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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 Form 10-K
____________________
 þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 Commission file number 0-25752 FNBH BANCORP, INC. 
 MICHIGAN
    
    38-2869722(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)101 East Grand River, Howell, Michigan 48843(Address of principal executive offices) (Zip Code)Registrants telephone number, including area code: (517) 546-3150Securities registered pursuant to Section 12(b) of the Act: NoneSecurities registered pursuant to Section 12(g) of the Act:Common Stock, no par value(Title of Class)
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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. Yes þ No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendments to this Form 10-K. o Indicate by checkmark whether the registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2) Yes þ No o The aggregate market value of common stock held by nonaffiliates as of June 30, 2004, was
$99,299,469. As of March 1, 2005 there were outstanding 3,179,654 shares of the Corporations common stock (no
par value). Documents Incorporated by Reference:




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TABLE OF CONTENTS  PART IItem 1 - BusinessItem 2  PropertiesItem 3  Legal ProceedingsItem 4  Submission of Matters to a Vote of Security HoldersPART IIItem 5  Market for Registrants Common Equity, Related Stockholder Matters and Issuer            Purchases of Equity SecuritiesItem 6  Selected Financial DataItem 7 Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7a  Quantitative and Qualitative Disclosures about Market RiskItem 8  Financial Statements and Supplementary DataItem 9  Change in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A  Controls and ProceduresItem 9B  Other InformationPART IIIItem 10  Directors and Executive Officers of the RegistrantItem 11  Executive CompensationItem 12  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13  Certain Relationships and Related TransactionsItem 14  Principal Accountant Fees and ServicesPART IVItem 15  Exhibits and Financial Statement SchedulesSIGNATURESEXHIBIT INDEXAppendix I to the Corporation's Proxy Statement, (FNBH Bancorp, Inc. and Subsidiaries Consolidated Financial Statements)Subsidiaries of the RegistrantSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer    Table of Contents  
 PART I 
 Item 1 - Business FNBH Bancorp, Inc. (the Corporation), a Michigan business corporation, is a one-bank holding
company, which owns all of the outstanding capital stock of First National Bank in Howell (the
Bank). The Corporation was formed in 1988 for the purpose of acquiring all of the stock of the
Bank in a shareholder approved reorganization, which became effective in May 1989. The
Corporations internet address is www.fnbsite.com. Through our Internet website, we make available
free of charge, as soon as reasonably practical after such information has been filed with the
Securities and Exchange Commission, our Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports filed with the Securities and Exchange
Commission. Also available on our website are the respective Charters of the Boards Audit
Committee, Compensation Committee, and Nominating and Corporate Governance Committee, as well as
the Companys Code of Ethics for its Chief Executive Officer and other senior financial officers. The Bank was originally organized in 1934 as a national banking association. As of January
31, 2005, the Bank had approximately 130 full-time and part-time employees. None of the Banks
employees are subject to collective bargaining agreements. The Corporation does not directly
employ any personnel. The Bank serves primarily five communities, Howell, Brighton, Green Oak
Township, Hartland, and Fowlerville, all of which are located in Livingston County. The county has
historically been rural in character but has a growing suburban population. On November 26, 1997, H.B. Realty Co., a subsidiary of the Corporation, was established to
purchase land for a future branch site of the Bank and to hold title to other Bank real estate when
it is considered prudent to do so. Bank Services The Bank is a full-service bank offering a wide range of commercial and personal banking
services. These services include checking accounts, savings accounts, certificates of deposit,
commercial loans, real estate loans, installment loans, trust and investment services, collections,
travelers checks, night depository, safe deposit box and U.S. Savings Bonds. The Bank maintains
correspondent relationships with major banks in Detroit, pursuant to which the Bank engages in
federal funds sale and purchase transactions, the clearance of checks and certain foreign currency
transactions. The Bank also has a relationship with the Federal Home Loan Bank of Indianapolis
where it makes short term investments and where it has a line of credit of $43,700,000, of which
$35,600,000 is available, and $8,100,000 is funded as of year end. In addition, the Bank
participates with other financial institutions to fund certain large loans which would exceed the Banks legal
lending limit if made solely by the Bank. 2




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The Banks deposits are generated in the normal course of business, and the loss of any one
depositor would not have a materially adverse effect on the business of the Bank. As of December
31, 2004, the Banks certificates of deposit of $100,000 or more constituted approximately 14% of
total deposit liabilities. The Banks deposits are primarily from its service areas and the Bank
does not seek or encourage large deposits from outside the area. The Corporations cash revenues are derived primarily from dividends paid by the Bank. The
Banks principal sources of revenue are interest and fees on loans and interest on investment
securities. Interest and fees on loans constituted approximately 76% of total revenues for the
period ended December 31, 2004, and 79% for the period ended December 31, 2003. Interest on
investment securities, including short-term investments and federal funds sold, constituted
approximately 10% of total revenues in 2004 and 8% of total revenues in 2003. Revenues were also
generated from deposit service charges and other financial service fees. The Bank provides real estate, consumer, and commercial loans to customers in its market. As
of December 31, 2004, 36% of outstanding loans were for either commercial or residential
construction or development. Forty-three percent of the Banks loan portfolio is in fixed rate
loans. Most of these loans, approximately 97%, mature within five years of issuance. Approximately
$3,900,000 in loans (or about 3% of the Banks total loan portfolio) have fixed rates with
maturities exceeding five years. Sixty percent of the Banks interest-bearing deposits are in
savings, NOW, and MMDAs, all of which are variable rate products. Of the approximately $131,000,000
in certificates, $71,900,000 mature within a year, with the majority of the balance maturing within
a five year period. Requests to the Bank for credit are considered on the basis of credit worthiness of each
applicant, without consideration to race, color, religion, national origin, sex, marital status,
physical handicap, age, or the receipt of income from public assistance programs. Consideration is
also given to the applicants capacity for repayment, collateral, capital and alternative sources
of repayment. Loan applications are accepted at all the Banks offices and are approved under each
lending officers authority. Loan requests in excess of $1,500,000 are required to be presented to
the Board of Directors or the Executive Committee of the Board for its review and approval. As described in more detail below, the Banks cumulative one year gap ratio of rate sensitive
assets to rate sensitive liabilities for the period ended December 31, 2004, was 42% asset
sensitive, compared to 34% asset sensitive at December 31, 2003. See discussion and table under
Quantitative and Qualitative Disclosures about Market Risk in Item 7a below. The Bank sells participations in commercial loans to other financial institutions approved by
the Bank, for the purpose of meeting legal lending limit requirements or loan concentration
considerations. The Bank regularly sells fixed rate residential mortgages to the Federal Home Loan
Mortgage Corporation (Freddie Mac) while retaining servicing on 3




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the sold loans. Those residential real estate mortgage loan requests that do not meet Freddie Mac criteria are reviewed by the Bank
for approval and, if approved, are retained in the Banks loan portfolio. The Bank also may
purchase loans which meet its normal credit standards. The Banks investment policy is designed to provide a framework within which the Bank may
maximize earnings potential by acquiring assets designed to enhance profitability, absorb excess
funds, provide liquidity, maintain a high credit quality, implement interest rate risk measures,
provide collateral for pledging, generate a favorable return on investments, and provide tax-exempt
income as appropriate. Safety, liquidity, and interest rate risk standards will not be compromised
in favor of increased return. When making investment decisions, the Bank considers investment type,
credit quality (including maximum credit exposure to one obligor at any one time) and maturity of
investments. Consideration is also given to each investments risk-weight as determined by
regulatory Risk-Based Capital Guidelines. The portfolio must be coordinated with the overall asset/liability management of the balance
sheet. The use of the investment portfolio for market oriented trading activities or speculative
purposes are expressly prohibited unless otherwise approved by the Board of Directors. Investments
are acquired for which the Bank has both the ability and intent to hold to maturity. Specific
limits determine the types, maturities, and amounts of securities the Bank intends to hold.
Guidelines on liquidity requirements, as well as an acknowledgement of the Banks credit profile
and capital position may affect the Banks ability to hold securities to maturity. It is not the
intention of management to profit from short-term securities price movements. Business reasons for
securities purchases and sales will be noted at the time of the transaction. All securities dealers
effecting transactions in securities held or purchased by the Bank must be approved by the Board of
Directors. Bank Competition The Bank has nine offices within the five communities it serves, all of which are located in
Livingston County, Michigan. Four of the offices, including the main office, are located in Howell.
There are two facilities in Brighton, and one each in Green Oak Township, Hartland, and
Fowlerville. See Properties below for more detail on these facilities. Within these communities,
its principal competitors are Fifth Third Bank, National City Bank, Standard Federal and Comerica
Bank. Each of these financial institutions, which are headquartered in larger metropolitan areas,
has significantly greater assets and financial resources than the Corporation. Among the principal
competitors in the communities in which the Bank operates, the Bank is the only financial
institution with a local community headquarters. Based on deposit information as of June 30, 2004,
the Bank holds approximately 23.35% of local deposits, compared to approximately 14.45% held by
Fifth Third Bank, approximately 11.01% held by National City, approximately 10.55% held by Republic
Bank, and approximately 8.42% held by Standard Federal. Information as to asset size of competitor
financial institutions is derived from publicly available reports filed by and with regulatory
agencies. Within the Banks markets, Fifth Third Bank maintains five branch offices, National City
Bank operates seven branch 4




