Fentura Financial : Letter to Shareholders Regarding Contested Election

Fentura Financial, Inc. Board of Directors Issues LeƩer to Shareholders

VOTE THE WHITE CARD TODAY! ONLY YOUR LATEST DATED CARD WILL COUNT!

FENTON, Mich., May 3, 2023 -- Fentura Financial, Inc. (OTCQX: FETM) ("Fentura Financial" or "the Company"), the holding company for The State Bank, today issued a leƩer to Fentura Financial's shareholders in connecƟon with the Company's 2023 Annual MeeƟng of Shareholders (the "Annual MeeƟng") to be held on May 26, 2023. All Fentura Financial shareholders of record as of the close of business on March 28, 2023, are enƟtled to vote at the Annual MeeƟng.

CriƟcal items for our shareholders to consider:

• Paul Drueke ("Drueke") is an acƟvist shareholder that owns less than 0.6% of the Company's common stock and has decided to wage a costly and distracƟng proxy fight.
• Fentura Financial's slate of directors own substanƟal shares of the Company's stock, work and reside in the communiƟes the Company serves, and have excellent board, banking, and leadership experience.
• In contrast, Drueke's nominees, Mr. Thomas Messink and Mr. Jason Schnelker:

• 1. have no prior public company board or leadership experience, o have no significant financial industry experience,
     o own no shares of Fentura Financial's stock, and o are not invested in the Company's communiƟes.
• Given the current state of the banking industry, the Board of Fentura Financial believes Drueke's proposal is only for his own near-term benefit, and not in the best, long-term interest of allshareholders.
• The Board of Fentura Financial is overseeing a successful long-term strategy that has produced legacy results and strong earnings, and record loans, assets, and deposits.

VOTE ONLY THE WHITE CARD; DISCARD THE GREEN CARD!

May 3, 2023

Dear Fellow Shareholder:

Our Annual MeeƟng of Stockholders is May 26, 2023, and this year your vote is especially important. We urge you to protect the value of your investment in Fentura Financial by voƟng using the WHITE PROXY CARD TODAY. The green proxy card is being proposed by Paul Drueke, an acƟvist shareholder that owns less than 0.6% of the Company's common stock. His green proxy is not supported by either the Company's Board or Management and Fentura Financial urges you to disregard any future mailings or proxy cards you may receive from Drueke.

This year, Fentura Financial celebrates its 125th anniversary as a safe, sound and community-oriented bank. We believe our approach to create beƩer lives, beƩer businesses and beƩer communiƟes drives value for our shareholders. As our industry navigates a complex operaƟng environment associated with recent bank failures, higher interest rates and increased economic uncertainty, Paul Drueke, a beneficial shareholder of less than 0.6% of the Company's common stock, has decided to wage a costly and distracƟng proxy fight. Drueke's shareholder proposal would strip the Board of its proper authority and is designed to force the sale of our Bank. Having just reported strong earnings for the first quarter of 2023 that included record loans, assets, and deposits, we believe the future is bright for Fentura

Financial shareholders and that evaluaƟon of major transacƟons belongs in the hands of the Board of Directors.

Fentura Financial takes all proposals seriously and has a long-standing policy to engage with all shareholders. Since Drueke has been a shareholder in the Company, our management team and Board of Directors have interacted with him on mulƟple occasions. Throughout these meeƟngs, we believe Drueke has been uninterested in dialogue and has instead maintained a singular focus on selling the Bank now and proposing board members who will undertake that direcƟve. We can only surmise this is because the Ɵme is right for him personally to sell. However, in our view his singular focus is without comprehensive financial and operaƟonal analysis, or proper regard for market condiƟons. In addiƟon, his proposals have a strong likelihood of destroying shareholder value by publicly placing a for sale sign on our Bank.

We encourage all shareholders to disregard Drueke's proposals, discard the green proxy card, and vote

the white proxy card.

Board Members & Governance

Fentura Financial takes the composiƟon of its Board seriously. We regularly evaluate the experience, skills, and aƩributes of current and prospecƟve Board members. Skills important to our Board include banking sector experience, corporate finance experience, general business experience, Company stock ownership and community involvement. In addiƟon, our Board is focused on assembling a diverse set of directors that reflect the structure of our communiƟes and a comprehensive range of skills and experiences. To accomplish these goals, over the past two years we have started to refresh our Board. Of the Company's 11 current directors, 36% of our directors have tenures under two years, compared to 0% five years ago. In addiƟon, 27% of our current directors are females, compared to 0% five years ago. Fentura Financial's slate of directors help further this objecƟve; by contrast, Drueke has disclosed no diversity characterisƟcs with respect to his nominees of Mr. Messink and Mr. Schnelker.

Drueke's Improper Nominees and Process

In December 2022, Drueke proposed two candidates to our Board of Directors, Robert A. Herdoiza and David S. Lundeen.

