends declared               | 
|                                      | 

See notes to consolidated financial
statements.

4

---



# Fentura Financial, Inc.Consolidated Statements
of Changes in Shareholders Equity (Unaudited)

|                                                        | Three MonthsEnded | Three MonthsEnded
|------------------------------------------------------- | ----------------- | -----------------
|                                                        |                   |                  
|
|                                                        |                  
|COMMON STOCK                                            |                   |                  
|Balance, beginning of period                            |                   | $ 33,110         
|Issuance of shares under                                |                  
|Director stock purchase plan &                          |                  
|Dividend reinvestment program (5,956 and  2,394 shares) |                   | 215              
|Repurchase stock                                        |                   | 0                
|                                                        |                   |                  
|Balance, end of period                                  |                   | 33,325           
|                                                       
|RETAINED EARNINGS                                       |                  
|Balance, beginning of period                            |                   | 10,514           
|Net income                                              |                   | 1,152            
|Cash dividends declared                                 |                   | (455             
|                                                        |                   |                  
|Balance, end of period                                  |                   | 11,211           
|                                                       
|ACCUMULATED OTHER COMPREHENSIVE                         |                  
|INCOME (LOSS)                                           |                  
|Balance, beginning of period                            |                   | (655             
|Change in unrealized gain (loss)                        |                  
|on securities, net of tax                               |                   | (694             
|                                                        |                   |                  
|Balance, end of period                                  |                   | (1,349           
|                                                        |                   |                  
|TOTAL SHAREHOLDERS' EQUITY                              |                   | $ 43,187         
|                                                        |                   |                  

See notes to consolidated financial
statements.

5

---



# Fentura Financial, Inc.Consolidated Statements
of Cash Flows (Unaudited)

|                                                                | 
|--------------------------------------------------------------- | 
|
|                                                                | 
|
|                                                                | 
|OPERATING ACTIVITIES:                                           | 
|Net income                                                      | 
|Adjustments to reconcile net income to cash                     | 
|Provided by Operating Activities:                               | 
|Depreciation and amortization                                   | 
|Provision for loan losses                                       | 
|Loans originated for sale                                       | 
|Proceeds from the sale of loans                                 | 
|Loss on sale of securities                                      | 
|Loss on sales of fixed assets                                   | 
|Gain on sales of loans                                          | 
|Net increase in bank owned life insurance                       | 
|Net (increase) decrease) in interest receivable & other assets  | 
|Net increase (decrease) in interest payable & other liabilities | 
|                                                                | 
|Total Adjustments                                               | 
|                                                                | 
|Net Cash Provided By (Used In) Operating Activities             | 
|                                                                | 
|Cash Flows From Investing Activities:                           | 
|Proceeds from maturities of securities - HTM                    | 
|Proceeds from maturities of securities - AFS                    | 
|Proceeds from calls of securities - HTM                         | 
|Proceeds from calls of securities - AFS                         | 
|Proceeds from sales of securities - AFS                         | 
|Purchases of securities - HTM                                   | 
|Purchases of securities - AFS                                   | 
|Net increase in loans                                           | 
|Net cash from acquisition of WMFC                               | 
|Acquisition of premises and equipment, net                      | 
|                                                                | 
|Net Cash Provided By (Used in) Investing Activities             | 
|Cash Flows From Financing Activities:                           | 
|Net increase (decrease) in deposits                             | 
|Net increase (decrease) in borrowings                           | 
|Purchase of advances from FHLB                                  | 
|Repayments of advances from FHLB                                | 
|Net proceeds from stock issuance and purchase                   | 
|Cash dividends                                                  | 
|                                                                | 
|Net Cash Provided By (Used In) Financing Activities             | 
|                                                               
|NET INCREASE IN CASH AND CASH EQUIVALENTS                       | 
|CASH AND CASH EQUIVALENTS - BEGINNING                           | 
|                                                                | 
|CASH AND CASH EQUIVALENTS - ENDING                              | 
|                                                                | 
|CASH PAID FOR:                                                  | 
|INTEREST                                                        | 
|INCOME TAXES                                                    | 

See notes to consolidated financial
statements

6

---



# Fentura Financial, Inc. Consolidated Statements
of Comprehensive Income (Unaudited)

|                                               | 
|---------------------------------------------- | 
|
|                                               | 
|
|                                               | 
|
|Net Income                                     | 
|Other comprehensive income (loss), net of tax: | 
|Unrealized holding gains (losses) arising      | 
|during period                                  | 
|Less: reclassification adjustment for          | 
|gains/losses included in net income            | 
|                                               | 
|Other comprehensive income (loss)              | 
|                                               | 
|Comprehensive income                           | 
|                                               | 

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

# Note 1. Basis of
Presentation

The consolidated financial statements
at December 31, 2004 and March 31, 2005 include Fentura Financial, Inc. (the Corporation)
and its wholly owned subsidiaries, The State Bank in Fenton, Michigan, Davison State Bank
in Davison, Michigan and West Michigan Community Bank in Hudsonville, Michigan
(collectively the Banks). As further discussed in Note 5, on March 15, 2004, the
Corporation completed the acquisition of West Michigan Financial Corporation (WMFC) and
its subsidiary, West Michigan Community Bank (WMCB). WMFC was merged with and into the
Corporation on the date of the acquisition. WMCB remains a subsidiary of the Corporation.
The acquisition was accounted for as a purchase and accordingly, these financial
statements include the results of operations of WMFC and WMCB subsequent to March 15,
2004. Intercompany transactions and balances are eliminated in consolidation.

