# 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, 2004OR[ ] 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.(Exact name of registrant as
specified in its charter)

|                                | 
|------------------------------- | 
|Michigan                        | 
|(State or other jurisdiction of | 
|incorporation or organization)  | 

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,
2004

Class  Common Stock           Shares
Outstanding  1,883,213

---



# 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  Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities     |     
|                                                                                              
|Item 3  Defaults Upon Senior Securities                                                       |     
|                                                                                              
|Item 4 Submission of Matters to a Vote of Security Holders                                    |     
|                                                                                              
|Item 5  Other Information                                                                     |     
|                                                                                              
|Item 6  Exhibits and Reports on Form 8-K                                                      |     
|                                                                                              
|Signatures                                                                                     |     
|                                                                                              
|Exhibit Index                                                                                  |     
|                                                                                              
|                                                                                               |     

2

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# 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 $14,358 | 
|at March 31, 2004 and $12,519 at December 31, 2003) | 
|                                                    | 
|Total securities                                    | 
|Loans held for sale                                 | 
|Loans:                                              | 
|Commercial                                          | 
|Real estate loans - mortgage                        | 
|Real estate loans - construction                    | 
|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 and other intangible assets                | 
|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                         | 
|1,879,585 shares issued (1,880,485 in Dec. 2003)    | 
|Retained earnings                                   | 
|Accumulated other comprehensive income              | 
|                                                    | 
|Total shareholders' equity                          | 
|                                                    | 
|Total Liabilities and Shareholders' Equity          | 
|                                                    | 

See notes to consolidated financial
statements.

3

---



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

|                                    | Three Months EndedMarch 31,
|----------------------------------- | ---------------------------
|
|                                    |                            
|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 mortgages           |                            
|Trust income                        |                            
|Gain 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                 |                            
|Applicable 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     |                   |                  
|Issuance of shares under         |                   |                  
|Director stock purchase plan &   |                   |                  
|Dividend reinvestment program    |                   |                  
|Repurchase stock                 |                   |                  
|                                 |                   |                  
|Balance, end of period           |                   |                  
|RETAINED EARNINGS                |                   |                  
|Balance, beginning of period     |                   |                  
|Net income                       |                   |                  
|Cash dividends declared          |                   |                  
|                                 |                   |                  
|Balance, end of period           |                   |                  
|ACCUMULATED OTHER COMPREHENSIVE  |                   |                  
|INCOME (LOSS)                    |                   |                  
|Balance, beginning of period     |                   |                  
|Change in unrealized gain (loss) |                   |                  
|on securities, net of tax        |                   |                  
|                                 |                   |                  
|Balance, end of period           |                   |                  
|                                 |                   |                  
|TOTAL SHAREHOLDERS' EQUITY       |                   |                  
|                                 |                   |                  

See notes to consolidated financial
statements.

5

---



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

|                                                                | Three Months EndedMarch 31,
|--------------------------------------------------------------- | ---------------------------
|                                                                |                            
|
|                                                                |                            
|OPERATING ACTIVITIES:                                           |                            
|Net income                                                      |                            
|Adjustments to reconcile net income to cash                     |                            
|Provided by Operating Activities:                               |                            
|Depreciation and amortization                                   |                            
|Provision for loan losses                                       |                            
|Amortization (accretion) on securities                          |                            
|Loans originated for sale                                       |                            
|Proceeds from the sale of loans                                 |                            
|Gain on sale of securities                                      |                            
|Gain 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                               |                            
|Capital expenditures                                            |                            
|                                                                |                            
|Net Cash Provided By (Used in) Investing Activities             |                            
|Cash Flows From Financing Activities:                           |                            
|Net increase (decrease) in deposits                             |                            
|Net increase (decrease) in borrowings                           |                            
|Net increase (decrease) in repurchase agreements                |                            
|Net proceeds from stock issuance and purchase                   |                            
|Cash dividends                                                  |                            
|                                                                |                            
|Net Cash Provided By (Used In) Financing Activities             |                            
|NET INCREASE(DECREASE) 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)

|                                               | Three Months EndedMarch 31,
|---------------------------------------------- | ---------------------------
|
|Net Income                                     |                            
|Other comprehensive income (loss), net of tax: |                            
|Unrealized holding gains (losses) arising      |                            
|during period                                  |                            
|Less: reclassification adjustment for          |                            
|gains 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, 2003 include Fentura Financial, Inc. (the Corporation) and its
wholly owned subsidiaries, The State Bank in Fenton, Michigan and Davison State Bank in
Davison, Michigan. The March 31, 2004 consolidated financial statements also include West
Michigan Community Bank in Hudsonville, Michigan (collectively the Banks). As further
discussed in Note 6, 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, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004. 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, 2003.