Members of our management team, Board and NominaƟng and Corporate Governance CommiƩee, interviewed and engaged with both Mr. Herdoiza and Mr. Lundeen. In due course, Mr. Lundeen indicated that he was unwilling to serve on the Board if elected, so we were unable to conƟnue our interview process. AŌer engaging with Mr. Herdoiza, our Board decided to expand the number of directors serving on our Board and nominated him based on his financial experƟse, business qualificaƟons and prior roles as a CFA and a CFO, which the Board thought would be valuable to the Company.

Drueke has proposed Mr. Thomas Messink and Mr. Jason Schnelker as his two other nominees per his proxy statement. We believe the shareholders deserve to know the background with regard to these two nominaƟons. Drueke had submiƩed Mr. Messink's nominaƟon to the Company as a subsƟtute to Mr. Lundeen's nominaƟon. As menƟoned above, Mr. Lundeen withdrew his intent to serve. However, despite having an enƟre month since Mr. Lundeen's withdrawal, Drueke did not indicate that he desired to nominate a subsƟtute. Moreover, he submiƩed Mr. Messink's nominaƟon one day prior to the

scheduled date of the mailing of our proxy statement, the deadline of which was known to Drueke. Drueke provided our Board liƩle to no Ɵme to make a fair assessment of Mr. Messink's appointment. As to Mr. Schnelker's nominaƟon, it came as a complete surprise to the Board. The Company has been provided no informaƟon about Mr. Schnelker as would otherwise be required under its Bylaws, including his wriƩen consent to serve if elected.

Seƫng aside the manner in which Mr. Messink and Mr. Schnelker have been nominated, we note the following with respect to their purported qualificaƟons as contained in Drueke's materials: (i) Mr. Messink has no banking industry experience, and Mr. Schnelker's banking industry experience is limited to the draŌing of commercial loan forms, (ii) Mr. Messink has no board of directors experience, and Mr. Schnelker's board of directors experience is limited to nonprofits and trade organizaƟons, (iii) Mr. Messink owns no shares of Company stock, and Mr. Schnelker's ownership of Company stock has not been disclosed, and (iv) both Mr. Messink and Mr. Schnelker work and reside in Western Michigan, in excess of 75 miles from the Company's nearest branch.

While claiming best interest of shareholders, the above-described behavior on the part of Drueke has repeatedly shown his unwillingness to co-operate with the Board and to arrive at a reasonable resoluƟon. On the contrary, we believe he has acted in bad faith, withheld informaƟon, and has proposed director nominees who appear drasƟcally unqualified.

The Company has nominated exisƟng directors Ronald L. JusƟce, Ronald K. Rybar, and Debra F. Williams. Mr. JusƟce and Mr. Rybar cumulaƟvely have over 50 years of relevant banking and market experience, have significant experience serving on the boards of directors and decision-making commiƩees of for- profit corporaƟons, own substanƟal shares of Company stock, and work and reside in the communiƟes that the Company serves. In addiƟon to possessing certain similar characterisƟcs of Mr. JusƟce and Mr. Rybar, Ms. Williams brings extensive experience in the areas of strategic planning and execuƟon, organizaƟonal design, restructuring and alignment, employee and customer experience, as well as diversity, equity and inclusion iniƟaƟves. The qualiƟes and skills of Mr. JusƟce, Mr. Rybar and Ms. Williams are vital to navigaƟng the current banking environment, and stand in stark contrast to those of Mr. Messink and Mr. Schnelker.

Drueke's Request to Seek "Strategic AlternaƟves" including a Merger or Sale of Fentura Financial, Inc.

The Board of Directors has reviewed the proposal in a manner consistent with the Company's corporate governance processes and Directors' fiduciary duƟes. The Board of Directors believes Drueke's proposal is only for the near-term benefit of Drueke, and not in the best, long-term interest of all shareholders.

Drueke in his proxy states: "I believe now is the Ɵme to request the Board to pursue strategic

alternaƟves, including a sale or merger." He further seeks to compel the Company to "take all other steps necessary to acƟvely seek a sale or merger of Fentura Financial, Inc. on terms that will maximize share value for shareholders."

Given recent bank failures, net interest margin compression and increased economic uncertainty, the Board believes now is a terrible Ɵme to jump to any strategic conclusion without first conducƟng a market analysis.

Current economic and banking condiƟons make the environment for a sale or merger transacƟon very challenging. The Federal Reserve's historic rate increases have resulted in massive unrealized securiƟes

porƞolio losses in the banking industry. To date, three large regional banks have failed in 2023 (Silicon Valley Bank, Signature Bank and First Republic Bank) for having duraƟon risk in their investment porƞolios and concentraƟon of large uninsured deposits. Due to these events, combined with overall recessionary fears, bank stocks are trading at historically low levels.

On a broader scale, underscoring both the uncertainty and volaƟlity in the general economy, the S&P

500 index has been in a "Bear Market" (down 20% or more from its recent highs) for more than 200 days

• a stretch last seen in 1973, roughly 50 years ago. Bank stocks, as measured by the S&P U.S. BMI Bank Index, were down 17% in 2022 and another 12% year-to-date in 2023. According to an analysis created by a third-party Investment Bank, all publicly traded banks at April 28, 2023 have experienced an approximately 41% decline from the six-year average price-to-earnings raƟo, and an approximately 29% decline from the six-year average price-to-tangible book raƟo.