The accompanying unaudited
consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim financial
information and the instructions for Form  10Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes required by accounting
principles generally accepted in the United States of America 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 three months ended March 31, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005. 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, 2004.

Reclassifications: Some items
in the prior year financial statements were reclassified to conform to the current
presentation.

Allowance for Loan Losses: The
allowance for loan losses is a valuation allowance for probable incurred credit losses,
increased by the provision for loan losses and decreased by charge-offs less recoveries.
Management estimates the allowance balance required using past loan loss experience, the
nature and volume of the portfolio, information about specific borrower situations and
estimated collateral values, economic conditions, and other factors. Allocations of the
allowance may be made for specific loans, but the entire allowance is available for any
loan that, in managements judgment, should be charged-off. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is
confirmed.

7

---



A loan is impaired when full payment
under the loan terms is not expected. Impairment is evaluated in total for smaller-balance
loans of similar nature such as residential mortgage, consumer, and credit card loans, and
on an individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value of
estimated future cash flows using the loans existing rate or at the fair value of
collateral if repayment is expected solely from the collateral.

Stock Option Plans

The Nonemployee Director Stock Option
Plan grants options to nonemployee directors to purchase the Corporations common
stock on April 1 each year. The purchase price of the shares is the fair market value at
the date of the grant, and there is a three-year vesting period before options may be
exercised. Options to acquire no more than 7,392 shares of stock may be granted under the
Plan in any calendar year and options to acquire not more than 73,920 shares in the
aggregate may be outstanding at any one time.

The Employee Stock Option Plan grants
options to eligible employees to purchase the Corporations common stock at or above,
the fair market value of the stock at the date of the grant. Awards granted under this
plan are limited to an aggregate of 79,200 shares. The administrator of the plan is a
committee of directors. The administrator has the power to determine the number of options
to be granted, the exercise price of the options and other terms of the options, subject
to consistency with the terms of the plan. Options covering 14,575 shares were granted
under this Plan on June 26, 2003.

The following table summarizes stock
option activity:

|                                         | Number of  Options | WeightedAverage Price
|---------------------------------------- | ------------------ | ---------------------
|Options outstanding at December 31, 2003 |                    | 34,761               
|Options granted 2004                     |                    | 12,250               
|Options forfeited 2004                   |                    | (4,799               
|                                         |                    |                      
|Options outstanding at December 31, 2004 |                    | 42,212               
|Options granted 2005                     |                    | 735                  
|                                         |                    |                      
|Options outstanding at March 31, 2005    |                    | 42,947               
|                                         |                    |                      

The stock option plans are accounted for
in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) as permitted under Financial Accounting Standards No.
123, Accounting for Stock Based Compensation (SFAS 123). In accordance with APB 25,
no compensation expense is required nor has been recognized for the options issued under
existing plans as all options had an exercise price equal to or greater than the market
price at the date of grant. Had the Corporation chosen not to elect APB 25, SFAS 123 would
apply and compensation expense would have been recognized, and the Corporations
earnings would have been as follows (in thousands, except per share data):

8

---



|                             | Three Months Ended     March 31,
|---------------------------- | --------------------------------
|
|Net Income                   |                                 
|As reported                  |                                 
|Proforma                     |                                 
|Basic net income per share   |                                 
|As reported                  |                                 
|Proforma                     |                                 
|Diluted net income per share |                                 
|As reported                  |                                 
|Proforma                     |                                 

Proforma net income includes
compensation cost for the Corporations stock option plans based on the fair values
of the grants as of the dates of the awards consistent with the method prescribed by SFAS
123. The fair value of each option grant is estimated using the Black-Scholes
option-pricing model. Assumptions used in the model for options granted during 2004 were
as follows: an expected life of 6 years, a dividend yield of 2.78%, a risk free return of
3.60%, and expected volatility of 24% resulting in a value of $5.97 per option.
Assumptions used in the model for options granted during 2005 were as follows: an expected
life of 6 years, a dividend yield of 2.70%, a risk free return of 4.00% and expected
volatility of 23% resulting in a value of $7.02 per option.

9

---



# 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 months ended March 31, 2005 and 2004

|                                   | Three Months Ended     March 31,
|---------------------------------- | --------------------------------
|
|
|Basic Earnings Per Common Share:   |                                 
|Numerator                          |                                 
|Net Income                         |                                 
|                                   |                                 
|Denominator                        |                                 
|Weighted average common shares     |                                 
|Outstanding                        |                                 
|                                   |                                 
|Basic earnings per common share    |                                 
|                                   |                                 
|Diluted Earnings Per Common Share: |                                 
|Numerator                          |                                 
|Net Income                         |                                 
|                                   |                                 
|Denominator                        |                                 
|Weighted average common shares     |                                 
|Outstanding for basic earnings per |                                 
|Common share                       |                                 
|                                  
|Add:  Dilutive effects of assumed  |                                 
|Exercises of stock options         |                                 
|                                   |                                 
|Weighted average common shares     |                                 
|And dilutive potential common      |                                 
|Shares outstanding                 |                                 
|                                   |                                 
|Diluted earnings per common share  |                                 
|                                   |                                 

Stock options for 14,200 shares of
common stock for the three-month period ended March 31, 2005 and stock options for 19,671
shares of common stock for the three-month period ended March 31, 2004 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.