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.

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.

All share and per share data has
been adjusted for the 10% stock dividend paid on February 13, 2004.

7

---



# 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, 2004 and 2003:

|                                   | Three Months EndedMarch 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 19,671 shares of
common stock for the three-month period ended March 31, 2004 and stock options for 6,311
shares of common stock for the three-month period ended March 31, 2003 were not considered
in computing diluted earnings per common share because they were not dilutive.

Note 3. 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 6,720 shares of stock may be granted
under the Plan in any calendar year and options to acquire not more than 67,200 shares in
the aggregate may be outstanding at any one time.

8

---



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 72,000 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 ofOptions | WeightedAverage Price
|---------------------------------------- | ---------------- | ---------------------
|Options outstanding at December 31, 2002 |                  |                      
|Options granted 2003                     |                  |                      
|Options exercised 2003                   |                  |                      
|Options forfeited 2003                   |                  |                      
|                                         |                  |                      
|Options outstanding at December 31, 2003 |                  |                      
|Options granted 2004                     |                  |                      
|                                         |                  |                      
|Options outstanding at March 31, 2004    |                  |                      
|                                         |                  |                      

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. 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):

|                              | 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 plan 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 2003 were
as follows: an expected life of 6 years, a dividend yield of 3.6%, a risk free return of
2.78% and expected volatility of 24% resulting in a value of $5.97 per option.

# Note 4. 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.

9

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Note 5. Securities

March 31, 2004 securities and
year-end 2003 securities are as follows:

|Available for SaleMarch 31, 2004 | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses
|-------------------------------- | ---------- | ---------------------- | -----------------------
|                                 |           
|U.S. Government & federal agency |            |                        | $                      
|State and Municipal              |            |                        |                        
|Mortgage-backed                  |            |                        |                        
|Corporate                        |            |                        |                        
|Equity securities                |            |                        |                        
|                                 |            |                       
|Total                            |            |                        | $                      
|                                 |            |                       
|December 31, 2003                |            |                       
|U.S. Government & federal agency |            |                        | $                      
|State and Municipal              |            |                        |                        
|Mortgage-backed                  |            |                        |                        
|Corporate                        |            |                        |                        
|Equity securities                |            |                        |                        
|                                 |            |                       
|Total                            |            |                        | $                      
|                                 |            |                       

|Held to MaturityMarch 31, 2004 | Amortized Cost | Gross Unrealized Gain | Gross Unrealized Losses | Fair Value
|------------------------------ | -------------- | --------------------- | ----------------------- | ----------
|                               |               
|State & municipal              |                |                       | $                       | 13,875    
|                               |                |                      
|Mortgage-backed                |                |                       |                         | 30        
|                               |                |                      
|Total                          |                |                       | $                       | 13,905    
|                               |                |                      
|December 31, 2003              |                |                      
|State & municipal              |                |                       | $                       | 12,169    
|                               |                |                      
|Total                          |                |                       | $                       | 12,169    
|                               |                |                      

Note 6. 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 continue to grow the Corporations
asset base and establish a presence 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 assets tangible and identified intangible assets purchased and the
liabilities assumed based upon the estimated fair values at the date of acquisition. The
purchase accounting fair value adjustments are being amortized under various methods and
over the lives of the corresponding assets and liabilities. Goodwill will not be
amortized, but will be reviewed for impairment on a yearly basis. This analysis is still
being finalized. Goodwill and other identifiable intangible assets are estimated to
aggregate to $10 million. Management expects to complete their analysis during the second
quarter of 2004.