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offices, Republic Bank has five branch offices and Standard Federal has
three branch offices. Management is not aware of any plans by these financial institutions to
expand their presence in the Banks market. The financial services industry continues to become increasingly competitive. Principal
methods of competition include loan and deposit pricing, advertising and marketing programs, and
the types and quality of services provided. The deregulation of the financial services industry and
the easing of restrictions on bank and holding company activities have led to increased competition
among banks and other financial service providers for funds, loans, and a broad array of other
financial services. There has been increased competition within the Banks market over the past few
years as new branches are built to meet the needs of the growing population in the county.
Management continues to evaluate the opportunities for the expansion of products and services. Growth of Corporation The following table sets forth certain information regarding the growth of the Corporation: Balances as of December 31,(in thousands)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Total Assets
    
    $
    456,603
    
    
    $
    449,818
    
    
    $
    420,686
    
    
    $
    392,978
    
    
    $
    348,363Loans, Net of Unearned Income
    
    
    357,377
    
    
    
    347,086
    
    
    
    327,117
    
    
    
    286,280
    
    
    
    255,414Securities
    
    
    64,348
    
    
    
    55,435
    
    
    
    44,611
    
    
    
    55,989
    
    
    
    39,311Noninterest-Bearing Deposits
    
    
    71,785
    
    
    
    69,234
    
    
    
    62,232
    
    
    
    62,938
    
    
    
    55,253Interest-Bearing Deposits
    
    
    327,478
    
    
    
    329,839
    
    
    
    311,840
    
    
    
    288,731
    
    
    
    254,961Total Deposits
    
    
    399,263
    
    
    
    399,073
    
    
    
    374,072
    
    
    
    351,669
    
    
    
    310,214Shareholders Equity
    
    
    45,716
    
    
    
    41,235
    
    
    
    37,580
    
    
    
    32,404
    
    
    
    28,887
 Through 2004, the Bank operated nine branch facilities: one in downtown Howell, one at
Lake Chemung (five miles east of downtown Howell), one is a grocery store branch, located west of
downtown Howell, two in Brighton (one on the east side and one on the west side), one in Hartland,
one in the village of Fowlerville, and one in Genoa Township. The final branch, which opened in
December 2003, is in Green Oak Township, which is 11 miles southwest of downtown Howell. In the
time period presented, all of the Banks branches grew due to general growth in the county. 5




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SUPERVISION AND REGULATION The following is a summary of certain statutes and regulations affecting the Corporation and
the Bank. This summary is qualified in its entirety by such statutes and regulations. A change in
applicable laws or regulations may have a material effect on the Corporation, the Bank and the
business of the Corporation and the Bank. General Financial institutions and their holding companies are extensively regulated under federal and
state law. Consequently, the growth and earnings performance of the Corporation and the Bank can be
affected not only by management decisions and general economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental regulatory authorities.
Those authorities include, but are not limited to, the Board of Governors of the Federal Reserve
System (the Federal Reserve Board), the FDIC, the Office of the Comptroller of the Currency
(OCC), the Internal Revenue Service, and state taxing authorities. The effect of such statutes,
regulations and policies can be significant, and cannot be predicted with a high degree of
certainty. Federal and state laws and regulations generally applicable to financial institutions and
their holding companies regulate, among other things, the scope of business, investments, reserves
against deposits, capital levels relative to operations, lending activities and practices, the
nature and amount of collateral for loans, the establishment of branches, mergers, consolidations
and dividends. The system of supervision and regulation applicable to the Corporation and the Bank
establishes a comprehensive framework for their respective operations and is intended primarily for
the protection of the FDICs deposit insurance funds, the depositors of the Bank, and the public,
rather than shareholders of the Bank or the Corporation. Federal law and regulations establish supervisory standards applicable to the lending
activities of the Bank, including internal controls, credit underwriting, loan documentation and
loan-to-value ratios for loans secured by real property. The Corporation General. The Corporation is a bank holding company and, as such, is registered with, and
subject to regulation by, the Federal Reserve Board under the Bank Holding Company Act, as amended
(the BHCA). Under the BHCA, the Corporation is subject to periodic examination by the Federal
Reserve Board, and is required to file with the Federal Reserve Board periodic reports of its
operations and such additional information as the Federal Reserve Board may require. In accordance with Federal Reserve Board policy, the Corporation is expected to act as a
source of financial strength to the Bank and to commit resources to support the Bank in
circumstances where the Corporation might not do so absent such policy. In 6




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addition, if the Banks capital becomes impaired, the OCC may require the Bank to restore its capital by a
special assessment upon the Corporation as the Banks sole shareholder. If the Corporation were to
fail to pay any such assessment, the directors of the Bank would be required, under federal law, to
sell the shares of the Banks stock owned by the Corporation at public auction and use the proceeds
of the sale to restore the Banks capital. Investments and Activities. In general, any direct or indirect acquisition by the Corporation
of any voting shares of any bank which would result in the Corporations direct or indirect
ownership or control of more than 5% of any class of voting shares of such bank, and any merger or
consolidation of the Corporation with another bank company, will require the prior written approval
of the Federal Reserve Board under the BHCA. The merger or consolidation of an existing bank subsidiary of the Corporation with another
bank, or the acquisition by such a subsidiary of assets of another bank, or the assumption of
liability by such a subsidiary to pay any deposits in another bank, will require the prior written
approval of the responsible Federal depository institution regulatory agency under the Bank Merger
Act. In addition, in certain such cases an application to, and the prior approval of, the Federal
Reserve Board under the BHCA and/or the OCC, may be required. With certain limited exceptions, the BHCA prohibits any bank holding company from engaging,
either directly or indirectly through a subsidiary, in any activity other than managing or
controlling Bank unless the proposed non-banking activity is one that the Federal Reserve Board has
determined to be so closely related to banking or managing or controlling Bank as to be a proper
incident thereto. Under current Federal Reserve Board regulations, such permissible non-banking
activities include such things as mortgage banking, equipment leasing, securities brokerage, and
consumer and commercial finance company operations. Well-capitalized and well-managed bank holding
companies may engage de novoin certain types of non-banking activities without prior notice to, or
approval of, the Federal Reserve Board, provided that written notice of the new activity is given
to the Federal Reserve Board within 10 business days after the activity is commenced. If a bank
holding company wishes to engage in a non-banking activity by acquiring a going concern, prior
notice and/or prior approval will be required, depending upon the activities in which the company
to be acquired is engaged, the size of the company to be acquired and the financial and managerial
condition of the acquiring bank holding company. Eligible bank holding companies that elect to operate as financial holding companies may
engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including
securities and insurance activities and any other activity that the Federal Reserve Board, in
consultation with the Secretary of the Treasury, determines by regulation or order is financial in
nature, incidental to any such financial activity or complementary to any such financial activity
and does not pose a substantial risk to the safety or soundness of depository institutions or the
financial system generally. The BHCA generally does not place territorial restrictions on the
domestic activities of 7