10

---



# Note 4. Securities

March 31, 2005 securities and
year-end 2004 securities are as follows:

# Available for Sale

|                                 | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses
|-------------------------------- | ---------- | ---------------------- | -----------------------
|                                 |            |                       
|March 31, 2005                   |            |                        |                        
|U.S. Government & federal agency |            | $  31,276              |                        
|State and Municipal              |            | 7,486                  |                        
|Mortgage-backed                  |            | 64,074                 |                        
|Equity securities                |            | 1,045                  |                        
|                                 |            |                       
|Total                            |            | $103,881               |                        
|                                 |            |                       
|December 31, 2004                |           
|U.S. Government & federal agency |            | $  47,835              |                        
|State and Municipal              |            | 7,124                  |                        
|Mortgage-backed                  |            | 54,387                 |                        
|Equity securities                |            | 1,045                  |                        
|                                 |            |                       
|Total                            |            | $110,391               |                        
|                                 |            |                       

# Held to Maturity

|                  | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Losses | Fair Value
|----------------- | -------------- | --------------------- | ----------------------- | ----------
|March 31, 2005    |                |                       |                         |           
|                  |                |                      
|State & municipal |                | $19,228               |                         | $101      
|Mortgage-backed   |                | 21                    |                         | 1         
|                  |                |                      
|Total             |                | $19,249               |                         | $102      
|                  |                |                      
|December 31, 2004 |               
|Mortgage backed   |                | $       23            |                         | $    2    
|                  |                |                      
|State & municipal |                | 18,763                |                         | 181       
|                  |                |                      
|Total             |                | $18,786               |                         | $183      
|                  |                |                      

# Note 5. Acquisition

On October 15, 2003, the Corporation
announced the signing of a definitive agreement to acquire West Michigan Financial
Corporation (WMFC), a commercial bank headquartered in Hudsonville, Michigan.
The purpose of the acquisition was to establish a presence in the West Michigan market
resulting in a foundation to grow the Corporations asset base, primarily loans, in the
West Michigan market. Under the terms of the transaction, the Corporation acquired all of
the outstanding stock of WMFC in exchange for cash. The total cost of the transaction was
$12.9 million. The Corporation closed the transaction on March 15, 2004.

The acquisition has been accounted
for using the purchase method of accounting, and accordingly, the purchase price has been
allocated to the tangible and identified intangible assets purchased and the liabilities
assumed based upon the estimated fair values at the date of acquisition. Identified
intangible assets and purchase accounting fair value adjustments are being amortized under
various methods over the expected lives of the corresponding assets and liabilities.
Goodwill will not be amortized, but will be reviewed for impairment on an annual basis.
Goodwill is tax deductible over 15 years. Identified intangible assets aggregate to $1.7
million and include a core deposit intangible and customer relationship value related to
West Michigan Financial Corporations loan, deposit and wealth management customers.
Goodwill aggregates to $7.9 million. Intangible assets recorded for the acquisition that
are subject to amortization are estimated as follows in thousands of dollars:

|                                  | Amount
|--------------------------------- | ------
|Core deposits intangible          |       
|Customer relationships intangible |       

11

---



In conjunction with the acquisition,
the fair values of significant assets and liabilities assumed are as follows, stated in
thousands of dollars

|                          | 
|------------------------- | 
|Cash and cash equivalents | 
|Securities                | 
|Loans                     | 
|Acquisition intangibles   | 
|Deposits                  | 
|Other borrowings          | 

The following table presents pro
forma information stated in thousands of dollars for the three months ended March 31, 2004
as if the acquisition of WMFC had occurred at the beginning of 2004. The pro forma
information includes adjustments for the amortization of intangibles arising from the
transaction, the elimination of acquisition related expenses, and the related income tax
effects. WMFC has been included in results since March 15, 2004. The pro forma financial
information is not necessarily indicative of the results of operations as they would have
been had the transactions been effected on the assumed dates.

|                                    | 2004
|----------------------------------- | ----
|Interest income                     |     
|Interest expense                    |     
|                                    |     
|Net interest income                 |     
|Provision for loan losses           |     
|                                    |     
|Net interest income after provision |     
|Noninterest income                  |     
|Noninterest expense                 |     
|                                    |     
|Income before federal income tax    |     
|Federal income tax expense          |     
|                                    |     
|Net income                          |     
|                                    |     
|Basic earnings per share            |     
|Diluted earnings per share          |     

# ITEM 2 
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Certain of the Corporations
accounting policies are important to the portrayal of the Corporations financial
condition, since they require management to make difficult, complex or subjective
judgments, some of which may relate to matters that are inherently uncertain. Estimates
associated with these policies are susceptible to material changes as a result of changes
in facts and circumstances. Facts and circumstances, which could affect these judgments,
include, but without limitation, changes in interest rates, in the performance of the
economy or in the financial condition of borrowers. Management believes that its critical
accounting policies include determining the allowance for loan losses and determining the
fair value of securities and other financial instruments.