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          | 

10

---



The following table presents pro
forma information stated in thousands of dollars for the three months ended March 31, 2004
and the year ended December 31, 2003 as if the acquisition of WMFC had occurred at the
beginning of 2004 and 2003. 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. 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 | 2003
|----------------------------------- | ---- | ----
|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          |      |     

11

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# 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, 2004 were $822,000 compared to
$821,000 for the same period in 2003. Earnings increased for the first quarter of 2004 due
to higher net interest income and slightly higher noninterest income, which more than
offset an increase in noninterest expense comparing year to year. Net interest income was
higher due to significantly higher loan and security balances during the first quarter of
2004 compared with the same period in 2003. The Corporation continues to focus on core
banking activities and new opportunities in current and surrounding markets.

As the acquisition of WMFC did not
occur until March 15, 2004, the results of operations of that new subsidiary did not
significantly impact the Corporations results for the first quarter of 2004.

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, 2004
the Corporations return on average assets (annualized) was 0.73% compared to 0.97%
for the same period in 2003. Net income per share  basic and diluted was $0.44 in
the first three months of 2004 compared to $0.43 net income per share  basic and
diluted for the same period in 2003.

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, 2004 and 2003 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 ENDEDMARCH 31,
2004 COMPARED TO 2003INCREASE (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                |                                                                            
|                                   |                                                                            

12

---



As indicated in Table 1, during
the three months ended March 31, 2004, net interest income increased compared to the same
period in 2003, principally because of the increase in securities interest income and the
increase in loan interest income. Both loan and investment interest income increased due
to higher balances during the first three months of 2004 compared to the same period in
2003. Interest expenses increased compared to the first quarter of 2003 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, 2004 and 2003 are shown in Table
2. Net interest income for the three months ended March 31, 2004 was $3,671,000 an
increase of $426,000, or 13.1%, over the same period in 2003. The primary factor
contributing to the net interest income increase was the higher interest income due to an
increase in loan and investment income resulting from higher balances carried in the first
quarter of 2004 compared to the same period in 2003. Also, net interest income increased
due to an increased volume at a lower spread and as a result the net interest margin
declined 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 2004 compared to the first three months of
2003.

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, 2004, the Corporations net interest margin (with
consideration of full tax equivalency) was 3.62% compared with 4.26% for the same period
in 2003. This decline is attributable to the impact of an increase in volume at a lower
spread, which helped increase net interest income but decreased the net interest margin.
The Corporations net interest margin was also negatively impacted by the Federal
Reserve reducing interest rates at the end of the second quarter in 2003 and by the
Corporations investment of excess cash in lower yielding securities.

Average earning assets increased
31.9% or approximately $98,521,000 comparing the first three months of 2004 to the same
time period in 2003. Loans, the highest yielding component of earning assets, represented
67.7% of earning assets in 2004 compared to 73.6% in 2003. Average interest bearing
liabilities increased 34.7% or $88,802,000 comparing the first three months of 2004 to the
same time period in 2003. Non-interest bearing deposits amounted to 15.0% of average
earning assets in the first three months of 2004 compared with 14.9% in the same time
period of 2003.

Management continually monitors
the Corporations balance sheet to insulate net interest income from significant
swings caused by interest rate volatility. If market rates change in 2004, 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.

13

---



# Table 2

|                                         | 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%.

14

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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 ALLincludes a review of individual
loans, historical loss experience, current economic conditions, portfolio trends, and
other pertinent factors. 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, 2004, the ALLwas $4,812,000, or 1.31% of total
loans. This compares with $3,414,000, or 1.35%, at December 31, 2003. The decrease of the
ALLas a percentage of total loans reflects a small increase in the allowance for
loan losses and a large increase in total loans. Management believes that the allowance to
gross loans percentage is appropriate given identified risk in the loan portfolio based on
asset quality.

Table 3 also summarizes loan losses
and recoveries for the first three months of 2004 and 2003. During the first three months
of 2004 the Corporation experienced net charge-offs of $34,000 or .01% of loans
(annualized) compared with net charge-offs of $261,000 or .11% in the first three months
of 2003. The provision for loan losses was $273,000 in the first three months of 2004 and
$296,000 for the same time period in 2003. The provision was decreased primarily as a
result of the higher quality of loans.

