EXHIBIT 99.1

February 2011

To Our Shareholders:

It has been quite some time since we have been able to share positive news with you about the financial performance of your company—so I am pleased to report that Fentura, and each of the subsidiary banks, achieved a profit during the fourth quarter of 2010. For the quarter, Fentura reported a profit of $214,000 or $0.09 per diluted share; a substantial improvement over the operating losses reported in the first, second and third quarters of the year. Additionally, the performance for the quarter reflects marked improvement over the fourth quarter of 2009 on an operating pre-tax basis. On a pre-tax basis, the fourth quarter of 2010 reflects a $2,393,000 improvement in the pre-tax operating income over the same quarter of the prior year. In December of 2009, a change in federal income tax regulation allowed Fentura to realize the benefit of an extended tax loss carry back, resulting in a $3,658,000 tax benefit for the quarter.

The quarterly financial performance improvement as compared to each of the prior four quarters is primarily a result of a substantial reduction in the provision for loan losses. After 14 consecutive quarters of extraordinarily high loan loss provision expense, (due to the impact of the economy on many of our borrowers), we were able to reduce the provision expense for the fourth quarter of 2010 and still maintain an adequate reserve for loan losses. Clearly, we are beginning to achieve improvement in asset quality ratios as our bankers continue to successfully address problem loan situations through restructuring and upgrading loans, and working with borrowers to liquidate assets or collateral to reduce problem loans. We are also seeing signs of stabilization of real estate collateral values. So it is with a sense of guarded optimism that we anticipate further improvement in our performance as the economy continues to strengthen.

Non-interest income of $1,381,000 reflects a 22% increase over the $1,130,000 reported for the fourth quarter of last year, as increases in residential mortgage gains and wealth management income more than offset a decline in deposit related service charge fee income. Our bankers continue to exercise good stewardship in controlling and reducing overhead and operating expenses, as total non interest expense of $3,305,000 declined $594,000 from the level reported for the fourth quarter of 2009.

On a year-to-date basis, Fentura reported an operating loss of $5,385,000 or $2.37 per diluted share which is a substantial improvement over the $16,980,000 or $7.70 per diluted share loss reported for 2009. The substantial improvement was primarily a result of elevated provision for loan loss expense in 2009; for both continuing operations and discontinued operations. For the year, the net interest margin improved 22 basis points from 3.50% in 2009 to 3.72% in 2010. Aggressive relationship management pricing by our lenders and retail bankers was the primary cause for the improvement.

At year-end 2010, assets totaled $424,228,000, a $97,851,000 decrease from the prior year. Approximately half of the decline resulted from the sale of Davison State Bank with the remaining portion a result of the banks managing to lower loan and deposit levels to maintain appropriate capital ratios. At year-end, both banks were adequately capitalized as measured against regulatory standards.

During the second quarter of 2010, we reported that Fentura had entered into an agreement to sell West Michigan Community Bank to a group of private investors. The sale of the bank was completed January 31, 2011. The financial results for West Michigan Community Bank are reported at year-end 2010 as discontinued operations, net of tax for income reporting purposes. The sale resulted in an approximate $750,000 gain on sale, which will be accounted for in the first quarter 2011 results. As reported previously, the sale benefits both Fentura Financial, Inc. and The State Bank. Effective with the sale, the pro forma Fentura Tier 1 capital leverage ratio improved 36% to approximately 6.7%. Additionally, it is expected that during the first quarter of 2011, Fentura will be able to downstream proceeds connected with the sale to further strengthen the capital position of The State Bank.

Just prior to year-end 2010, the Boards of Directors of The State Bank appointed Ronald Justice President and Chief Operating Officer. Most recently, Ron served as President and CEO of West Michigan Community Bank. He began his career with The State Bank in 1985 and served in various banking capacities prior to his West Michigan appointment. Ron will serve on the board of The State Bank and he is expected to again become very active in community and civic activities.