As indicated in the income statement,
earnings for the three months ended March 31, 2005 were $1,152,000 compared to $822,000
for the same period in 2004. Earnings increased for the first quarter of 2005 due to the
inclusion of a full quarter of earnings for West Michigan Community Bank in 2005 versus
sixteen days of earnings in 2004. Higher net interest income, which more than offset a
slight decrease in noninterest income and an increase in noninterest expense,also
contributed in part to the increase in net income. Net interest income was higher due to
significantly higher loan balances during the first quarter of 2005 compared with the same
period in 2004. The Corporation continues to focus on core banking activities and new
opportunities in current and surrounding markets.

12

---



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 three months ended March 31, 2005
the Corporations return on average assets (annualized) was 0.80% compared to 0.73%
for the same period in 2004. Net income per share  basic and diluted was $0.61 in
the first three months of 2005 compared to $0.44 net income per share  basic and
diluted for the same period in 2004.

Net Interest Income

Net interest income and average
balances and yields on major categories of interest-earning assets and interest-bearing
liabilities for the three months ended March 31, 2005 and 2004 are summarized in Table 2.
The effects of changes in average interest rates and average balances are detailed in
Table 1 below.

# Table 1

|                                   | THREE MONTHS ENDED
       MARCH 31,
 2005 COMPARED TO 2004
  INCREASE (DECREASE)
         DUE TO
|---------------------------------- | ------------------------------------------------------------------------------------------------
|                                   |                                                                                                 
|
|                                   |                                                                                                 
|Taxable Securities                 |                                                                                                 
|Tax-Exempt Securities              |                                                                                                 
|Federal Funds Sold                 |                                                                                                 
|Total Loans                        |                                                                                                 
|Loans Held for Sale                |                                                                                                 
|                                   |                                                                                                 
|Total Earning Assets               |                                                                                                 
|Interest Bearing Demand Deposits   |                                                                                                 
|Savings Deposits                   |                                                                                                 
|Time CD's $100,000 and Over        |                                                                                                 
|Other Time Deposits                |                                                                                                 
|Other Borrowings                   |                                                                                                 
|                                   |                                                                                                 
|Total Interest Bearing Liabilities |                                                                                                 
|                                   |                                                                                                 
|Net Interest Income                |                                                                                                 
|                                   |                                                                                                 

As indicated in Table 1, during the
three months ended March 31, 2005, net interest income increased compared to the same
period in 2004, principally because of the increase in loan interest income and securities
interest income. Loan income increased due to higher balances during the first three
months of 2005 compared to the same period in 2004. Interest expenses increased compared
to the first quarter of 2004 due to the increase in deposit balances and an increase in
borrowings for the Corporation.

Net interest income (displayed with
consideration of full tax equivalency), average balance sheet amounts, and the
corresponding yields for the three months ended March 31, 2005 and 2004 are shown in Table
2. Net interest income for the three months ended March 31, 2005 was $5,542,000, an
increase of $1,871,000, or 51.0%, over the same period in 2004. The primary factor
contributing to the net interest income increase was the acquisition of West Michigan
Financial Corporation on March 15, 2004, and the higher interest income due to an increase
in loan income resulting from higher balances carried in the first quarter of 2005
compared to the same period in 2004. Also, net interest margin increased due to favorable
increases in the prime rate and loan volumes during the quarter. Managements actions
to reprice loans and deposits to improve the margin and short-term rate stability
contributed substantially to the improvement during the first three months of 2005
compared to the first three months of 2004.

13

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Management reviews economic forecasts
and strategy on a monthly basis. Accordingly, the Corporation will continue to
strategically manage the balance sheet structure in an effort to create stability in net
interest income. The Corporation expects to continue to seek out new loan opportunities
while continuing to maintain sound credit quality.

As indicated in Table 2, for the
three months ended March 31, 2005, the Corporations net interest margin (with
consideration of full tax equivalency) was 4.24% compared with 3.62% for the same period
in 2004. This increase is attributable to the impact of higher loan volumes and repricing
of variable rate instruments, which helped increase net interest income and increased the
net interest margin. The Corporations net interest margin was also positively
impacted by the Federal Reserve increasing interest rates during the first quarter in
2005.

Average earning assets increased
30.2% or approximately $122,923,000 comparing the first three months of 2005 to the same
time period in 2004. Loans, the highest yielding component of earning assets, represented
75.7% of earning assets in 2005 compared to 67.7% in 2004. Average interest bearing
liabilities increased 31.5% or $108,491,000 comparing the first three months of 2005 to
the same time period in 2004. Non-interest bearing deposits amounted to 15.3% of average
earning assets in the first three months of 2005 compared with 15.0% in the same time
period of 2004. The increase in average earning assets and interest bearing liabilities
resulted primarily from the acquisition of West Michigan Financial Corporation.

Management continually monitors the
Corporations balance sheet in an effort to insulate net interest income from
significant swings caused by interest rate volatility. If market rates change in 2005,
corresponding changes in funding costs will be considered to avoid potential negative
impacts on net interest income. The Corporations policies in this regard are further
discussed in the section titled Interest Rate Sensitivity Management.