Table 3                ANALYSIS OF THE
ALLOWANCE FOR LOAN LOSSES

|(000's omitted)                         | Three Months EndedMarch 31,2004 | Three Months EndedMarch 31,2003
|--------------------------------------- | ------------------------------- | -------------------------------
|                                        |                                 |                                
|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 |                                 |                                
|                                        |                                 |                                

15

---



NON-INTEREST INCOME

Non-interest income increased during
the three months ended March 31, 2004 as compared to the same period in 2003, primarily
due to the increase in service charges on deposits, and an increase in other income and
fees. Overall non-interest income was $1,611,000 for the three months ended March 31, 2004
compared to $1,575,000 for the same period in 2003. These figures represent an increase of
2.3%. 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 $878,000 in
the first three months of 2004 compared to $808,000 for the same period of 2003. This
represents an increase of 8.7%. Increases are attributable to service charges from growth
in core deposits and the continued success of the overdraft privilege product.

Gains on the sale of mortgage loans
originated by the Banks and sold in the secondary market were $96,000 in the three months
ended March 31, 2004 and $355,000 in the same period in 2003. In the first quarter of 2004
gain on the sale of mortgages decreased 73.0% over the same period in 2003. The decline
resulted from the decline in residential mortgage refinance activity and lower new loan
volumes due to the higher interest rates compared to the historically low market interest
rates during the first quarter of 2003.

Trust income increased $46,000
(41.1%) in the first three months of 2004 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 and the addition of several new trust accounts within the
Corporations Trust Department.

Gain on sale of securities decreased
$12,000 in the first three months of 2004, due to the Banks not selling any securities in
the first quarter of 2004. The Banks sold securities in the first quarter of 2003, which
produced a gain of $12,000 this gain made up less than 1 percent of the 2003 first three
months noninterest income.

Loss on sale of fixed assets
decreased $2,000 in the first three months, due to the sale of equipment in of one of the
Bank subsidiaries.

Other operating income increased
$189,000 (65.6%) to $477,000 in the first three months of 2004 compared to $288,000 in the
same time period in 2003. Other operating income increased due to the gain of $79,000
resulting from the surrender of insurance related to a terminated benefit plan, an
insurance claim for damage to other real estate property in one of the Bank subsidiaries,
increased cash surrender value of life insurance and the increase in debit and ATM income.

16

---



Non-Interest Expense

Total non-interest expense increased
14.9% to $3,795,000 in the three months ended March 31, 2004, compared with $3,303,000 in
the same period of 2003. This increase was largely attributable to an increase in salaries
and benefits expense and occupancy expenses.

Salary and benefit costs,
Fenturas largest non-interest expense category, were $2,076,000 in the first three
months of 2004, compared with $1,836,000, or an increase of 13.1%, for the same time
period in 2003 Increased costs were primarily a result of a modest salary increase for
employees and an increase in employee benefit costs and modest staffing increases.

Occupancy expenses at $342,000
increased in the three months ended March 31, 2004 compared to the same period in 2003 by
$49,000 or 16.7%. The increases were attributable to increases in facility repairs, an
increase in rent due to the opening of the Grand Blanc executive office in November of
2003 and maintenance contracts expense.

During the three months ended March
31, 2004 furniture and equipment expenses were $413,000 compared to $359,000 for the same
period in 2003, an increase of 15.0%. The increases in expenses were attributable to
increases in equipment maintenance contracts and equipment depreciation.

Loan and collection expenses, at
$79,000, were up $20,000 during the three months ended March 31, 2004 compared to the same
time period in 2003. In the first quarter loan and collection expense increased 33.9%
compared to the first quarter of 2003. 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 $108,000 in
the three months ended March 31, 2004, up 21.3% compared with $89,000 for the same period
in 2003. The increases were primarily due to the increase in media, shareholder and
promotional expenses.

Other operating expenses were
$777,000 in the three months ended March 31, 2004 compared to $667,000 in the same time
period in 2003, an increase of $110,000 or 16.5%. The increases were attributable to an
increase in the amount of overdrawn deposit account charge-offs and an increase in other
outside services and consulting expenses.

17

---



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.

On March 15, 2004, the Corporation
acquired WMFC, as more fully described in Note 6. This transaction significantly increased
the Corporations consolidated assets and liabilities, as compared to year-end 2003.