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non-bank subsidiaries of bank or financial holding companies. While the Corporation believes it
is eligible to elect to operate as a financial holding company, as of the date of this filing, it
has not applied for approval to operate as a financial holding company. Capital Requirements. The Federal Reserve Board uses capital adequacy guidelines in its
examination and regulation of bank holding companies. If capital falls below minimum guidelines, a
bank holding company may, among other things, be denied approval to acquire or establish additional
bank or non-bank businesses. The Federal Reserve Boards capital guidelines establish the following minimum regulatory
capital requirements for bank holding companies: (i) a leverage capital requirement expressed as a
percentage of total average assets, and (ii) a risk-based requirement expressed as a percentage of
total risk-weighted assets. The leverage capital requirement consists of a minimum ratio of Tier 1
capital (which consists principally of shareholders equity) to total average assets of 3% for the
most highly rated companies, with minimum requirements of 4% to 5% for all others. The risk-based
requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8%, of
which at least one-half must be Tier 1 capital. The risk-based and leverage standards presently used by the Federal Reserve Board are minimum
requirements, and higher capital levels may be required if warranted by the particular
circumstances or risk profiles of individual banking organizations. The Federal Reserve Board has
not advised the Corporation of any specific minimum Tier 1 Capital leverage ratio applicable to it. Dividends. The Corporation is a corporation separate and distinct from the Bank. Most of the
Corporations revenues are received by it in the form of dividends paid by the Bank. Thus, the
Corporations ability to pay dividends to its shareholders is indirectly limited by statutory
restrictions on the Banks ability to pay dividends as described below. Further, in a policy
statement, the Federal Reserve Board has expressed its view that a bank holding company
experiencing earnings weaknesses should not pay cash dividends exceeding its net income or which
can only be funded in ways that weaken the bank holding companys financial health, such as by
borrowing. Additionally, the Federal Reserve Board possesses enforcement powers over bank holding
companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or
unsound practices or violations of applicable statutes and regulations. Among these powers is the
ability to proscribe the payment of dividends by Bank and bank holding companies. Similar
enforcement powers over the Bank are possessed by the FDIC. The prompt corrective action
provisions of federal law and regulation authorizes the Federal Reserve Board to restrict the
payment of dividends by the Corporation for an insured bank which fails to meet specified capital
levels. In addition to the restrictions on dividends imposed by the Federal Reserve Board, the
Michigan Business Corporation Act provides that dividends may be legally declared or paid only if
after the distribution a corporation, such as the Corporation, can pay its debts as they come due in the usual course of business and its total assets equal or exceed the 8




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sum of its liabilities plus the amount that would be needed to satisfy the preferential rights upon
dissolution of any holders of preferred stock whose preferential rights are superior to those
receiving the distribution. The Corporations Articles of Incorporation do not authorize the
issuance of preferred stock and there are no current plans to seek such authorization. The Corporations common stock is registered with the Securities and Exchange Commission
(SEC) under the Securities Act of 1933, as amended (the Securities Act), and the Securities
Exchange Act of 1934, as amended (the Exchange Act). As a result, the Corporation is subject to
the information, proxy solicitation, insider trading and other restrictions and requirements of the
SEC under the Exchange Act. The Sarbanes-Oxley Act of 2002 provides for numerous changes to the
reporting, accounting, corporate governance and business practices of companies as well as
financial and other professionals who have involvement with the U.S. public securities markets. The
Corporations securities are not listed for trading on any national or regional securities
exchange. The Bank General. The Bank is organized as a national banking association and is, therefore, regulated
and supervised by the OCC. The deposit accounts of the Bank are insured by the Bank Insurance Fund
(the BIF) of the FDIC. Consequently, the Bank is also subject to the provisions of the Federal
Deposit Insurance Act. The Bank is subject to the examination, supervision, reporting and
enforcement requirements of the OCC as its primary federal regulator. The OCC and the federal and
state laws applicable to the Bank and its operations, extensively regulate various aspects of the
banking business including, among other things, permissible types and amounts of loans, investments
and other activities, capital adequacy, branching, interest rates on loans and on deposits, the
maintenance of non-interest bearing reserves on deposit accounts, and the safety and soundness of
banking practices. Deposit Insurance. As an FDIC-insured institution, the Bank is required to pay deposit
insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system
under which all insured depository institutions are placed into one of nine categories and assessed
insurance premiums, based upon their respective levels of capital and results of supervisory
evaluation. Institutions classified as well-capitalized (as defined by the FDIC) and considered
healthy pay the lowest premium while institutions that are less than adequately capitalized (as
defined by the FDIC) and considered of substantial supervisory concern pay the highest premium.
Risk classification of all insured institutions is made by the FDIC for each semi-annual assessment
period. The Federal Deposit Insurance Act (FDIA) requires the FDIC to establish assessment rates at
levels which will maintain the Deposit Insurance Fund at a mandated reserve ratio of not less than
1.25% of estimated insured deposits. For several years, the BIF reserve ratio has been at or above
the mandated ratio and assessments have ranged from 0% of deposits for institutions in the lowest risk category, such as the Bank, to .27% of
deposits in the highest risk category. 9




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FICO Assessments.The Bank, as a member of the BIF, is subject to assessments to cover the
payments on outstanding obligations of the Financing Corporation (FICO). FICO was created to
finance the recapitalization of the Federal Savings and Loan Insurance Corporation, the predecessor
to the FDICs Savings Association Insurance Fund (the SAIF) which insures the deposits of thrift
institutions. From now until the maturity of the outstanding FICO obligations in 2019, BIF members
and SAIF members will share the cost of the interest on the FICO bonds on a pro ratabasis. It is
estimated that FICO assessments during this period will be less than 0.025% of deposits. OCC Assessments.National Banks are required to pay supervisory fees to the OCC to fund the
operations of the OCC. The amount of supervisory fees paid by a national bank is based upon the
banks total assets, as reported to the OCC. Capital Requirements. The OCC has established the following minimum capital standards for
national banks: a leverage requirement consisting of a minimum ratio of Tier 1 capital to total
average assets of 3% for the most highly-rated Bank with minimum requirements of 4% to 5% for all
others, and a risk-based capital requirement consisting of a minimum ratio of total capital to
total risk-weighted assets of 8%, at least one-half of which must be Tier 1 capital. Tier 1 capital
consists principally of shareholders equity. These capital requirements are minimum requirements.
Higher capital levels will be required if warranted by the particular circumstances or risk
profiles of individual institutions. Federal law provides the federal banking regulators with broad power to take prompt corrective
action to resolve the problems of undercapitalized institutions. The extent of the regulators
powers depends on whether the institution in question is well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, or critically
undercapitalized. Federal regulations define these capital categories as follows: Total
    
    Tier 1Risk-Based
    
    Risk-BasedCapital Ratio
    
    Capital Ratio
    
    Leverage RatioWell capitalized
    
    10% or above
    
    6% or above
    
    5% or aboveAdequately capitalized
    
    8% or above
    
    4% or above
    
    4% or aboveUndercapitalized
    
    Less than 8%
    
    Less than 4%
    
    Less than 4%Significantly undercapitalized
    
    Less than 6%
    
    Less than 3%
    
    Less than 3%Critically undercapitalized
    
    
    
    
    
