Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with June 30, 2018 presentation.

FENTON, Mich., Aug. 03, 2018 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces continued strong earnings with net income of $2,518 and $4,592 for the three and six month periods ended June 30, 2018, respectively.

-- Record quarter-to-date adjusted net income from operations of $2,226 -- 42.34% increase in net income over the first six months of 2017 -- Return on average assets of 1.15% in the first six months of 2018 vs 0.92% in the first six months of 2017 -- 41.57% increase in year-to-date earnings per share -- 27.34% annualized increase in stock trading price in the second quarter of 2018 -- Gross loans increased 3.09% during the quarter and 19.54% since June 30, 2017 -- Total deposits increased 2.67% during the quarter and 18.64% since June 30, 2017

Ronald L. Justice, President and CEO said, “I am extremely proud of our team. Their dedication to community banking values continually strengthen the communities we serve while delivering strong returns for our shareholders.”

Total Shareholder Return

FETM QTD Total Return to Shareholders (Annualized) ------------------------------------------- 6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 ------- ------- ------- ------- ------- Increase in Price 27.34 % 18.43 % 9.32 % 4.38 % 5.56 % Cash Dividends 1.22 % 1.27 % 1.08 % 1.10 % 1.11 % Total Return 28.56 % 19.70 % 10.41 % 5.48 % 6.67 % ----- - ----- - ----- - ----- - ----- - FETM Annual Total Return to Shareholders ------------------------------------------- 12/31/17 12/31/16 12/31/15 12/31/14 12/31/13 ------- ------- ------- ------- ------- Increase in Price 18.00 % 15.44 % 40.00 % 42.04 % 99.14 % Cash Dividends 1.25 % 2.89 % 1.21 % 1.29 % 0.00 % Total Return 19.25 % 18.33 % 41.21 % 43.33 % 99.14 % ----- - ----- - ----- - ----- - ----- -