14

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# Table 2 Average Balance
and Rates

|                                         | THREE MONTHS ENDED MARCH 31,
|---------------------------------------- | ----------------------------
|
|                                         |                             
|Securities:                              |                             
|U.S. Treasury and Government Agencies    |                             
|State and Political (1)                  |                             
|Other                                    |                             
|                                         |                             
|Total Securities                         |                             
|Fed Funds Sold                           |                             
|Loans:                                   |                             
|Commercial                               |                             
|Tax Free (1)                             |                             
|Real Estate-Mortgage                     |                             
|Consumer                                 |                             
|                                         |                             
|Total loans                              |                             
|Allowance for Loan Losses                |                             
|Net Loans                                |                             
|                                         |                             
|Loans Held for Sale                      |                             
|                                         |                             
|TOTAL EARNING ASSETS                     |                             
|                                         |                             
|Cash Due from Banks                      |                             
|All Other Assets                         |                             
|                                         |                             
|TOTAL ASSETS                             |                             
|                                         |                             
|LIABILITIES & SHAREHOLDERS' EQUITY:      |                             
|Deposits:                                |                             
|Interest bearing - DDA                   |                             
|Savings Deposits                         |                             
|Time CD's $100,000 and Over              |                             
|Other Time CD's                          |                             
|                                         |                             
|Total Deposits                           |                             
|Other Borrowings                         |                             
|                                         |                             
|INTEREST BEARING LIABILITIES             |                             
|                                         |                             
|Non-Interest bearing - DDA               |                             
|All Other Liabilities                    |                             
|Shareholders' Equity                     |                             
|                                         |                             
|TOTAL LIABILITIES & SHAREHOLDERS' EQUITY |                             
|                                         |                             
|Net Interest Rate Spread                 |                             
|                                         |                             
|Net Interest Income /Margin              |                             
|                                         |                             

(1)    
          Presented on a fully taxable equivalent basis using a federal income tax rate of
          34%.

Allowance and Provision
For Loan Losses

The Corporation maintains formal
policies and procedures to control and monitor credit risk. Management believes the
allowance for loan losses is adequate to provide for probable incurred losses in the loan
portfolio. The Corporations loan portfolio has no significant concentrations in any
one industry or any exposure in foreign loans. The Corporation has not extended credit 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 are not performing as agreed. 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 the allowance for loan losses as a percentage of gross loans. Non-performing loans are
discussed further in the section titled Non-Performing Assets.

The allowance for loan losses
(ALL)reflects managements judgment as to the level considered appropriate to
absorb probable losses in the loan portfolio. Fenturas subsidiary banks
methodology in determining the adequacy of the ALLrelies on several key
elements,which include specific allowances for identified problem loans and a
formula-based risk-allocated allowance for the remainder of the portfolio. This includes a
review of individual loans, historical loss experience, current economic conditions,
portfolio trends, and other pertinent factors. The amount of the provision for loan losses
is based on our review of the historical credit loss experience and such factors that, in
our judgment, deserve consideration under existing economic conditions in estimating
probable credit losses. While we consider the allowance for loan losses to be adequate
based on information currently available, future adjustments to the allowance may be
necessary due to changes in economic conditions, delinquencies, or loss rates. Although
portions of the allowance have been allocated to various portfolio segments, the ALLis general in nature and is available for the portfolio in its entirety. At March 31,
2005, the ALLwas $5,780,000, or 1.41% of total loans substantially the same as the
$5,501,000, or 1.40%, at December 31, 2004. Non performing loan levels, discussed later,
remained stable during the period and net charge-offs were nominal. Management believes
that the allowance to gross loans percentage is appropriate given identified risk in the
loan portfolio based on asset quality.

15

---



Table 3 also summarizes loan losses
and recoveries for the first three months of 2005 and 2004. During the first three months
of 2005 the Corporation experienced net recoveries of $10,000 compared with net
charge-offs of $34,000 or .01% in the first three months of 2004. The provision for loan
losses was $269,000 in the first three months of 2005 and $273,000 for the same time
period in 2004 resulting principally from the growth in the loan portfolio during 2005.

# Table 3 Analysis Of The
Allowance For Loan Losses

|                                        | Three Months Ended March 31,
|--------------------------------------- | ----------------------------
|
|
|                                        |                             
|Balance at Beginning of Period          |                             
|                                        |                             
|Charge-Offs:                            |                             
|Commercial, Financial and Agriculture   |                             
|Real Estate-Mortgage                    |                             
|Installment Loans to Individuals        |                             
|                                        |                             
|Total Charge-Offs                       |                             
|Recoveries:                             |                             
|Commercial, Financial and Agriculture   |                             
|Real Estate-Mortgage                    |                             
|Installment Loans to Individuals        |                             
|                                        |                             
|Total Recoveries                        |                             
|                                        |                             
|Net Charge-Offs                         |                             
|Provision                               |                             
|                                        |                             
|Addition from WMCB acquisition          |                             
|                                        |                             
|Balance at End of Period                |                             
|                                        |                             
|Ratio of Net Charge-Offs to Gross Loans |                             
|                                        |                             

Non-Interest Income

Non-interest income decreased during
the three months ended March 31, 2005 as compared to the same period in 2004, primarily
due to the decrease in service charges on deposits, a small decrease in other income and
fees and loss on sales of securities. Overall non-interest income was $1,586,000 for the
three months ended March 31, 2005 compared to $1,611,000 for the same period in 2004.
These figures represent a decrease of 1.6%. The income statement provides a detailed
breakdown of the components of non-interest income.

The most significant category of
non-interest income is service charges on deposit accounts. These fees were $785,000 in
the first three months of 2005 compared to $878,000 for the same period of 2004. This
represents a decrease of 10.6%. Decreases are attributable to a reduction in overdraft
privilege service charges and regular deposit account service charges in the Banks. The
decrease was due to higher balances in deposit accounts and fewer customers using the
overdraft privilege product during the first quarter of 2005.