    A ratio of tangible equity
to total assets of 2% or
 10




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As of December 31, 2004, each of the Banks ratios exceeded minimum requirements for the well
capitalized category. Depending upon the capital category to which an institution is assigned, the regulators
corrective powers include: requiring the submission of a capital restoration plan; placing limits
on asset growth and restrictions on activities; requiring the institution to issue additional
capital stock (including additional voting stock) or to be acquired; restricting transactions with
affiliates; restricting the interest rate the institution may pay on deposits; ordering a new
election of directors of the institution; requiring that senior executive officers or directors be
dismissed; prohibiting the institution from accepting deposits from correspondent Bank; requiring
the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on
subordinated debt; and ultimately, appointing a receiver for the institution. In general, a depository institution may be reclassified to a lower category than is indicated
by its capital levels if the appropriate federal depository institution regulatory agency
determines the institution to be otherwise in an unsafe or unsound condition or to be engaged in an
unsafe or unsound practice. This could include a failure by the institution, following receipt of
a less-than-satisfactory rating on its most recent examination report, to correct the deficiency. Dividends. Under federal law, the Bank is restricted as to the maximum amount of dividends it
may pay on its common stock. The Bank may not pay dividends except out of undivided net profits
then on hand after deducting its losses and bad debts. In addition, the Bank is required by
federal law to obtain the prior approval of the OCC for the declaration or payment of a dividend,
if the total of all dividends declared by the Banks Board of Directors in any year will exceed the
total of (i) the Banks retained net income (as defined and interpreted by regulation) for that
year plus (ii) the retained net income for the preceding two years, less any required transfers to
surplus. Federal law generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to its holding company
if the depository institution would thereafter be undercapitalized. Further, federal regulatory
agencies can prohibit a banking institution or bank holding company from engaging in unsafe and
unsound business practices and could prohibit payment of dividends if such payment could be deemed
an unsafe and unsound business practice. Insider Transactions. The Bank is subject to certain restrictions imposed by the Federal
Reserve Act on any extensions of credit to the Corporation or its subsidiaries, on investments in
the stock or other securities of the Corporation or its subsidiaries and the acceptance of the
stock or other securities of the Corporation or its subsidiaries as collateral for loans. Certain
limitations and reporting requirements are also placed on extensions of credit by the Bank to its
directors and officers, to directors and officers of the Corporation and its subsidiaries, to
principal shareholders of the Corporation, and to related interests of such directors, officers
and principal shareholders. In addition, federal law and regulations may affect the terms upon
which any person becoming a director or officer of 11




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the Corporation or one of its subsidiaries or a principal shareholder of the Corporation may
obtain credit from Bank with which the Bank maintains a correspondent relationship. Safety and Soundness Standards. The federal banking agencies have adopted guidelines to
promote the safety and soundness of federally insured depository institutions. These guidelines
establish standards for internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and
benefits, asset quality and earnings. Consumer Protection Laws. The Banks businesses include making a variety of types of loans to
individuals. In making these loans, the Bank is subject to State usury and regulatory laws and to
various federal statutes, including the privacy of consumer financial information provisions of the
Gramm-Leach-Bliley Act and regulations promulgated there under, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act,
and the Home Mortgage Disclosure Act, and the regulations promulgated there under, which prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and settlement costs,
and regulate the mortgage loan servicing activities of the Bank, including the maintenance and
operation of escrow accounts and the transfer of mortgage loan servicing. In receiving deposits,
the Bank is subject to extensive regulation under State and federal law and regulations, including
the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy Act, the
Electronic Funds Transfer Act, and the Federal Deposit Insurance Act. Violation of these laws
could result in the imposition of significant damages and fines upon the Bank and its directors and
officers. 12




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##### Table of Contents



I. SELECTED STATISTICAL INFORMATION (A)Distribution of Assets, Liabilities, and Shareholders Equity (B)Interest Rates and Interest Differential The table on the following page shows the daily average balances for major categories of
interest earning assets and interest bearing liabilities, interest earned (on a taxable equivalent
basis) or paid, and the effective rate or yield, for the three years ended December 31, 2004, 2003,
and 2002. Net interest income is the difference between interest earned on loans, securities and other
earning assets and interest paid on deposits and borrowed funds. In the following tables, the
interest earned on investments and loans is expressed on a fully taxable equivalent (FTE) basis.
Tax exempt interest is increased to an amount comparable to interest subject to federal income
taxes in order to properly evaluate the effective yields earned on earning assets. The tax
equivalent adjustment is based on a federal income tax rate of 34%. The following Yield Analysis
shows that the Banks interest margin decreased 10 basis points in 2004 as a result of a decrease
of 32 basis points in yield on earning assets, partially offset by a decrease of 26 basis points in
the interest cost on deposits and borrowings. In 2003, the interest margin decreased 9 basis
points due to a 69 basis point decrease in yield on earning assets offset by a 72 basis point
decrease in interest cost. 13




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##### Table of Contents



Yield Analysis of Consolidated Average Assets and Liabilities (dollars in
thousands)
 2004
    
    
    2003
    
    
    2002Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsInterest earning assets:Short term investments
    
    $
    14,587
    
    
    $
    166.0
    
    
    
    1.14
    %
    
    $
    9,625
    
    
    $
    103.4
    
    
    
    1.07
    %
    
    $
    3,522
    
    
    $
    57.4
    
    
    
    1.63
    %Certificates of deposit
    
    
    3,817
    
    
    
    95.8
    
    
    
    2.51
    %
    
    
    3,135
    
    
    
    109.2
    
    
    
    3.48
    %
    
    
    5,424
    
    
    
    177.7
    
    
    
    3.28
    %Securities:Taxable
    
    
    46,914
    
    
    
    1,843.6
    
    
    
    3.93
    %
    
    
    29,550
    
    
    
    1,205.3
    
    
    
    4.08
    %
    
    
    34,869
    
    
    
    1,614.7
    
    
    
    4.63
    %Tax-exempt
    
    
    15,612
    
    
    
    1,083.4
    
    
    
    6.94
    %
    
    
    15,845
    
    
    
    1,109.0
    
    
    
    7.00
    %
    
    
    17,109
    
    
    
    1,186.9
    
    
    
    6.94
    %Loans(1)(2)
    
    
    340,859
    
    
    
    22,280.3
    
    
    
    6.54
    %
    
    
    340,384
    
    
    
    22,805.8
    
    
    
    6.70
    %
    
    
    311,060
    
    
    
    23,197.8
    
    
    
    7.46
    %Total earning assets and total
interest income
    
    
    421,789
    
    
    $
    25,469.1
    
    
    
    6.04
    %
    
    
    398,539
    
    
    $
    25,332.7
    
    
    
    6.36
    %
    
    
    371,984
    
    
    $
    26,234.5
    
    
    
    7.05
    %Cash and due from banks
    
    
    12,508
    
    
    
    
    
    
    
    
    
    
    
    13,018
    
    
    
    
    
    
    
    
    
    
    
    14,641All other assets
    
    
    18,202
    
    
    
    
    
    
    
    
    
    
    
    18,333
    
    
    
    
    
    
    
    
    
    
    
    17,723Allowance for loan loss
    
    
    (6,203
    )
    
    
    
    
    
    
    
    
    
    
    (5,871
    )
    
    
    
    
    
    
    
    
    
    
    (5,436
    )Total assets
    
    $
    446,296
    
    
    
    
    
    
    
    
    
    
    $
    424,019
    
    
    
    
    
    
    
    
    
    
    $
    398,912Liabilities and
Shareholders EquityInterest bearing deposits:NOW, savings & MMDA
    
    $
    184,792
    
    
    $
    1,175.8
    
    
    
    0.64
    %
    
    $
    172,611
    
    
    $
    1,468.5
    
    
    
    0.85
    %
    
    $
    153,651
    
    
    $
    2,286.0
    
    
    
    1.49
    %Time deposits
    
    
    138,463
    
    
    
    4,041.8
    
    
    
    2.92
    %
    
    
    135,842
    
    
    
    4,288.9
    
    
    
    3.16
    %
    
    
    131,019
    
    
    
    5,154.8
    
    
    
    3.93
    %Short term borrowings
    
    
    626
    
    
    
    12.2
    
    
    
    1.95
    %
    
    
    1,300
    
    
    
    17.7
    
    
    
    1.37
    %
    
    
    8,430
    
    
    
    167.6
    
    
    
    1.99
    %FHLBI advances
    
    
    5,080
    
    
    
    376.1
    
    
    
    7.40
    %
    
    
    5,337
    
    
    
    391.7
    
    
    
    7.34
    %
    
    
    5,578
    
    
    