I hope you detected the note of optimism that this shareholder letter is intended to provide. Your company has gone through a very difficult period starting in the third quarter of 2007. The impact from the collapse of the housing industry in 2007, the partial meltdown of the financial industry in 2008, the contraction of

the auto industry and the dramatic drop in real estate values all had a staggering impact on our banks. Our decision to shrink the company through divestitures and other internal measures now appears to have been a very effective survival strategy; as the company’s financial performance is improving and the capital position at both Fentura and The State Bank are at their highest levels since the recession first started.

We deeply appreciate your continued support as we look forward; anticipating further performance improvement in 2011 and beyond.

Sincerely,

Donald L. Grill
President & CEO

Fentura Financial Inc.
Consolidated Statement of Condition
(000’s omitted except per share data)
Unaudited

		December 30,
		2010				2009
ASSETS
Cash and due from banks		$	11,592			$	15,490
Federal Funds Sold			21,900				16,150
Total cash and cash equivalents			33,492				31,640
Securities available for sale, at fair value			41,875				33,939
Securities held to maturity (fair value of $4,383 at December 31, 2010 and $5,492 at December 31, 2009)			4,350				5,455
Total securities			46,225				39,394
Loans held for sale			850				229
Commercial loans			150,179				164,163
Construction loans			9,597				21,904
Real estate loans			19,046				23,681
Consumer loans			29,153				32,302
Total loans			207,975				242,050
Less: Allowance for loan losses			(10,027	)			(8,589	)
Net loans			197,948				233,461
Bank premises and equipment			10,335				10,994
Accrued interest receivable			1,050				1,289
Bank-owned life insurance			5,800				5,947
Assets of discontinued operations			122,968				188,006
Other assets			5,560				11,119
Total assets		$	424,228			$	522,079
LIABILITIES
Noninterest bearing deposits		$	55,044			$	53,113
Interest bearing deposits			220,933				258,438
Total deposits			275,977				311,551
Short-term borrowings			879				164
Other borrowings			954				981
Subordinated debt			14,000				14,000
Liabilities of discontinued operations			113,321				171,758
Accrued taxes, interest and other liabilities			3,042				3,093
Total liabilities			408,173				501,547
Common stock — 2,308,765 issued (2,248,553 in 2009)			43,036				42,913
Retained deficit			(27,042	)			(21,657	)
Accumulated other comprehensive income (loss)			61				(724	)
Total stockholders’ equity			16,055				20,532
Total liabilities and stockholders’ equity		$	424,228			$	522,079

Fentura Financial Inc.
Consolidated Statement of Income
(000’s omitted except per share data)
Unaudited

		Three Months Ended December 31,
		2010				2009
INTEREST INCOME
Interest and fees on loans		$	3,291			$	3,801
Interest and dividends on securities:
Taxable			213				246
Tax-exempt			45				113
Interest on short-term securities			8				2
Total interest income			3,557				4,162
INTEREST EXPENSE
Deposits			856				1,303
Borrowings			132				129
Total interest expense			988				1,432
NET INTEREST INCOME			2,569				2,730
Provision for loan losses			700				2,409
Net interest income after provision for loan losses			1,869				321
NONINTEREST INCOME
Service charges on deposit accounts			320				472
Trust and investment services income			260				178
Gain on sale of loans			283				141
Other operating income			518				339
Total noninterest income			1,381				1,130
NONINTEREST EXPENSE
Salaries and benefits			1,600				1,480
Occupancy of bank premises			284				306
Equipment expense			297				340
Loss on equity impairment			—				—
Other operating expenses			1,124				1,773
Total noninterest expense			3,305				3,899
NET INCOME (LOSS) BEFORE TAXES FROM CONTINUING OPERATIONS			(55	)			(2,448	)
Federal income taxes (benefit)			106				(3,658	)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS			(161	)			1,210
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX			375				(320	)
NET INCOME (LOSS)		$	214			$	890
Per share amounts:
INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
Basic		$	(0.07	)		$	0.54
Diluted		$	(0.07	)		$	0.54
NET INCOME (LOSS) PER SHARE:
Basic		$	0.09			$	(0.40	)
Diluted		$	0.09			$	(0.40	)

Fentura Financial Inc.
Consolidated Statement of Income
(000’s omitted except per share data)
Unaudited