16

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Gains on the sale of mortgage loans
originated by the Banks and sold in the secondary market were $182,000 in the three months
ended March 31, 2005 and $96,000 in the same period in 2004. In the first quarter of 2005
gain on the sale of mortgages increased 89.6% over the same period in 2004. The increase
resulted from the increase in residential mortgage products offered and an increase in
activity and a full quarter of West Michigan Community Bank, compared to the first quarter
of 2004.

Trust and investment services income
increased $149,000 (80.1%) in the first three months of 2005 compared to the same period
in the prior year. The increase in fees is attributable to the increase in the average
market value of assets under management, the increase in investment services at The State
Bank and a full quarter of West Michigan Community Bank trust and investment services
fees.

Loss on sale of securities was
$111,000 in the first three months of 2005, due to the Banks selling securities in the
first quarter of 2005. The Banks took the loss to reposition its securities portfolio into
higher yielding securities. The Banks did not sell any securities in the first quarter of
2004.

Other operating income decreased
$58,000 (12.8%) to $395,000 in the first three months of 2005 compared to $453,000 in the
same time period in 2004. Other operating income decreased due to the gain of $79,000
resulting from the surrender of insurance related to a terminated benefit plan in the
first quarter of 2004.

Non-Interest Expense

Total non-interest expense increased
34.2% to $5,093,000 in the three months ended March 31, 2005, compared with $3,795,000 in
the same period of 2004. This increase was largely attributable to the inclusion of a full
quarter of expenses of West Michigan Community Bank, an increase in salaries and benefits
expense and occupancy expenses.

Salary and benefit costs,
Fenturas largest non-interest expense category, were $2,964,000 in the first three
months of 2005, compared with $2,076,000, or an increase of 42.8%, for the same time
period in 2004. Increased costs were primarily a result of the acquisition of West
Michigan Financial Corporation on March 15, 2004, the addition of the Brighton Loan
Production office in June 2004, a modest salary increase for employees and an increase in
employee benefit costs and modest staffing increases.

Occupancy expenses at $436,000
increased in the three months ended March 31, 2005 compared to the same period in 2004 by
$94,000 or 27.5%. The increases were attributable to the acquisition of West Michigan
Financial Corporation on March 15, 2004, the addition of the Brighton Loan Production
office in June 2004, an increase in facility repairs and maintenance contracts expense.

During the three months ended March
31, 2005 furniture and equipment expenses were $544,000 compared to $413,000 for the same
period in 2004, an increase of 31.7%. The increases in expenses were attributable to the
acquisition of West Michigan Financial Corporation on March 15, 2004, the addition of the
Brighton Loan Production office in June 2004, an increase in equipment maintenance
contracts and equipment depreciation.

Loan and collection expenses, at
$97,000, were up $18,000 during the three months ended March 31, 2005 compared to the same
time period in 2004. In the first quarter loan and collection expense increased 22.8%
compared to the first quarter of 2004. The increase was primarily attributable to an
increase in other loan expense relating to other real estate and increases in other loan
costs.

Advertising expenses were $127,000 in
the three months ended March 31, 2005, up 17.6% compared with $108,000 for the same period
in 2004. The increases were primarily due to the increase in media, shareholder,
promotional expenses and the full quarter of West Michigan Community Bank advertising
costs.

17

---



Other operating expenses were
$925,000 in the three months ended March 31, 2005 compared to $777,000 in the same time
period in 2004, an increase of $148,000 or 19.0%. The increases were attributable to the
acquisition of West Michigan Financial Corporation on March 15, 2004, the addition of the
Brighton Loan Production office in June, 2004, an increase in the amount of correspondent
bank service charges due to maintaining lower balances and an increase in other outside
services and consulting expenses.

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
securities portfolio is structured to provide a source of liquidity through maturities and
to 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. Customer deposits are the
primary source of funding for earning assets while short-term debt and other sources of
funds could be further utilized if market conditions and liquidity needs change.

The Corporations total assets
were $589 million at March 31, 2005 compared to December 31, 2004 total assets of $585
million. Loans comprised 69.8% of total assets at March 31, 2005 compared to 67.3% at
December 31, 2004. Loans grew $17.6 million for the Corporation. The ratio of non-interest
bearing deposits to total deposits was 16.6% at March 31, 2005 compared to 16.4% at
December 31, 2004. Interest bearing deposit liabilities totaled $396 million at March 31,
2005 compared to $410 million at December 31, 2004. Total deposits decreased $16.8 million
with non-interest bearing demand deposits decreasing $1.9 million and interest bearing
deposits decreasing $14.9 million. Short-term borrowings increased $12.2 million due to
the increase in loan demand and decrease in deposit volume. FHLB advance balances
increased $9.5 million during the period due to the increase in loan demand at the Banks
and reduction in deposit volumes. Repurchase agreement balances remained steady comparing
the two periods. Repurchase agreements are instruments with deposit type characteristics,
which are secured by bank securities. The repurchase agreements were leveraged against
securities to increase net interest income.

Bank premises and equipment increased
$795,000 to $14.6 million at March 31, 2005 compared to $13.8 million at December 31,
2004. The increase was due to the acquisition of land at one of Bank subsidiaries and the
purchase of a new mainframe computer system.