    408.8
    
    
    
    7.23
    %Total interest bearing
liabilities and total interest
expenses
    
    $
    328,961
    
    
    $
    5,605.9
    
    
    
    1.70
    %
    
    $
    315,090
    
    
    $
    6,166.8
    
    
    
    1.96
    %
    
    $
    298,678
    
    
    $
    8,017.2
    
    
    
    2.68
    %Noninterest bearing deposits
    
    
    70,477
    
    
    
    
    
    
    
    
    
    
    
    65,719
    
    
    
    
    
    
    
    
    
    
    
    61,223All other liabilities
    
    
    3,502
    
    
    
    
    
    
    
    
    
    
    
    3,671
    
    
    
    
    
    
    
    
    
    
    
    3,925Shareholders Equity
    
    
    43,356
    
    
    
    
    
    
    
    
    
    
    
    39,539
    
    
    
    
    
    
    
    
    
    
    
    35,086Total liabilities and
shareholders equity
    
    $
    446,296
    
    
    
    
    
    
    
    
    
    
    $
    424,019
    
    
    
    
    
    
    
    
    
    
    $
    398,912Interest spread
    
    
    
    
    
    
    
    
    
    
    4.34
    %
    
    
    
    
    
    
    
    
    
    
    4.40
    %
    
    
    
    
    
    
    
    
    
    
    4.37
    %Net interest income-FTE
    
    
    
    
    
    $
    19,863.2
    
    
    
    
    
    
    
    
    
    
    $
    19,165.9
    
    
    
    
    
    
    
    
    
    
    $
    18,217.3Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.71
    %
    
    
    
    
    
    
    
    
    
    
    4.81
    %
    
    
    
    
    
    
    
    
    
    
    4.90
    %
   (1)
    
    Included in average daily loan balances are non-accruing loans with average balances of $2,426,000 in 2004, $4,751,000 in 2003, and $2,322,000 in 2002.(2)
    
    Interest on loans includes origination fees totaling $726,000 in 2004, $720,000 in 2003, and $750,000 in 2002. 14




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##### Table of Contents



(C)The following table sets forth the effects of volume and rate changes on net
interest income on a taxable equivalent basis. All amounts are stated in thousands of dollars. Year ended
    
    
    Year endedDecember 31, 2004 compared to
    
    
    December 31, 2003 compared toYear ended December 31, 2003
    
    
    Year ended December 31, 2002Amount of Increase (Decrease)
    
    
    Amount of Increase (Decrease)due to change in
    
    
    due to change inTotal
    
    
    
    
    
    
    
    
    
    
    TotalAmount
    
    
    
    
    
    
    
    
    
    
    AmountOf
    
    
    
    
    
    
    
    
    
    
    ofAverage
    
    
    Increase
    
    
    
    
    
    
    Average
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)
    
    
    Volume
    
    
    Rate
    
    
    (Decrease)Interest Income:Short term investments
    
    $
    53
    
    
    $
    9
    
    
    $
    62
    
    
    $
    99
    
    
    $
    (53
    )
    
    $
    46Certificates of deposit
    
    
    24
    
    
    
    (37
    )
    
    
    (13
    )
    
    
    (75
    )
    
    
    6
    
    
    
    (69
    )Securities:Taxable
    
    
    708
    
    
    
    (70
    )
    
    
    638
    
    
    
    (246
    )
    
    
    (163
    )
    
    
    (409
    )Tax Exempt
    
    
    (16
    )
    
    
    (9
    )
    
    
    (25
    )
    
    
    (88
    )
    
    
    10
    
    
    
    (78
    )Loans
    
    
    32
    
    
    
    (557
    )
    
    
    (525
    )
    
    
    2,187
    
    
    
    (2,579
    )
    
    
    (392
    )Total interest income
    
    $
    801
    
    
    $
    (664
    )
    
    $
    137
    
    
    $
    1,877
    
    
    $
    (2,779
    )
    
    $
    (902
    )Interest Expense:Interest bearing deposits:NOW, savings & MMDA
    
    $
    104
    
    
    $
    (396
    )
    
    $
    (292
    )
    
    $
    282
    
    
    $
    (1,100
    )
    
    $
    (818
    )Time deposits
    
    
    83
    
    
    
    (330
    )
    
    
    (247
    )
    
    
    190
    
    
    
    (1,055
    )
    
    
    (865
    )Short term borrowings
    
    
    (9
    )
    
    
    4
    
    
    
    (5
    )
    
    
    (142
    )
    
    
    (8
    )
    
    
    (150
    )FHLBI & other borrowings
    
    
    (19
    )
    
    
    3
    
    
    
    (16
    )
    
    
    (18
    )
    
    
    1
    
    
    
    (17
    )Total interest expense
    
    $
    159
    
    
    $
    (719
    )
    
    $
    (560
    )
    
    $
    312
    
    
    $
    (2,162
    )
    
    $
    (1,850
    )Net interest income (FTE)
    
    $
    642
    
    
    $
    55
    
    
    $
    697
    
    
    $
    1,565
    
    
    $
    (617
    )
    
    $
    948
 The change in interest due to changes in both volume and rate has been allocated to the change due
to volume and the change due to rate in proportion to the relationship of the absolute dollar
amounts of change in each. 15




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##### Table of Contents



II. INVESTMENT PORTFOLIO (A)The following table sets forth the book value of held to maturity securities and the fair
value of available for securities at December 31: (in thousands)2004
    
    
    2003
    
    
    2002Held to maturity:States and political subdivisions
    
    $
    16,009
    
    
    $
    15,051
    
    
    $
    16,863Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    26Total
    
    $
    16,009
    
    
    $
    15,051
    
    
    $
    16,889Available for sale:U.S. Treasury and government agencies
    
    $
    29,738
    
    
    $
    22,151
    
    
    $
    12,032Corporate securities
    
    
    1,038
    
    
    
    4,637
    
    
    
    4,721Mortgage-backed securities
    
    
    16,432
    
    
    
    12,513
    
    
    
    9,925FRB Stock
    
    
    44
    
    
    
    44
    
    
    
    44FHLBI Stock
    
    
    1,087
    
    
    
    1,039
    
    
    
    1,000Total
    
    $
    48,339
    
    
    $
    40,384
    
    
    $
    27,722
 (B)The following table sets forth contractual maturities of securities at
December 31, 2004 and the weighted average yield of such securities: (dollars in thousands)Maturing After
    
    
    Maturing After
    
    
    Maturing AfterMaturing Within
    
    
    One But Within
    
    
    Five But Within
    
    
    Ten YearsOne Year
    
    
    Five Years
    
    
    Ten YearsAmount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldHeld to maturityStates and political
subdivisions
    
    $
    1,280
    
    
    
    7.15
    %
    
    $
    8,926
    
    
    
    6.78
    %
    
    $
    1,953
    
    
    
    6.52
    %
    
    $
    3,850
    
    
    
    6.74
    %Tax equivalent adjustment
for calculations of yield
    
    $
    27
    
    
    
    
    
    
    $
    187
    
    
    
    
    
    
    $
    41
    
    
    
    
    
    
    $
    81Available for saleU.S. Agency
    
    $
    2,987
    
    
    
    2.89
    %
    
    $
    25,773
    
    
    
    3.32
    %
    
    $
    978
    
    
    
    4.40
    %
    
    $
    
    
    
    
    Corporate bonds
    
    
    
    
    
    
    
    
    
    
    1,038
    
    
    
    6.10
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mortgage backed
securities
    
    
    
    
    
    
    
    
    
    
    781
    
    
    
    5.51
    %
    
    
    4,709
    
    
    
    3.84
    %
    
    
    10,943
    
    
    
    5.01
    %FRB Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    6.00
    %FHLBI Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,086
    
    
    
    4.43
    %Total
    
    $
    2,987
    
    
    
    2.89
    %
    
    $
    27,592
    
    
    
    3.49
    %
    
    $
    5,687
    
    
    
    3.94
    %
    
    $
    12,073
    
    
    