		Twelve Months Ended December 31,
		2010				2009
INTEREST INCOME
Interest and fees on loans		$	13,874			$	16,239
Interest and dividends on securities:
Taxable			881				1,173
Tax-exempt			295				474
Interest on short-term securities			27				3
Total interest income			15,077				17,889
INTEREST EXPENSE
Deposits			4,032				6,230
Borrowings			520				695
Total interest expense			4,552				6,925
NET INTEREST INCOME			10,525				10,964
Provision for loan losses			6,934				11,040
Net interest income (loss) after provision for loan losses			3,591				(76	)
NONINTEREST INCOME
Service charges on deposit accounts			1,445				1,726
Trust and investment services income			915				919
Gain on sale of loans			701				744
Other operating income			1,709				1
Loss on equity investment			—				(1,360	)
Total noninterest income			4,770				2,030
NONINTEREST EXPENSE
Salaries and benefits			6,387				6,650
Occupancy of bank premises			1,225				1,326
Equipment expense			1,265				1,339
Loss on equity impairment			—				200
Other operating expenses			4,389				4,537
Total noninterest expense			13,266				14,052
NET INCOME (LOSS) BEFORE TAXES			(4,905	)			(12,098	)
Federal income taxes (benefit)			(22	)			221
NET INCOME (LOSS) FROM CONTINUING OPERATIONS			(4,883	)			(12,319	)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX			(502	)			(4,661	)
NET INCOME (LOSS)		$	(5,385	)		$	(16,980	)
Per share amounts:
INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS:
Basic		$	(2.15	)		$	(5.59	)
Diluted		$	(2.15	)		$	(5.59	)
NET INCOME (LOSS) PER SHARE:
Basic		$	(2.37	)		$	(7.70	)
Diluted		$	(2.37	)		$	(7.70	)

Financial Highlights
$ in thousands except per share data
Unaudited

		December 30,
		2010				2009				%Change
Net Income		$	(5,385	)		$	(16,980)	%			(68.29	)%
Return on average total equity			(28.52	)			(61.18)	%			(53.38	)%
Return on average assets			(1.15	)			(3.02)	%			(61.92	)%
Net interest margin			3.72				3.50	%			6.29	%
Efficiency ratio			86.73				108.14				19.80	%
Per Common Share:
Net Income(Loss) — basic			($2.37	)			($7.70	)			(69.22	)%
Net Income(Loss) — diluted			($2.37	)			($7.70	)			(69.22	)%
Book value		$	6.95			$	9.13				(23.88	)%
Market price (last trade)		$	1.75			$	1.36				28.68	%

Forward Looking Statements

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

Future factors that could cause a difference between an ultimate actual outcome and a preceding forward looking statement include, but are not limited to, changes in interest rate and interest rate relationships, demands for products and service, the degree of competition by traditional and non-traditional competitors, changes in banking laws or regulations, changes in tax laws, changes in prices, the impact of technological advances, government and regulatory policy changes, the outcome of pending and future litigation and contingencies, trends in customer behavior as well as their ability to repay loans, and the local and national economy.

Fentura Financial Inc.
Consolidated Balance Sheets
(Dollars in thousands)
UNAUDITED