Income Statement Breakdown and Analysis

Quarter to Date ------------------------------------------------------- 6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 --------- --------- ---------- ---------- --------- Interest and dividend income Loans, including fees $ 8,433 $ 8,038 $ 8,524 $ 7,226 $ 6,931 Investments 296 341 341 339 323 - ----- - - ----- - - ------ - - ------ - - ----- - Total interest and dividend income 8,729 8,379 8,865 7,565 7,254 Total interest expense 1,232 1,031 939 792 702 - ----- - - ----- - - ------ - - ------ - - ----- - Net interest income 7,497 7,348 7,926 6,773 6,552 Provision for loan losses 301 275 348 136 125 - ----- - - ----- - - ------ - - ------ - - ----- - Net interest income, after provision for loan losses 7,196 7,073 7,578 6,637 6,427 Total noninterest income 2,013 1,801 2,220 3,396 2,138 Total noninterest expenses 6,049 6,279 7,400 5,581 5,742 - ----- - - ----- - - ------ - - ------ - - ----- - Income before federal income taxes 3,160 2,595 2,398 4,452 2,823 Federal income taxes 642 521 236 1,164 884 Net income $ 2,518 $ 2,074 $ 2,162 $ 3,288 $ 1,939 - ----- - - ----- - - ------ - - ------ - - ----- - Quarter to Date ------------------------------------------------------- 6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 --------- --------- ---------- ---------- --------- Based on GAAP net income Return on Average Assets 1.27 % 1.05 % 1.11 % 1.76 % 1.09 % Efficiency Ratio 63.61 % 68.63 % 72.94 % 54.88 % 66.08 % Earnings Per Share $ 0.69 $ 0.57 $ 0.60 $ 0.91 $ 0.53 Yield on Earning Assets 4.63 % 4.55 % 5.13 % 4.40 % 4.45 % Rate on Int. Bearing Liabilities 0.96 % 0.82 % 0.82 % 0.67 % 0.57 % Net Interest Margin to Earning Assets 3.98 % 3.99 % 4.59 % 3.94 % 4.02 % GAAP net income $ 2,518 $ 2,074 $ 2,162 $ 3,288 $ 1,939 Provision for loan losses (net of tax) 238 217 229 90 83 - ----- - - ----- - - ------ - - ------ - - ----- - Acquisition related items (net of tax) Accretion on purchased loans (255 ) (250 ) (676 ) (179 ) (175 ) Amortization of core deposit intangible 107 107 105 104 104 Acquisition related expenses - - 296 - - Accretion on acquired OREO - - - - (53 ) Amortization on acquired time deposits 9 9 10 10 9 Amortization on purchased MSRs 6 6 8 8 7 Total acquisition related items (net of tax) (133 ) (128 ) (257 ) (57 ) (108 ) - ----- - - ----- - - ------ - - ------ - - ----- - One-time and other items (net of tax) Net gain from BOLI death benefit - - - (1,155 ) - Re-valuation of net deferred tax liabilities - - (489 ) - - Net gain from note receivable - - - (172 ) - Impact of The Tax Cuts and Jobs Act (397 ) (323 ) - - - - ----- - - ----- - - ------ - - ------ - - ----- - Total one-time and other items (net of tax) (397 ) (323 ) (489 ) (1,327 ) - Adjusted net income from operations $ 2,226 $ 1,840 $ 1,645 $ 1,994 $ 1,914 - ----- - - ----- - - ------ - - ------ - - ----- - GAAP net interest income $ 7,497 $ 7,348 $ 7,926 $ 6,773 $ 6,552 Accretion on purchased loans (323 ) (317 ) (1,021 ) (272 ) (266 ) Amortization on acquired time deposits 11 12 15 15 14 Adjusted net interest income $ 7,185 $ 7,043 $ 6,920 $ 6,516 $ 6,300 - ----- - - ----- - - ------ - - ------ - - ----- - Based on adjusted net income from operations Return on Average Assets 1.12 % 0.93 % 0.84 % 1.07 % 1.08 % Efficiency Ratio 64.24 % 69.41 % 74.22 % 63.73 % 66.73 % Earnings Per Share $ 0.61 $ 0.51 $ 0.45 $ 0.55 $ 0.53 Based on adjusted net interest income Yield on Earning Assets 4.46 % 4.38 % 4.54 % 4.24 % 4.29 % Rate on Int. Bearing Liabilities 0.97 % 0.83 % 0.83 % 0.68 % 0.58 % Net Interest Margin to Earning Assets 3.81 % 3.83 % 4.01 % 3.79 % 3.87 %