    4.96
    %
 16




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##### Table of Contents



The rates set forth in the tables above for obligations of state and political
subdivisions have been restated on a fully tax equivalent basis assuming a 34% marginal tax rate.
The amount of the adjustment is as follows: Rate on TaxTax-Exempt Rate
    
    
    Adjustment
    
    
    Equivalent BasisUnder 1 year
    
    
    5.05
    %
    
    
    2.10
    %
    
    
    7.15
    %1-5 years
    
    
    4.68
    %
    
    
    2.10
    %
    
    
    6.78
    %5-10 years
    
    
    4.42
    %
    
    
    2.10
    %
    
    
    6.52
    %10 years or more
    
    
    4.64
    %
    
    
    2.10
    %
    
    
    6.74
    %
 Additional statistical information concerning the Banks securities portfolio is
incorporated by reference from Note 3 of the Corporations Consolidated Financial Statements for
the year ended December 31, 2004, included in Appendix I to the Corporations definitive proxy
statement, relating to the April 20, 2005, Annual Meeting of Shareholders (as filed with the
Commission as exhibit 13 to this Report). III. LOAN PORTFOLIO (A)The table below shows loans outstanding at December 31: (dollars in thousands)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Secured by real estate:Residential first mortgage
    
    $
    53,059
    
    
    $
    46,845
    
    
    $
    37,202
    
    
    $
    27,456
    
    
    $
    31,328Residential home equity/other junior liens
    
    
    16,017
    
    
    
    13,999
    
    
    
    11,184
    
    
    
    8,066
    
    
    
    9,999Construction, land development and
farmland
    
    
    59,873
    
    
    
    54,554
    
    
    
    49,516
    
    
    
    42,221
    
    
    
    35,020Commercial
    
    
    163,706
    
    
    
    165,464
    
    
    
    153,720
    
    
    
    118,191
    
    
    
    105,041Consumer
    
    
    26,965
    
    
    
    25,842
    
    
    
    25,261
    
    
    
    22,719
    
    
    
    20,700Commercial
    
    
    31,772
    
    
    
    33,947
    
    
    
    43,276
    
    
    
    59,602
    
    
    
    45,239Other
    
    
    6,991
    
    
    
    7,366
    
    
    
    7,801
    
    
    
    8,870
    
    
    
    8,897Total gross loans
    
    
    358,383
    
    
    
    348,017
    
    
    
    327,960
    
    
    
    287,125
    
    
    
    256,224Net unearned fees
    
    
    (1,006
    )
    
    
    (931
    )
    
    
    (843
    )
    
    
    (845
    )
    
    
    (810
    )Total Loans
    
    $
    357,377
    
    
    $
    347,086
    
    
    $
    327,117
    
    
    $
    286,280
    
    
    $
    255,414
 The loan portfolio is periodically reviewed and the results of these reviews are reported
to the Banks Board of Directors. The purpose of these reviews is to verify proper loan
documentation, to provide for the early identification of potential problem loans, and to assist
the Bank in evaluating the adequacy of the allowance for loan losses. (B)The following table shows the amount of commercial, financial, and agricultural loans
outstanding as of December 31, 2004, which based on remaining scheduled repayments of principal,
mature in the periods indicated. Maturing(dollars in thousands)After one butWithin one year
    
    
    within five years
    
    
    After five years
    
    
    TotalReal estate construction and land development
    
    $
    37,914
    
    
    $
    21,667
    
    
    $
    25
    
    
    $
    59,606Real estate other (secured by commercial and
multi-family)
    
    
    20,185
    
    
    
    133,918
    
    
    
    9,603
    
    
    
    163,706Commercial (secured by business assets or
unsecured)
    
    
    12,996
    
    
    
    18,224
    
    
    
    552
    
    
    
    31,772Other (loans to farmers, political
subdivisions, and overdrafts)
    
    
    1,688
    
    
    
    1,228
    
    
    
    4,075
    
    
    
    6,991Totals
    
    $
    72,783
    
    
    $
    175,037
    
    
    $
    14,255
    
    
    $
    262,075
 17




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##### Table of Contents



Below is a schedule of amounts due after one year which are classified according to their
sensitivity to changes in interest rates. Interest Sensitivity(dollars in thousands)Fixed Rate
    
    Variable RateDue after one but within five years
    
    $
    96,151
    
    
    $
    78,886Due after five years
    
    
    10,480
    
    
    
    3,775
 (C)Nonperforming loans consist of loans accounted for on a nonaccrual basis and loans
contractually past due 90 days or more as to interest or principal payments (but not included in
nonaccrual loans). The aggregate amount of non-performing loans, as of December 31, is presented in
the table below: (dollars in thousands)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Nonperforming Loans:Nonaccrual loans
    
    $
    1,146
    
    
    $
    4,293
    
    
    $
    3,288
    
    
    $
    2,636
    
    
    $
    608Loans past due 90 days or
more
    
    
    288
    
    
    
    0
    
    
    
    809
    
    
    
    361
    
    
    
    209Total nonperforming loans
    
    $
    1,434
    
    
    $
    4,293
    
    
    $
    4,097
    
    
    $
    2,997
    
    
    $
    817Percent of total loans
    
    
    .40
    %
    
    
    1.24
    %
    
    
    1.25
    %
    
    
    1.04
    %
    
    
    .32
    %
 Additional information concerning nonperforming loans, the Banks nonaccrual policy, loan
impairment, and loan concentrations is incorporated by reference from Note 4 of the Corporations
Consolidated Financial Statements for the year ended December 31, 2004, included in the Appendix I
to the Corporations definitive proxy statement, relating to the April 20, 2005, Annual Meeting of
Shareholders (as filed with the Commission as exhibit 13 to this Report). There were no other interest bearing assets, at December 31, 2004, that would be required to
be disclosed under Item III(C), if such assets were loans. The loan portfolio has no significant concentrations in any one industry. There were no
foreign loans outstanding at December 31, 2004. 18




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##### Table of Contents



IV. SUMMARY OF LOAN LOSS EXPERIENCE (A)The following table sets forth loan balances and summarizes the changes in the allowance
for loan losses, which is the Corporations critical accounting policy, for each of the years ended
December 31: (dollars in thousands)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Loans:Average daily balance of loans for the year
    
    $
    340,859
    
    
    $
    340,384
    
    
    $
    311,060
    
    
    $
    270,776
    
    
    $
    238,697Amount of loans (gross) outstanding at end
of the year
    
    
    358,383
    
    
    
    348,017
    
    
    
    327,960
    
    
    
    287,125
    
    
    
    256,224Allowance for loan losses:Balance at beginning of year
    
    
    5,958
    
    
    
    5,794
    
    
    
    5,668
    
    
    
    5,193
    
    
    
    4,483Loans charged off:Real estate
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Commercial
    
    
    379
    
    
    
    1,014
    
    
    
    598
    
    
    
    322
    
    
    
    526Consumer
    
    
    543
    
    
    
    269
    
    
    
    169
    
    
    
    195
    
    
    
    83Total charge-offs
    
    
    922
    
    
    
    1,283
    
    
    
    767
    
    
    
    517
    
    
    
    609Recoveries of loans previously charged off:Real estate
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Commercial
    
    
    70
    
    
    
    112
    
    
    
    177
    
    
    
    47
    
    
    
    79Consumer
    
    
    104
    
    
    
    65
    
    
    
    91
    
    
    
    45
    
    
    
    40Total recoveries
    
    
    174
    
    
    
    177
    
    
    
    268
    
    
    
    92
    
    
    
    119Net loans charged off
    
    
    748
    
    
    
    1,106
    
    
    
    499
    
    
    
    425
    
    
    
    490Additions to allowance charged to operations
    
    
    1,190
    
    
    
    1,270
    
    
    
    625
    
    
    
    900
    
    
    