The Corporations total
assets were $555 million at March 31, 2004 compared to December 31, 2003 total assets of
$420 million. Loans comprised 66.5% of total assets at March 31, 2004 compared to 60.3% at
December 31, 2003. Loans grew $114.0 million for the Corporation with $95.7 million due to
the acquisition of West Michigan Financial Corporation. The loans for the other two
subsidiary banks grew $18.3 million with commercial loans and real estate- construction
loans leading the advance, which together grew $18.7 million while other loan categories
experienced small decreases. The ratio of non-interest bearing deposits to total deposits
was 15.4% at March 31, 2004 compared to 16.8% at December 31, 2003. Interest bearing
deposit liabilities totaled $386 million at March 31, 2004 compared to $290 million at
December 31, 2003. Total deposits increased $107.7 million with non-interest bearing
demand deposits increasing $11.7 million and interest bearing deposits increasing $96.0
million due to the acquisition of West Michigan Financial Corporation. Short-term
borrowings increased $1,233,000 due to the acquisition of West Michigan Financial
Corporation. The Corporation assumed a note payable to a financial institution drawn by
WMFC and secured by all of the stock of WMCB. This note had a balance of $3.2 million at
March 31, 2004, bears interest at prime rate less.75% and matures on March 31, 2010. The
Corporation paid this note off in full as of April 15, 2004. FHLB advance balances
increased $21.0 million during the period due to the acquisition of West Michigan
Financial Corporation. 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 $4.8 million to $14.4 million at March 31, 2004 compared to $9.6 million at
December 31, 2003. The increase was due to the acquisition of West Michigan Financial
Corporation. The other bank subsidiaries fixed assets declined due to depreciation
expense.

# 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, 2004 and December 31, 2003.

Non-performing assets decreased at
March 31, 2004 compared to December 31, 2003. This decrease was primarily due to a
decrease in Other Real Estate and REO-in-Redemption, which decreased $134,000 in the first
three months of 2004. One property comprised $599,000 of the decrease in the period. The
majority of the properties are commercial and marketability is dependent on the real
estate market. Non-performing loans increased slightly as compared to December 31, 2003
primarily due to the increase in non-accrual loans, which include one consumer loan that
is $782,000 of the total. The Corporation provided $273,000 to the loan loss allowance in
the first quarter.

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

---



# Table 4 Non-Performing Assets
and Past Due Loans

|                                       | March 31,2004 | December 31,2003
|-------------------------------------- | ------------- | ----------------
|Non-Performing Loans:                  |               |                 
|Loans Past Due 90 Days or More & Still |               |                 
|Accruing                               |               |                 
|Non-Accrual Loans                      |               |                 
|Renegotiated Loans                     |               |                 
|                                       |               |                 
|Total Non-Performing Loans             |               |                 
|                                       |               |                 
|Other Non-Performing Assets:           |               |                 
|Other Real Estate                      |               |                 
|REO in Redemption                      |               |                 
|Other Non-Performing  Assets           |               |                 
|                                       |               |                 
|Total Other Non-Performing Assets      |               |                 
|                                       |               |                 
|Total Non-Performing Assets            |               |                 
|                                       |               |                 
|Non-Performing Loans as a % of         |               |                 
|Total Loans                            |               |                 
|Allowance for Loan Losses as a % of    |               |                 
|Non-Performing Loans                   |               |                 
|Accruing Loans Past Due 90 Days or     |               |                 
|More to Total Loans                    |               |                 
|Non-performing Assets as a % of        |               |                 
|Total Assets                           |               |                 

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 quarter of
2004. 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.

The following table discloses
information on the maturity of the Corporations contractual long-term obligations
(in thousands):

|Table 5               | Total | Less than 1 year | 1 - 3 years | 3-5 years | More than 5 years
|--------------------- | ----- | ---------------- | ----------- | --------- | -----------------
|                      |      
|Short-term borrowings |       |                  | $           | 4,682     |                  
|                      |      
|FHLB Advances         |       |                  |             | 22,108    |                  
|                      |      
|Repurchase agreements |       |                  |             | 12,500    |                  
|                      |      
|Subordinated debt     |       |                  |             | 12,000    |                  
|                      |      
|Operating leases      |       |                  |             | 646       |                  
|                      |      
|Total                 |       |                  | $           | 51,936    |                  
|                      |      

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
increased $3.3 million due to the acquisition of West Michigan Financial Corporation,
which added $24.5 million of securities. The other subsidiaries securities portfolios
decreased $21.2 million since December 31, 2003 due to the calls of securities and the
increase in loan demand. The Corporation has decided to invest the excess funds in the
security or loan portfolio to increase yield and income versus keeping the excess funds in
federal funds sold at a lower yield. As of March 31, 2004 federal funds sold represented
less than 1 percent of total assets, which is about the same when compared to December 31,
2003. 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 entered into a leverage strategy in the second quarter of 2003, which was
purchasing securities funded by repurchase agreements. This strategy helped leverage more
capital of the Corporation and limit volatility if interest rates dropped further. 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.