		Dec 31				Sep 30				Jun 30				Mar 31				Dec 31
		2010				2010				2010				2010				2009
ASSETS
Cash and cash equivalents
Cash and due from banks		$	11,592			$	12,804			$	13,119			$	13,385			$	15,490
Short term investments			21,900				30,950				21,900				15,150				16,150
Total cash & cash equivalents			33,492				43,754				35,019				28,535				31,640
Securities:
Securities available for sale			41,875				38,141				27,925				31,981				33,939
Securities held to maturity			4,350				4,481				4,702				5,453				5,455
Total securities			46,225				42,622				32,627				37,434				39,394
Loans held for sale			850				1,877				1,386				1,046				229
Loans:
Commercial			150,179				155,875				163,069				167,177				164,163
Real estate — construction			9,597				10,807				12,391				14,363				21,904
Real estate — mortgage			19,046				20,136				21,079				21,958				23,681
Consumer			29,153				30,341				30,424				31,110				32,302
Total loans			207,975				217,159				226,963				234,608				242,050
Less: Allowance for loan losses			(10,027	)			(11,456	)			(10,610	)			(9,686	)			(8,589	)
Net loans			197,948				205,703				216,353				224,922				233,461
Bank owned life insurance			5,800				5,764				6,024				5,985				5,947
Bank premises and equipment			10,335				10,490				10,651				10,818				10,994
Federal Home Loan Bank stock			740				806				806				806				806
Accrued interest receivable			1,050				1,036				1,154				1,386				1,289
Acquisition intangibles			—				—				—				—				—
Other Real Estate Owned			2,742				3,920				3,851				4,452				3,761
Assets of discontinued operations			122,968				130,996				139,053				184,543				188,006
Other assets			2,078				2,411				8,365				9,067				6,552
TOTAL ASSETS		$	424,228			$	449,379			$	455,289			$	508,994			$	522,079
LIABILITIES & SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits			55,044				54,555				56,097				53,529				53,113
Interest bearing deposits			220,933				239,172				232,523				245,360				258,438
Total deposits			275,977				293,727				288,620				298,889				311,551
Short-term borrowings			879				116				10				67				164
Federal Home Loan Bank Advances			954				954				954				981				981
Subordinated debentures			14,000				14,000				14,000				14,000				14,000
Liabilities of discontinued operations			113,321				121,659				129,579				171,910				171,758
Accrued interest, taxes & other liabilities			3,042				2,851				4,231				2,904				3,093
Total liabilities			408,173				433,307				437,394				488,751				501,547
STOCKHOLDERS’ EQUITY
Common stock — no par value 5,000,000 shares authorized			43,036				43,002				42,974				42,945				42,913
Retained earnings			(27,042	)			(27,257	)			(24,920	)			(22,140	)			(21,657	)
Accumulated other comprehensive income (loss)			61				327				(159	)			(562	)			(724	)
Total stockholders’ equity			16,055				16,072				17,895				20,243				20,532
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY		$	424,228			$	449,379			$	455,289			$	508,994			$	522,079
Common stock shares issued & outstanding			2,272,065				2,289,912				2,276,441				2,267,135				2,205,419
Asset Quality Ratios:
Non-Performing Loans as a % of Total Loans			6.61	%			6.35	%			6.46	%			6.06	%			5.45	%
Allowance for Loan Losses as a % of Non-Performing Loans			72.62	%			82.32	%			71.93	%			67.73	%			65.01	%
Accruing Loans Past Due 90 Days More to Total Loans			0.06	%			0.00	%			0.73	%			0.17	%			0.13	%
Non-Performing Assets as a % of Total Assets			4.10	%			4.10	%			4.41	%			4.07	%			3.77	%
Quarterly Average Balances:
Total Loans			203,277				224,170				232,237				240,828				254,810
Total Earning Assets			270,867				290,127				255,044				294,175				311,418
Total Shareholders’ Equity			16,713				18,260				19,870				20,750				20,281
Total Assets			432,033				457,986				477,761				513,830				530,250
Diluted Shares Outstanding			2,291,629				2,277,406				2,276,441				2,249,917				2,226,745

Fentura Financial Inc.
Consolidated Income Statements
(Dollars in thousands, except per share data)
UNAUDITED