    1,200Balance at end of year
    
    $
    6,400
    
    
    $
    5,958
    
    
    $
    5,794
    
    
    $
    5,668
    
    
    $
    5,193Ratios:Net loans charged off to average loans
outstanding
    
    
    .22
    %
    
    
    .32
    %
    
    
    .16
    %
    
    
    .16
    %
    
    
    .21
    %Allowance for loan losses to loans
outstanding
    
    
    1.79
    %
    
    
    1.72
    %
    
    
    1.77
    %
    
    
    1.97
    %
    
    
    2.03
    %
 (B)The following table presents the portion of the allowance for loan losses applicable
to each loan category and the percent of loans in each category to total loans, as of December 31: (dollars in thousands)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentCommercial
    
    $
    5,025
    
    
    
    80.3
    %
    
    $
    5,520
    
    
    
    80.1
    %
    
    $
    5,166
    
    
    
    80.2
    %
    
    $
    2,244
    
    
    
    79.1
    %
    
    $
    4,725
    
    
    
    77.0
    %Consumer
    
    
    983
    
    
    
    10.1
    %
    
    
    335
    
    
    
    10.1
    %
    
    
    406
    
    
    
    10.3
    %
    
    
    160
    
    
    
    11.3
    %
    
    
    315
    
    
    
    12.2
    %Real estate
    
    
    392
    
    
    
    9.6
    %
    
    
    103
    
    
    
    9.8
    %
    
    
    222
    
    
    
    9.5
    %
    
    
    26
    
    
    
    9.6
    %
    
    
    153
    
    
    
    10.8
    %Unallocated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,238
    
    
    
    
    
    
    
    Total
    
    $
    6,400
    
    
    
    100
    %
    
    $
    5,958
    
    
    
    100
    %
    
    $
    5,794
    
    
    
    100
    %
    
    $
    5,668
    
    
    
    100
    %
    
    $
    5,193
    
    
    
    100
    %
 19




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##### Table of Contents



V. DEPOSITS The following table sets forth average deposit balances and the weighted average rates paid
thereon for the years ended December 31: (dollars in thousands)2004
    
    
    2003
    
    
    2002Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    RateNon-interest bearing demand
    
    $
    70,477
    
    
    
    
    
    
    $
    65,719
    
    
    
    
    
    
    $
    61,223NOW, savings & MMDA
    
    
    184,792
    
    
    
    .64
    %
    
    
    172,611
    
    
    
    .85
    %
    
    
    153,651
    
    
    
    1.49
    %Time deposits
    
    
    138,463
    
    
    
    2.92
    %
    
    
    135,842
    
    
    
    3.16
    %
    
    
    131,019
    
    
    
    3.93
    %Total
    
    $
    393,732
    
    
    
    1.33
    %
    
    $
    374,172
    
    
    
    1.54
    %
    
    $
    345,893
    
    
    
    2.15
    %
 The table for maturities of negotiated rate time deposits of $100,000 or more outstanding
at December 31, 2004, is incorporated by reference from Note 9 of the Corporations Consolidated
Financial Statements for the year ended December 31, 2004 included in Appendix I to the
Corporations definitive proxy statement, relating to the April 20, 2005, Annual Meeting of
Shareholders (as filed with the Commission as exhibit 13 to this Report). VI. RETURN ON EQUITY AND ASSETS The ratio of net income to average shareholders equity and to average total assets, for the
years ended December 31 follow: 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Net income as a percent of:Average common equity
    
    
    14.51
    %
    
    
    14.90
    %
    
    
    17.97
    %
    
    
    16.80
    %
    
    
    18.76
    %Average total assets
    
    
    1.41
    %
    
    
    1.39
    %
    
    
    1.58
    %
    
    
    1.46
    %
    
    
    1.63
    %
 Additional performance ratios are set forth in Selected Financial Data included in
Appendix I to the Corporations definitive proxy statement, relating to the April 20, 2005, Annual
Meeting of Shareholders and is incorporated herein by reference. Any significant changes in the
current trend of the above ratios are reviewed in Managements Discussion and Analysis of Financial
Condition and Results of Operations, included in Appendix I to the Corporations definitive proxy
statement, relating to the April 20, 2005, Annual Meeting of Shareholders (as filed with the
Commission as exhibit 13 to this Report). VII. SHORT TERM BORROWING The information required in this item is not applicable for the Corporation. 
 Item 2  Properties The Bank operates from nine facilities, located in five communities, in Livingston County,
Michigan. The executive offices of the Corporation are located at the Banks main office, 101 East
Grand River, Howell, Michigan. The Bank maintains three branches in Howell at 5990 East Grand
River, 4299 East Grand River, and 2400 West Grand River. The Bank also maintains branch offices at
9911 East Grand River, Brighton, Michigan; 8080 Challis Road, Brighton, Michigan; 760 South Grand
Avenue, Fowlerville, Michigan; 10700 Highland Road, Hartland, Michigan; and 9775 M-36, Whitmore
Lake, Michigan. All of the offices have ATM machines 20




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##### Table of Contents



and all except the West Grand River branch, which is in a grocery store, have drive up services. All of
the properties are owned by the Bank except for the West Grand River branch which is leased. The
lease is for 15 years, expiring September 2007. The average lease payment over the remaining life
of the lease is $3,888 monthly. 
 Item 3  Legal Proceedings The Corporation is not involved in any material legal proceedings. The Bank is involved in
ordinary routine litigation incident to its business; however, no such proceedings are expected to
result in any material adverse effect on the operations or earnings of the Bank. Neither the Bank
nor the Corporation is involved in any proceedings to which any director, principal officer,
affiliate thereof, or person who owns of record or beneficially more than five percent (5%) of the
outstanding stock of either the Corporation or the Bank, or any associate of the foregoing, is a
party or has a material interest adverse to the Corporation or the Bank. 
 Item 4  Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of 2004. Additional ItemExecutive Officers Executive officers of the Corporation are appointed annually by the Board of Directors. There
are no family relationships among these officers and/or the directors of the Corporation, or any
arrangement or understanding between any officer and any other person pursuant to which the officer
was elected. The following table sets forth certain information with respect to the Corporations executive
officers as of December 31, 2004: First Selected asan OfficerName (Age)
    
    
    Position with Corporation
    
    
    of the CorporationHerbert W. Bursch (52)
    
    
    President, Chief Executive Officer, and Director of
the Corporation and the Bank (May 2004 to present);
Senior Vice President, Chief Operations Officer
(February 2004 to May 2004); Senior Vice President,
Retail Banking (December 1999 to February 2004).
    
    
    
    1999Nancy Morgan (54)
    
    
    Senior Vice President, Human Resources of the Bank
(October 2001 to present); Vice President, Human
Resources (June 1999 to October 2001).
    
    
    
    1988Janice B. Trouba (43)
    
    
    Senior Vice President, Chief Financial Officer, of the
Bank (May 2003 to present); Senior Vice President,
Accounting (October 2002 to May 2003).
    
    
    
    2002James Wibby (54)
    
    
    Senior Vice President, Senior Lender, of the Bank
    
    
    
    1997Stephen J. Pipis (50)
    
    
    Senior Vice President, Retail Lending, of the Bank
    
    
    
    2004Susan D. Burns (54)
    
    
    Senior Vice President, Sales and Marketing, of the Bank
    
    
    
    2004
 21




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##### Table of Contents



PART II 
 Item 5  Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities There is not an established trading market for the Corporations Common Stock. Information
regarding its market price can be obtained on the internet at nasdaq.com, symbol FNHM. There is
one market maker for the stock. There are occasional direct sales by shareholders of which the
Corporations management is generally aware. It is the understanding of the management of the
Corporation that over the last two years the Corporations Common Stock has sold at a premium to
book value. From January 1, 2003, through December 31, 2004, there were, so far as the
Corporations management knows, a total of 351,484 shares of the Corporations Common Stock sold.
The price was reported to management in some of these transactions; however, there may have been
other transactions involving the Corporations stock at prices not reported to management. During
2004, the highest and lowest prices known to management involving sales of more than 200 shares
were $32.00 and $26.00 per share, respectively. To the knowledge of management, the last sale of
Common Stock occurred on March 1, 2005 at a price of $30.10 per share. As of March 1, 2005, there were approximately 934 holders of record of the Corporations
Stock. The following table sets forth the range of high and low sales prices of the Corporations
Common Stock during 2003 and 2004, based on information made available to the Corporation, as well
as per share cash dividends declared during those periods. Although management is not aware of any
transactions exceeding 200 shares at higher or lower prices, there may have been transactions at
prices outside the ranges listed in the table. Sales prices, for sales involving more than 200 shares, and dividend information for the years
2003 and 2004 are as follows: Sales Prices
    