As indicated in the statement of cash
flows, cash provided by financing activities was $7,100,000 in the first three months of
2004 due to the increase in deposits. Comparatively, in the first three months of 2003,
cash provided in financing activities was $5,658,000 because of increases in deposits.
Cash used in investing activities was $7,072,000 during the first three months of 2004.
Cash flow used in investing activities decreased for the first three months of 2004
primarily because of the acquisition of West Michigan Financial Corporation and an
increase in loan demand.

CAPITAL MANAGEMENT

Total shareholders equity
increased 1.8% to $41,607,000 at March 31, 2004 compared with $40,882,000 at December 31,
2003. The Corporations equity to asset ratio was 7.5% at March 31, 2004 and 9.7% at
December 31, 2003. The increase in the amount of capital resulted primarily from the net
income from the Corporation, partially offset by dividends declared.

As indicated on the balance sheet at
December 31, 2003 the Corporation had an accumulated other comprehensive loss of $125,000
compared to accumulated other comprehensive income at March 31, 2004 of $248,000. The
increase from a loss position to an income position is attributable to the fluctuation of
the market price of securities held in the available for sale portfolio.

The Corporation issued trust
preferred securities in the fourth quarter of 2003 to help fund the acquisition of West
Michigan Financial Corporation. The Corporation acquired West Michigan Financial
Corporation in Hudsonville, Michigan, on March 15, 2004, following approval by West
Michigan Financial Corporation shareholders and receipt of regulatory approvals.

West Michigan Financial
Corporation was a one-bank holding company for West Michigan Community Bank, which became
the third affiliate bank owned by Fentura Financial, Inc.

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 6, at March 31, 2004 and at December 31, 2003, 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 6

|                          | 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 47 in the
Corporations Annual Report on Form 10-K for the year ended December 31, 2003,
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
2004, 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 2004 compared to 2003.

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 7 sets forth the
distribution of re-pricing of the Corporations earning assets and interest bearing
liabilities as of March 31, 2004, 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.

21

---



Table 7               
                                    GAP ANALYSIS MARCH 31, 2004

|(000's Omitted)                     | WithinThreeMonths | ThreeMonths toOne Year | One toFiveYears | AfterFiveYears | Total
|----------------------------------- | ----------------- | ---------------------- | --------------- | -------------- | -----
|                                    |                   |                       
|Earning Assets:                     |                   |                        |                 |                |      
|Federal Funds Sold                  |                   |                        | $               | 2,632          |      
|Securities                          |                   |                        |                 | 26,294         |      
|Loans                               |                   |                        |                 | 208,348        |      
|Loans Held for Sale                 |                   |                        |                 | 1,790          |      
|FHLB Stock                          |                   |                        |                 | 2,180          |      
|                                    |                   |                       
|Total Earning Assets                |                   |                        | $               | 241,244        |      
|                                    |                   |                       
|Interest Bearing Liabilities:       |                   |                       
|Interest Bearing Demand Deposits    |                   |                        | $               | 103,901        |      
|Savings Deposits                    |                   |                        |                 | 148,908        |      
|Time Deposits Less than $100,000    |                   |                        |                 | 12,619         |      
|Time Deposits Greater than $100,000 |                   |                        |                 | 14,932         |      
|Short term borrowings               |                   |                        |                 | 4,682          |      
|Other Borrowings                    |                   |                        |                 | 10,015         |      
|Repurchase agreements               |                   |                        |                 | 0              |      
|Subordinated debentures             |                   |                        |                 | 12,000         |      
|                                    |                   |                       
|Total Interest Bearing Liabilities  |                   |                        | $               | 307,057        |      
|                                    |                   |                       
|Interest Rate Sensitivity GAP       |                   |                        |                 | ($65,813       | )    
|Cumulative Interest Rate            |                   |                       
|Sensitivity GAP                     |                   |                        |                 | ($65,813       | )    
|Interest Rate Sensitivity GAP       |                   |                        |                 | (0.79)         |      
|Cumulative Interest Rate            |                   |                       
|Sensitivity GAP Ratio               |                   |                        |                 | (0.79)         |      