		Three Months ended																				Twelve months ended
		Dec 31				Sep 30				Jun 30				Mar 31				Dec 31				Dec 31				Dec 31
(prior periods restated with out DSB and WMCB)		2010				2010				2010				2010				2009				2010				2009
Interest income:
Interest & fees on loans		$	3,291			$	3,453			$	3,538			$	3,592			$	3,801			$	13,874			$	16,239
Interest & dividends on securities:
Taxable			213				224				219				225				246				881				1,173
Tax-exempt			45				46				92				112				113				295				474
Interest on federal funds sold			8				9				7				3				2				27				3
Total interest income			3,557				3,732				3,856				3,932				4,162				15,077				17,889
Interest expense:
Deposits			856				985				1,057				1,134				1,303				4,032				6,230
Borrowings			132				135				127				126				129				520				695
Total interest expense			988				1,120				1,184				1,260				1,432				4,552				6,925
Net interest income			2,569				2,612				2,672				2,672				2,730				10,525				10,964
Provision for loan losses			700				2,650				2,449				1,135				2,409				6,934				11,040
Net interest income after provision for loan losses			1,869				(38	)			223				1,537				321				3,591				(76	)
Non-interest income:
Service charges on deposit accounts			320				341				359				425				472				1,445				1,726
Gain on sale of mortgage loans			283				214				123				81				140				701				744
Trust & investment services income			260				192				194				269				178				915				919
Gain (Loss) on sale of securities			(23	)			—				71				—				—				48				—
Other than temporary impairment loss			—				(307	)			—				—				(79	)			(307	)			(288	)
Income (Loss) on Equity Investment			—				—				—				—				—				—				(1,360	)
Other income and fees			541				498				589				340				419				1,968				289
Total non-interest income			1,381				938				1,336				1,115				1,130				4,770				2,030
Non-interest expense:
Salaries & employee benefits			1,600				1,573				1,595				1,619				1,480				6,387				6,650
Occupancy			284				309				311				321				306				1,225				1,326
Furniture and equipment			297				340				322				306				340				1,265				1,339
Loan and collection			338				296				272				373				981				1,279				2,559
Advertising and promotional			12				22				41				26				16				101				121
Loss on Equity Impairment			—				—				—				—				9				—				200
Other operating expenses			774				765				837				633				767				3,009				1,857
Total non-interest expense			3,305				3,305				3,378				3,278				3,899				13,266				14,052
Income (loss) from continuing operations before income tax			(55	)			(2,405	)			(1,819	)			(626	)			(2,448	)			(4,905	)			(12,098	)
Federal income taxes (benefit)			106				(235	)			421				(314	)			(3,658	)			(22	)			221
Net income (loss) from continuing operations			(161	)			(2,170	)			(2,240	)			(312	)			1,210				(4,883	)			(12,319	)
Net Income (loss) from discontinued operations, net of tax			375				(165	)			(541	)			(171	)			(320	)			(502	)			(4,661	)
Net Income (loss)		$	214			$	(2,335	)		$	(2,781	)		$	(483	)		$	890			$	(5,385	)		$	(16,980	)
Net Income (Loss) per share from continuing operations:
Basic and diluted earnings		$	(0.07	)		$	(0.95	)		$	(0.99	)		$	(0.14	)		$	0.54			$	(2.15	)		$	(5.59	)
Net Income (Loss) per share from discontinued operations:
Basic and diluted earnings		$	0.16			$	(0.07	)		$	(0.23	)		$	(0.08	)		$	(0.14	)		$	(0.22	)			(2.11	)
Net Income (Loss) per share:
Basic and diluted earnings		$	0.09			$	(1.02	)		$	(1.22	)		$	(0.22	)		$	0.40			$	(2.37	)		$	(7.70	)
Performance Ratios:
Return on Average Assets			0.05	%			-0.51	%			-0.58	%			-0.09	%			0.17	%			-1.15	%			-3.02	%
Return on Average Equity			1.28	%			-12.79	%			-14.00	%			-2.33	%			4.39	%			-28.52	%			-61.18	%
Net Interest Margin (FTE)			3.66	%			3.62	%			3.76	%			3.78	%			3.57	%			3.72	%			3.50	%
Book Value Per Share		$	6.95			$	7.02			$	7.86			$	8.93			$	9.13			$	6.95			$	9.13
Net Charge-offs			2,095				2,095				1,908				178				7,278				5,496				9,779
Ratio of Net charge-offs to Gross Loans			1.01	%			0.96	%			0.84	%			0.08	%			3.01	%			2.53	%			4.04	%
Average QTD/YTD Shares Outstanding			2,291,628.50				2,277,406.14				2,268,791.19				2,249,916.95				2,226,715.47				2,272,064.96				2,205,419.46