Year to Date June 30 Variance ---------------------- -------------------- 2018 2017 $ % ---------- ---------- --------- --------- Interest and dividend income Loans, including fees $ 16,471 $ 13,015 $ 3,456 26.55 % Investments 637 666 (29 ) -4.35 % - ------ - - ------ - - ----- - ------- - Total interest and dividend income 17,108 13,681 3,427 25.05 % Total interest expense 2,263 1,389 874 62.92 % - ------ - - ------ - - ----- - ------- - Net interest income 14,845 12,292 2,553 20.77 % Provision for loan losses 576 125 451 360.80 % - ------ - - ------ - - ----- - ------- - Net interest income, after provision for loan losses 14,269 12,167 2,102 17.28 % Total noninterest income 3,814 3,372 442 13.11 % Total noninterest expenses 12,328 10,837 1,491 13.76 % - ------ - - ------ - - ----- - ------- - Income before federal income taxes 5,755 4,702 1,053 22.39 % Federal income taxes 1,163 1,476 (313 ) -21.21 % Net income $ 4,592 $ 3,226 $ 1,366 42.34 % - ------ - - ------ - - ----- - ------- - Year to Date June 30 Variance ---------------------- -------------------- 2018 2017 $ % ---------- ---------- --------- --------- Based on GAAP net income Return on Average Assets 1.15 % 0.92 % 0.23 % Efficiency Ratio 66.07 % 69.18 % -3.11 % Earnings Per Share $ 1.26 $ 0.89 $ 0.37 41.57 % Yield on Earning Assets 4.59 % 4.32 % 0.26 % Rate on Int. Bearing Liabilities 0.89 % 0.56 % 0.33 % Net Interest Margin to Earning Assets 3.98 % 3.89 % 0.10 % GAAP net income $ 4,592 $ 3,226 $ 1,366 42.34 % Provision for loan losses (net of tax) 455 83 372 448.19 % - ------ - - ------ - - ----- - ------- - Acquisition related items (net of tax) Accretion on purchased loans (505 ) (349 ) (156 ) 44.70 % Amortization of core deposit intangible 214 209 5 2.39 % Acquisition related expenses - - - N/M Accretion on acquired OREO - (53 ) 53 -100.00 % Amortization on acquired time deposits 18 18 - 0.00 % Amortization on purchased MSRs 12 15 (3 ) -20.00 % Total acquisition related items (net of tax) (261 ) (160 ) (101 ) 63.13 % - ------ - - ------ - - ----- - ------- - One-time and other items (net of tax) Net gain from BOLI death benefit - - - N/M Re-valuation of net deferred tax liabilities - - - N/M Net gain from note receivable - - - N/M Impact of The Tax Cuts and Jobs Act (720 ) - (720 ) N/M - ------ - - ------ - - ----- - ------- - Total one-time and other items (net of tax) (720 ) - (720 ) N/M ------- - Adjusted net income from operations $ 4,066 $ 3,149 $ 917 29.12 % - ------ - - ------ - - ----- - ------- - GAAP net interest income $ 14,845 $ 12,292 $ 2,553 20.77 % Accretion on purchased loans (640 ) (529 ) (111 ) 20.98 % Amortization on acquired time deposits 23 28 (5 ) -17.86 % Adjusted net interest income $ 14,228 $ 11,791 $ 2,437 20.67 % - ------ - - ------ - - ----- - ------- - Based on adjusted net income from operations Return on Average Assets 1.02 % 0.90 % 0.12 % Efficiency Ratio 66.77 % 69.18 % -2.41 % Earnings Per Share $ 1.12 $ 0.87 $ 0.25 28.74 % Based on adjusted net interest income Yield on Earning Assets 4.42 % 4.16 % 0.26 % Rate on Int. Bearing Liabilities 0.90 % 0.57 % 0.32 % Net Interest Margin to Earning Assets 3.82 % 3.73 % 0.09 %

To effectively compare core operating results from period to period, the impact of the provision for loan losses, acquisition related items, and one-time and other items have been isolated.

As outlined in the preceding tables, the Corporation has been able to generate strong net income and adjusted net income from operations. While a portion of the increase in net income was driven by the Tax Cuts and Jobs Act of 2017, which reduced the Corporation’s Federal income tax rate from 34% to 21%, adjusted net income from operations, which excludes the impact of the reduction in tax rates, represented the highest level of core earnings in the Corporation’s history.

The Corporation has also been successful at consistently increasing adjusted net interest income. This increase continues to be primarily driven through increases in loans while maintaining relatively strong interest margins. As the Corporation expects to grow its loan portfolio throughout 2018, net interest income is expected to continue to increase.