As indicated in Table 7, the
short-term (one year and less) cumulative interest rate sensitivity gap is positive.
Accordingly, if market interest rates increase, this positive gap position would have a
short-term positive impact on interest margin. Conversely, if market rates continue to
decline this should theoretically have a short-term negative 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, 2004 and the
change in net interest margin for the three months ended March 31, 2004 compared to the
same time period in 2003. At March 31, 2003 the Corporation was negatively gapped through
one year and since that time interest rates have declined further, yet net interest margin
decreased when the first three months of 2004 is compared to the same period in 2003. 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 decrease in net interest margin. 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 impact net interest income.

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.
             Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity
Securities.

|Period            | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announce Plan | Maximum Number of Shares That May Yet Be Purchased Under the Plan
|----------------- | -------------------------------- | ---------------------------- | ------------------------------------------------------------------ | -----------------------------------------------------------------
|January 1, 2004   |                                  |                              |                                                                    | 0                                                                
|January 31, 2004  |                                  |                              |                                                                    | 0                                                                
|February 1, 2004  |                                  |                              |                                                                    | 0                                                                
|February 29, 2004 |                                  |                              |                                                                    | 0                                                                
|March 1, 2004     |                                  |                              |                                                                    | 0                                                                
|March 31, 2004    |                                  |                              |                                                                    | 3,421                                                            

# Item 3.    Defaults
Upon Senior Securities.  None

# Item 4.   
          Submission of Matters to a Vote of Securities Holders.

# Item 5.              Other
 Information.  - The Audit  Committee of the Board of Directors  approved the categories
of                   all non-audit  services performed by the Registrant's  independent
 accountants during the period                   covered by this report.

# Item 6.
             Exhibits and Reports on Form 8-K.

| | (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.
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) |  | Reports
on 8-K
| | --- |  | --------------

| | Report
on Form 8-K dated January 16, 2004, submitting press release announcing fourth quarter and
full year 2003 operating results.
| | -----------------------------------------------------------------------------------------------------------------------------------

| | Report
on Form 8-K dated March 15, 2004, announcing the completion of the acquisition of West
Michigan Financial Corporation and filing a copy of the merger agreement.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

|                    | Fentura Financial, Inc.
|------------------- | -----------------------
|                   
|                   
|Dated: May 12, 2004 |                        
|                   
|                   
|Dated: May 12, 2004 |                        

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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Exhibit 31.1

I, Donald L. Grill, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Fentura Financial, Inc.;
|-- | ------------------------------------------------------------------------------

|2. | Based on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | 
|------------------- | 
|Dated: May 12, 2004 | 

27

---



Exhibit 31.2

I, Douglas J. Kelley, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Fentura Financial, Inc.;
|-- | ------------------------------------------------------------------------------

|2. | Based on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | all significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting;
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | 
|------------------- | 
|Dated: May 12, 2004 | 

28

---



Exhibit 32.1

|(1) | the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004
          which this statement accompanies fully complies with the requirements of Section
          13(a) or 15(d) of the Securities Exchange Act of 1934, and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | the information contained in the Quarterly Report on Form 10-Q for the quarterly
          period ended March 31, 2004 fairly presents, in all material respects, the
          financial condition and results of operations of Fentura Financial, Inc.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | 
|------------------- | 
|Dated: May 12, 2004 | 

29

---



Exhibit 32.2

|(1) | the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004
          which this statement accompanies fully complies with the requirements of Section
          13(a) or 15(d) of the Securities Exchange Act of 1934, and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | the information contained in the Quarterly Report on Form 10-Q for the quarterly
          period ended March 31, 2004 fairly presents, in all material respects, the
          financial condition and results of operations of Fentura Financial, Inc.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                    | 
|------------------- | 
|Dated: May 12, 2004 | 

30

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