Non-Performing Assets

Non-performing assets are assets that
have more than a normal risk of loss and include loans on which interest accruals have
ceased, loans that have been renegotiated, and real estate acquired through foreclosure.
Past due loans are loans which are delinquent 90 days or more, but have not been placed on
non-accrual status. Table 4 reflects the levels of these assets at March 31, 2005 and
December 31, 2004.

Non-performing assets decreased at
March 31, 2005 compared to December 31, 2004. This decrease was primarily due to a
$237,000 decrease in Other Real Estate and REO-in-Redemption, which decreased due to the
sale of two residential properties in the first three months of 2005. One residential
property comprises $727,000 of the remaining balance and marketability is dependent on the
real estate market. Non-performing loans decreased as compared to December 31, 2004 due to
the pay off of the remaining balance of two non-accrual loans.

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.

18

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# Table 4 
Non-Performing Assets and Past Due Loans

|                                       | March 31,2005 | December 31,2004
|-------------------------------------- | ------------- | ----------------
|                                       |               |                 
|Non-Performing Loans:                  |               |                 
|Loans Past Due 90 Days or More & Still |              
|Accruing                               |               | $     84        
|Non-Accrual Loans                      |               | 995             
|Renegotiated Loans                     |               | 475             
|                                       |               |                 
|Total Non-Performing Loans             |               | 1,554           
|                                       |               |                 
|Other Non-Performing Assets:           |              
|Other Real Estate                      |               | 100             
|REO in Redemption                      |               | 727             
|Other Non-Performing  Assets           |               | 44              
|                                       |               |                 
|Total Other Non-Performing Assets      |               | 871             
|                                       |               |                 
|Total Non-Performing Assets            |               | $2,425          
|                                       |               |                 
|Non-Performing Loans as a % of         |              
|Total Loans                            |               | 0.38            
|Allowance for Loan Losses as a % of    |              
|Non-Performing Loans                   |               | 371.94          
|Accruing Loans Past Due 90 Days or     |              
|More to Total Loans                    |               | 0.02            
|Non-performing Assets as a % of        |              
|Total Assets                           |               | 0.41            

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, short-term borrowings, FHLB advances,
repurchase agreements, other liabilities and shareholders equity) provided primarily
all funding needs in the first quarter of 2005. 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.

19

---



Primary liquidity is provided through
short-term investments or borrowings (including federal funds sold and purchased) while
the securities portfolio provides secondary liquidity. The securities portfolio has
decreased $6.0 million since December 31, 2004 due to the calls of securities and the
increase in loan demand. The Corporation has decided to invest the excess funds in the
securities and loan portfolios to increase yield and income versus keeping the excess
funds in federal funds sold at a lower yield. The Corporation regularly monitors liquidity
to ensure adequate cash flows to cover unanticipated reductions in the availability of
funding sources.

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 are reviewed,
analyzed, and compared to policy and objectives to assure present and future financial
viability.

The Corporation had cash flows from
financing activities resulting primarily from the increase of borrowings and decrease of
demand and savings deposits. In the first three months of 2005, these borrowings increased
$24,574,000 while these deposits decreased $16,831,000. Cash used by investing activities
was $13,821,000 in first three months of 2005 compared to cash used of $7,072,000 in first
three months of 2004. The change in investing activities was due to the increase in the
origination of loans in the first three months of 2005 compared to the first three months
of 2004, which included the acquisition of West Michigan Community Bank on March 15, 2004
and securities sales.

Capital Management

Total shareholders equity
increased 0.5% to $43,187,000 at March 31, 2005 compared with $42,969,000 at December 31,
2004. The Corporations equity to asset ratio remained steady at 7.3% at March 31,
2005 and December 31, 2004. The increase in the amount of capital resulted primarily from
net income, partially offset by dividends declared.

As indicated on the balance sheet at
December 31, 2004, the Corporation had an accumulated other comprehensive loss of $655,000
compared to accumulated other comprehensive loss at March 31, 2005 of $1,349,000. The
increase in the loss position is attributable to the fluctuation of the market price of
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 plus qualifying cumulative preferred
securities (limited to 33% of common 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 3%. As reflected
in Table 5, at March 31, 2005 and at December 31, 2004, the Corporation was well in excess
of the minimum capital and leverage requirements necessary to be considered a well
capitalized banking company.

20

---



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 retain a designation of
well capitalized.

# Table 5

|                          | Capital Ratios
|------------------------- | --------------
|                          |               
|
|Total Capital to risk     |               
|Weighted assets           |               
|Tier 1  Capital to risk   |               
|Weighted assets           |               
|Tier 1 Capital to average |               
|Assets                    |               

# ITEM 3.  QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information concerning
quantitative and qualitative disclosures about market risk contained on page 50 in the
Corporations Annual Report on Form 10-K for the year ended December 31, 2004, is
here incorporated by reference.

Fentura Financial, 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 first three months of 2005, 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 have been managed
in 2005 compared to 2004.

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.

21

---



Table 6 sets forth the distribution
of re-pricing of the Corporations earning assets and interest bearing liabilities as
of March 31, 2005, 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.