Balance Sheet Breakdown and Analysis

6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 ----------- ----------- ----------- ----------- ----------- ASSETS Cash and cash equivalents $ 44,280 $ 15,154 $ 15,928 $ 16,450 $ 29,487 Total securities 49,110 49,608 55,323 67,155 70,699 Loans held for sale 4,936 4,980 2,067 4,835 4,664 - ------- - - ------- - - ------- - - ------- - - ------- - Gross loans 707,364 686,140 672,530 628,552 591,753 Less allowance for loan losses 4,033 3,725 3,603 3,262 3,092 - ------- - - ------- - - ------- - - ------- - - ------- - Net loans 703,331 682,415 668,927 625,290 588,661 All other assets 39,802 37,786 39,198 43,237 37,000 Total assets $ 841,459 $ 789,943 $ 781,443 $ 756,967 $ 730,511 - ------- - - ------- - - ------- - - ------- - - ------- - LIABILITIES ANDSHAREHOLDERS' EQUITY Total deposits $ 702,035 $ 683,775 $ 673,505 $ 625,588 $ 614,167 Total borrowed funds 74,000 44,600 46,000 68,000 59,000 Accrued interest and other liabilities 2,346 947 2,491 6,218 3,089 Total liabilities 778,381 729,322 721,996 699,806 676,256 - ------- - - ------- - - ------- - - ------- - - ------- - Total shareholders' equity 63,078 60,621 59,447 57,161 54,255 Total liabilities and shareholders' equity $ 841,459 $ 789,943 $ 781,443 $ 756,967 $ 730,511 - ------- - - ------- - - ------- - - ------- - - ------- - Selected Ratios Net loans to total deposits 100.18 % 99.80 % 99.32 % 99.95 % 95.85 % ALLL to gross loans 0.57 % 0.54 % 0.54 % 0.52 % 0.52 % Book value per share $ 17.34 $ 16.68 $ 16.35 $ 15.74 $ 14.95 Tangible book value per share $ 16.01 $ 15.31 $ 14.95 $ 14.24 $ 13.41 Total capital to risk weighted assets* 10.70 % 10.61 % 10.46 % 10.21 % 10.36 % Tier 1 capital to risk weighted assets* 10.11 % 10.06 % 9.91 % 9.70 % 9.84 % CET1 capital to risk weighted assets* 10.11 % 10.06 % 9.91 % 9.70 % 9.84 % Tier 1 capital to average assets* 8.70 % 8.65 % 8.57 % 8.62 % 8.30 % *The State Bank 6/30/2018 vs 3/31/2018 6/30/2018 vs 6/30/2017 ------------------------ ------------------------ $ Variance % Variance $ Variance % Variance ----------- ----------- ----------- ----------- ASSETS Cash and cash equivalents $ 29,126 192.20 % $ 14,793 50.17 % Total securities (498 ) -1.00 % (21,589 ) -30.54 % Loans held for sale (44 ) -0.88 % 272 5.83 % - ------- - - ------- - - ------- - - ------- - Gross loans 21,224 3.09 % 115,611 19.54 % Less allowance for loan losses 308 8.27 % 941 30.43 % - ------- - - ------- - - ------- - - ------- - Net loans 20,916 3.06 % 114,670 19.48 % All other assets 2,016 5.34 % 2,802 7.57 % Total assets $ 51,516 6.52 % $ 110,948 15.19 % - ------- - - ------- - - ------- - - ------- - LIABILITIES ANDSHAREHOLDERS' EQUITY Total deposits $ 18,260 2.67 % $ 87,868 14.31 % Total borrowed funds 29,400 65.92 % 15,000 25.42 % Accrued interest and other liabilities 1,399 147.73 % (743 ) -24.05 % Total liabilities 49,059 6.73 % 102,125 15.10 % - ------- - - ------- - - ------- - - ------- - Total shareholders' equity 2,457 4.05 % 8,823 16.26 % Total liabilities and shareholders' equity $ 51,516 6.52 % $ 110,948 15.19 % - ------- - - ------- - - ------- - - ------- - Selected Ratios Net loans to total deposits 0.38 % 4.33 % ALLL to gross loans 0.03 % 0.05 % Book value per share $ 0.66 3.96 % $ 2.39 4.41 % Tangible book value per share $ 0.70 4.57 % $ 2.60 5.22 % Total capital to risk weighted assets* 0.09 % 0.34 % Tier 1 capital to risk weighted assets* 0.05 % 0.27 % CET1 capital to risk weighted assets* 0.05 % 0.27 % Tier 1 capital to average assets* 0.05 % 0.40 %

The following tables outline the composition and changes in the loan portfolio as of:

6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 ----------- ----------- ---------- ----------- ----------- Commercial real estate $ 344,658 $ 343,265 $ 333,463 $ 298,821 $ 276,640 Residential real estate 257,776 237,677 234,190 228,143 214,870 Commercial 49,776 47,812 47,931 49,897 48,022 Home equity 41,736 42,879 41,318 39,861 38,335 Installment 13,418 14,507 15,628 11,830 13,886 Total loans $ 707,364 $ 686,140 $ 672,530 $ 628,552 $ 591,753 - ------- - - ------- - - ------- - ------- - - ------- - 6/30/2018 vs 3/31/2018 6/30/2018 vs 6/30/2017 ------------------------ ------------------------ $ Variance % Variance $ Variance % Variance ----------- ----------- ----------- ----------- Commercial real estate $ 1,393 0.41 % $ 68,018 24.59 % Residential real estate 20,099 8.46 % 42,906 19.97 % Commercial 1,964 4.11 % 1,754 3.65 % Home equity (1,143 ) -2.67 % 3,401 8.87 % Installment (1,089 ) -7.51 % (468 ) -3.37 % Total loans $ 21,224 3.09 % $ 115,611 19.54 % - ------- - - ------- - - ------- - - ------- -