Due to all of the above factors, M&A volume and pricing have plummeted. Year-to-date, there have been only 28 transacƟons announced with only five in March and eight in April. On an annualized basis this would equate to just 84 transacƟons for 2023, compared to an average of 218 transacƟons annually since 2011.

Therefore, if the Bank were to pursue a sale or a merger now, the Board's belief is that without learning of the market senƟment and inclinaƟon, any proceeds Fentura Financial receives today would likely be lower than what the Company may be able to receive in the future.

The Board believes that the proper Ɵming of a merger or sale is of criƟcal importance in maximizing shareholder value. Compelling the Company to "take all other steps necessary to acƟvely seek a sale or merger of Fentura Financial, Inc. on terms that will maximize share value for shareholders" is likely to adversely affect the value of any such transacƟon by creaƟng the impression that the Company is under pressure to sell and that the Board would accept a lower price as a result. The Board strongly believes that it is in the most informed posiƟon to analyze all the complex variables and decide whether remaining independent or pursuing a merger is in the best interest of the Company and its shareholders. EvaluaƟng all alternaƟves through a reasoned diligence process is the best way to maximize shareholder value.

AdopƟon of Drueke's proposal is also likely to create uncertainty with respect to the Company's future, which would undermine the Company's relaƟonships with customers, employees and the communiƟes that the Bank serves. That uncertainty would have an adverse impact on the Company's ability to operate effecƟvely, including a decline in revenue due to the loss of high-quality employees and the customers that the Company and its employees serve. These consequences could result in erosion of the Company's value.

By contrast, the extraordinary transacƟon proposal on the WHITE PROXY CARD allows the Board

sufficient discreƟon to evaluate strategies and transacƟons that are in the best interest of shareholders.

Finally, Fentura Financial believes that the adopƟon of this proposal is ill-advised and unwarranted based on the arguments put forth in Drueke's supporƟng statement. Drueke makes a number of statements related to what he claims is the Company's long run of poor operaƟng results. Fentura Financial strongly disagrees with these asserƟons.

• Share Price: As the Company successfully eclipsed $1 billion in assets a few years ago, management and the Board recognized the need and opportunity to begin culƟvaƟng potenƟal research coverage and the investor interest that larger banks typically aƩract, in an effort to ideally enhance our market valuaƟon and trading liquidity. While recessionary fears and market volaƟlity over the past 12 - 18 months have been debilitaƟng for bank stocks, we believe we conƟnue to be well posiƟoned for when investors return to strong underlying fundamentals and proven records of performance over the past decade for a Company like ours.
• Dividends: Fentura has incorporated a successful growth strategy and believes for the Ɵme being that a modest dividend helps to prudently retain capital to insure well-capitalized status while supporƟng balance sheet growth. Despite this approach, the Company's regular quarterly cash dividend has actually increased from $0.03 per share for the fourth quarter of 2015 to $0.10 per share for the second quarter of 2023.
• Profitability - Drueke selected a one-year performance that fit his narraƟve. Over the last five year- period ending 2022, the Company's ROAA, ROAE and ROATE were the highest compared to our Michigan and Midwest peers.

5 Year Average	ROAA	ROAE	ROATE
Fentura Financial	1.19%	13.39%	14.52%
Michigan(1)	1.16%	12.14%	14.27%
Midwest(2)	1.07%	10.91%	12.23%

• Since 2012, the year our current CEO, Ron JusƟce, was appointed, Fentura Financial has increased annual net income from $1.3 million to $14.9 million in 2022. In each of the four years prior to Mr. JusƟce's stewardship, Fentura Financial reported losses. In each of the seven years leading to 2021, Fentura reported record earnings. As 2022 returned to a more normal environment, reported earnings receded slightly but sƟll reflect a "core" upward trajectory that had been building pre- pandemic and conƟnues into 2023.

Capital Management, Credit Quality, Safety and Soundness:

• Fentura has a robust capital management program. From Ɵme-to-Ɵme, the Company has repurchased shares in the open market with excess capital. This strategy reduces shares outstanding and enhances shareholder value through earnings per share accreƟon.
• Management acƟvely manages the concentraƟon of overall commercial real estate ("CRE") as well as subcategories and believes the CRE porƞolio is high quality. Nonperforming CRE loans are at historic low levels with low delinquency and charge-off history.
• Our Bank has an experienced and talented lending team, which has a demonstrated ability to originate high volumes of quality loans that support growth and business development in our communiƟes. Having a strong loan-to-deposit raƟo allows the Company to maintain a stable net interest margin, driving core profitability during volaƟle Ɵmes. Across the banking industry, banks have seen an increase in loan-to-deposit raƟos as intense compeƟƟon for deposits has heightened.
• Fentura Financial's capital raƟos are well above minimum safety and soundness guidelines set forth by regulators and above the Company's established target raƟos detailed in its Capital Policy. The