# Table 6 GAP ANALYSIS
MARCH 31, 2005

|(000's Omitted)                     | Within  
  Three  
 Months | Three   
 Months to 
 One Year | One to  
 Five   
 Years | After
  Five
  Years | Total
|----------------------------------- | -------------------------- | ------------------------------ | ------------------------ | -------------------- | -----
|                                    |                            |                               
|Earning Assets:                     |                            |                                |                          |                      |      
|Federal Funds Sold                  |                            | $            0                 |                          | $            0       |      
|Securities                          |                            | 27,164                         |                          | 22,158               |      
|Loans                               |                            | 52,358                         |                          | 91,584               |      
|Loans Held for Sale                 |                            | 3,278                          |                          | 0                    |      
|FHLB Stock                          |                            | 2,276                          |                          | 0                    |      
|                                    |                            |                               
|Total Earning Assets                |                            | $   85,076                     |                          | $ 113,742            |      
|                                    |                            |                               
|Interest Bearing Liabilities:       |                           
|Interest Bearing Demand Deposits    |                            | $ 108,247                      |                          | $            0       |      
|Savings Deposits                    |                            | $ 129,471                      |                          | 0                    |      
|Time Deposits Less than $100,000    |                            | 18,774                         |                          | 31,200               |      
|Time Deposits Greater than $100,000 |                            | 20,308                         |                          | 23,597               |      
|Short term borrowings               |                            | 17,356                         |                          | 0                    |      
|Other Borrowings                    |                            | 11,554                         |                          | 8,117                |      
|Repurchase agreements               |                            | 5,000                          |                          | 0                    |      
|Subordinated debentures             |                            | 12,000                         |                          | 0                    |      
|                                    |                            |                               
|Total Interest Bearing Liabilities  |                            | $ 322,710                      |                          | $   62,914           |      
|                                    |                            |                               
|Interest Rate Sensitivity GAP       |                            | ($237,634                      | )                        | $   50,828           |      
|Cumulative Interest Rate            |                           
|Sensitivity GAP                     |                            | ($237,634                      | )                        | ($186,806            | )    
|Interest Rate Sensitivity GAP       |                            | (0.26)                         |                          | 1.81                 |      
|Cumulative Interest Rate            |                           
|Sensitivity GAP Ratio               |                            | (0.26)                         |                          | (0.52)               |      

As indicated in Table 6, the
short-term (one year and less) cumulative interest rate sensitivity gap is negative.
Accordingly, if market interest rates continue to increase, this negative gap position
could have a short-term negative impact on interest margin. Conversely, if market rates
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 the Corporations Gap position at March 31, 2005 and the
change in net interest margin for the three months ended March 31, 2005 compared to the
same time period in 2004. At March 31, 2005 the Corporation was negatively gapped through
one year and since that time interest rates have increased further, yet net interest
margin increased when the first three months of 2005 is compared to the same period in
2004. This occurred because certain deposit categories, specifically interest bearing
demand and savings deposits, repriced at the same time but not at the same level as the
asset portfolios resulting in a increase in net interest margin. In addition to the GAP
analysis, the Corporation, as a part of managing interest rate risk, also performs simulation
modeling, which measures the impact of upward and downward movements of interest rates on
interest margin and the market value of equity.  Assuming continued success at achieving
repricing of loans to higher rates at a faster pace than repricing of deposits, simulation
modeling indicates that an upward movement of interest rates could have a positive impact on
net interest imcome. Because management believes that it should be able to continue these
repricing relationships, it anticipates improved performance in net interest margin as a result of a
rising interest rate environment.

22

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# Forward Looking
Statements

This report includes
forward-looking statements as that term is used in the securities laws. All
statements regarding our expected financial position, business and strategies are
forward-looking statements. In addition, the words anticipates,
believes, estimates, seeks, expects,
plans, intends, and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. The presentation and
discussion of the provision and allowance for loan losses and statements concerning future
profitability or future growth or increases, are examples of inherently forward looking
statements in that they involve judgments and statements of belief as to the outcome of
future events. Our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse affect on
our operations and our future prospects include, but are not limited to, changes in:
interest rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve Board, the quality or composition of the loan or investment portfolios,
demand for loan products, deposit flows, competition, demand for financial services in our
market area and accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. 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.

# ITEM 4: CONTROLS AND
PROCEDURES

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

|(b) | Changes in Internal Controls. During the period covered by this report,
          there have been no changes in the Corporations internal control over
          financial reporting that have materially affected or are reasonably likely to
          materially affect the Corporations internal control over financial
          reporting.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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# PART II  OTHER
INFORMATION

# Item 1.    Legal
Proceedings.  None

# Item 2.    Unregistered
Sales of Equity Securities and Use of Proceeds.  None

# Item 3.    Defaults Upon
Senior Securities.  None

# Item 4.   
          Submission of Matters to a Vote of Securities Holders. - None

# Item 5.    Other
Information.  None

# Item 6.    Exhibits.

|(a) | Exhibits
|--- | --------

| | 31.1 | Certificate
 of the 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 the 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 the Chief Executive 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.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certificate
of the 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.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

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Signatures

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

|Dated:  May 16, 2005  
Dated:  May 16, 2005 | Fentura Financial Inc./s/ Donald L. Grill      
Donald L. Grill
President & CEO/s/ Douglas J. Kelley    
Douglas J. Kelley
Chief Financial Officer
|------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------

25

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# EXHIBIT INDEX

|Exhibit | Description
|------- | -----------

|31.1 | Certificate
of the 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 the 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 the Chief  Executive  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.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.2 | Certificate
 of the 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.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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