During the quarter, the Corporation continued to drive loan growth through actively pursuing prudent opportunities in existing market areas. Most of the growth in the portfolio over the quarter has come in the form of residential real estate. Over the past 12 months the Corporation has been successful in growing the loan portfolio in all segments, except for installment loans. Installment loans have declined because of the sale of the Corporation’s credit card portfolio which was acquired from The Community State Bank of St. Charles in December 2016.

The following tables outline the composition and changes in the deposit portfolio as of:

6/30/18 3/31/18 12/31/17 9/30/17 6/30/17 ----------- ----------- --------- ----------- ----------- Demand $ 236,899 $ 224,486 $ 216,607 $ 208,494 $ 217,504 Savings 218,512 227,987 224,558 229,471 223,274 Money market demand 53,654 59,370 67,387 68,567 55,736 NOW 6,346 2,984 2,253 3,565 2,810 Time deposits 186,624 168,948 162,700 115,491 114,843 ----------- ----------- --------- ----------- ----------- Total deposits $ 702,035 $ 683,775 $ 673,505 $ 625,588 $ 614,167 - ------- - - ------- - - ------- - ------- - - ------- - 6/30/2018 vs 3/31/2018 6/30/2018 vs 6/30/2017 ------------------------ ------------------------ $ Variance % Variance $ Variance % Variance ----------- ----------- ----------- ----------- Demand $ 12,413 5.53 % $ 19,395 8.92 % Savings (9,475 ) -4.16 % (4,762 ) -2.13 % Money market demand (5,716 ) -9.63 % (2,082 ) -3.74 % NOW 3,362 112.67 % 3,536 125.84 % Time deposits 17,676 10.46 % 71,781 62.50 % ----------- ----------- Total deposits $ 18,260 2.67 % $ 87,868 14.31 % - ------- - - ------- - - ------- - - ------- -

Total deposits, like loans, have grown both quarter over quarter and year over year. Most of the growth continues to come in the form of demand and time deposits. The increase in demand deposits has been the direct result of our treasury management team working with municipalities and small business customers to ensure that we have the appropriate mix of products and services at a competitive price. The increase in time deposits has been the result of targeted CD specials and an increase in brokered and internet deposits to fund the remaining growth in the loan portfolio. We have implemented several strategic initiatives geared at accelerating deposit growth in upcoming periods to help provide organic funding to meet loan demands.

About Fentura Financial, Inc. and The State Bank

Fentura Financial, Inc. is the holding company for The State Bank. It was formed in 1987 and is traded on the OTCQX exchange under the symbol FETM, and was recognized as one of the Top 50 performing stocks in 2016 on that exchange.

The State Bank is a full-service, 4-Star Bauer Financial rated commercial, retail and trust bank headquartered in Fenton, Michigan. It currently operates 15 full-service branches in Genesee, Livingston, Oakland, Saginaw, and Shiawassee Counties and loan production offices in Washtenaw and Saginaw Counties. The State Bank was ranked #41 by S&P Global in terms of 2017 performance for banks under $1 billion in assets. The State Bank’s commercial department provides a complete array of products including lines of credit, term loans, commercial mortgages, SBA loans and a full-suite of cash management products. The retail department offers personal checking, savings, time and IRA deposit accounts and a wide array of loan products including home equity, auto and personal loans. The residential loan department offers construction, purchase and refinance residential mortgage loans. The wealth management department offers a full-service suite of trust and portfolio management services. The aim of The State Bank is to become and remain “Your Financial Partner for Life.” More information can be found at www.thestatebank.com.

CAUTIONARY STATEMENT: This press release contains certain forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning future growth in earning assets and net income. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services, interest rates and fees for services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

Contacts: Ronald L. Justice President & CEO Fentura Financial, Inc. 810.714.3902 Aaron D. Wirsing Chief Financial Officer Fentura Financial, Inc. 810.714.3925