    
    Cash Dividends Declared2003
    
    High
    
    
    LowFirst Quarter
    
    $
    25.00
    
    
    $
    23.00
    
    
    $
    0.17Second Quarter
    
    $
    25.00
    
    
    $
    24.00
    
    
    $
    0.17Third Quarter
    
    $
    31.00
    
    
    $
    24.00
    
    
    $
    0.17Fourth Quarter
    
    $
    27.50
    
    
    $
    25.25
    
    
    $
    0.17
 2004
    
    High
    
    
    LowFirst Quarter
    
    $
    29.98
    
    
    $
    26.00
    
    
    $
    0.17Second Quarter
    
    $
    31.50
    
    
    $
    27.00
    
    
    $
    0.17Third Quarter
    
    $
    31.25
    
    
    $
    27.55
    
    
    $
    0.19Fourth Quarter
    
    $
    32.00
    
    
    $
    28.50
    
    
    $
    0.19
 The holders of the Corporations Common Stock are entitled to dividends when, as, and if
declared by the Board of Directors of the Corporation out of funds legally available for that
purpose. Dividends have been paid on a quarterly basis. In determining dividends, the Board of
Directors considers the earnings, capital requirements and financial condition of the Corporation
and the Bank, along with other relevant factors. The Corporations
principal source of funds for cash dividends is the dividends paid by the Bank. The ability of the
Corporation and Bank to pay dividends is subject to statutory and regulatory restrictions and
requirements. 22




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##### Table of Contents



The Corporation did not repurchase any of its stock during the current quarter, nor has the
Corporations Board adopted or approved a stock repurchase program. 
 Item 6  Selected Financial Data The information set forth under the caption Summary Financial Data on page 41 of Appendix I
to the Corporations definitive proxy statement, as filed with the Commission relating to the April
20, 2005 Annual Meeting of Shareholders, is incorporated herein by reference. 
 Item 7 Managements Discussion and Analysis of Financial Condition and Results of
Operations The information set forth under the caption Managements Discussion and Analysis of Financial
Condition and Results of Operations on pages 29 through 42 of Appendix I to the Corporations
definitive proxy statement, as filed with the Commission and relating to the April 20, 2005 Annual
Meeting of Shareholders, is incorporated herein by reference. 
 Item 7a  Quantitative and Qualitative Disclosures about Market Risk Included in Managements Discussion and Analysis of Financial Condition and Results of
Operations 
 Item 8  Financial Statements and Supplementary Data The following consolidated financial statements and supplementary data of the Corporation
appear on pages 1 through 28 of Appendix I to the Corporations definitive Proxy Statement,
relating to the April 20, 2005 Annual Meeting of shareholders, as filed with the Commission. This
Appendix is incorporated herein by reference and included as exhibit 13 to this report on Form
10-K: Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders Equity and Comprehensive Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statement
Independent Auditors ReportsQuarterly financial data relating to results of operations for the years ended December 31,
2004 and 2003 are reported on page 27 of Appendix I
 
 Item 9  Change in and Disagreements with Accountants on Accounting and
Financial Disclosure By letter dated December 30, 2003, KPMG LLP (KPMG) declined to stand for re-election as the
Registrants independent auditors, following the completion by KPMG of the audit of the
Registrants financial statements as of and for the year ended December 31, 2003, and the issuance
of its report thereon. The Registrants Audit Committee was informed of the decision. The Registrant announced the engagement
of its new independent auditor BDO Seidman, LLP effective March 15, 2004. 23




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##### Table of Contents



KPMGs audit reports on the Registrants consolidated financial statements for the years ended
December 31, 2003 and 2002, did not contain an adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope, or accounting principles. During the
years ended December 31, 2003 and 2002, and through the effective date of the termination of the
Registrants relationship with KPMG, which occurred on March 15, 2004 (the date of the filing of
Registrants Annual Report on Form 10-K for the year ended December 31, 2003) (the Reporting
Period), there were no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to
KPMGs satisfaction, would have caused KPMG to make reference to the subject matter of the
disagreement(s) in connection with its reports on the Registrants consolidated financial
statements. Also, during the Reporting Period, there were no reportable events as described in Item
304(a)(i)(v) of the Securities and Exchange Commissions Regulation S-K. During the Relevant Period, neither the Corporation nor anyone acting on its behalf, consulted
with BDO Seidman, LLP regarding (1) the application of accounting principles to a specified
transaction, completed or proposed, or the type of audit opinion that might be rendered on the
Corporations consolidated financial statements, or (2) any matters or reportable events as
described in Item 304(a)(2) of the Securities and Exchange Commissions Regulation S-K. 
 Item 9A  Controls and Procedures 1. Evaluation of Disclosure Controls and Procedures. With the participation of
management, 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(a) and 15d-15(e), as of December 31, 2004, have concluded that, as of such date,
the Corporations disclosure controls and procedures were effective. 2. Managements Annual Report on Internal Control Over Financial Reporting. On
November 30, 2004, the SEC published Exchange Act Release No. 50754, which allowed certain
registrants that satisfy the conditions set forth in that Release to file the required Managements
Annual Report on Internal Control Over Financial Reporting not later than 45 days after the date
this Report is required to be filed. The Corporation satisfies the conditions set forth in that
Release and plans to file that Report by amendment to this Form 10-K Report within the 45 day
extension period. Currently, the Corporation is not aware of any material weaknesses in the
Corporations internal control over financial reporting. 3. Attestation Report of the Registered Independent Public Accounting Firm.
Exchange Act Release No. 50754 referenced in (2) above, also allows certain registrants to file the
related attestation report of the independent registered public accounting firm, required by Item
308(b) of Regulation S-K, not later than 45 days after the date this Form 10-K is required to be
filed. Again, the Corporation satisfies the conditions set forth in the Release and intends to file
the required attestation report by amendment to this Form 10-K within the 45 day extension period. 4. Change in Internal Control Over Financial Reporting. During the fourth quarter
ended December 31, 2004, there were no changes in the Corporations Internal Control Over Financial
Reporting that materially affected, or is reasonably likely to materially affect, the Corporations
internal control over financial reporting. 
 Item 9B  Other Information 24




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##### Table of Contents



None 
 PART III 
 Item 10  Directors and Executive Officers of the Registrant Directors The information with respect to Directors and Nominees of the Registrant, set forth under the
caption Election of Directors on pages I and II of the Corporations definitive proxy statement,
as filed with the Commission relating to the April 20, 2005 Annual Meeting of Shareholders, is
incorporated herein by reference. Executive Officers The information called for by this item is contained in Part I of this Form 10-K Report. We have adopted a Code of Ethics for our chief executive officer and senior financial officers. A
copy of our Code of Ethics is available upon request by writing to the Corporations Chief
Financial Officer at 101 East Grand River, Howell, Michigan 48843 and is available on our website
at www.fnbsite.com. 
 Item 11  Executive Compensation The information set forth under the caption Summary Compensation Table on pages VIII and IX
of the Corporations definitive proxy statement, as filed with the Commission relating to the April
20, 2005 Annual Meeting of Shareholders, is incorporated herein by reference. Information under
the caption Committee Report on Executive Compensation on page V and VI and Shareholder Return
Performance Graph on page X of the definitive proxy statement is not incorporated by reference
herein and is not deemed to be filed with the Securities and Exchange Commission. 
 Item 12  Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters The information set forth under the caption Ownership of Common Stock on page X of the
Corporations definitive proxy statement, as filed with the Commission relating to the April 20,
2005 Annual Meeting of Shareholders, is incorporated herein by reference. 25




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##### Table of Contents



The following information is provided under Item 201(d):  Number of securitiesNumber of
    
    
    
    
    
    
    
    remaining availablesecurities to be
    
    
    
    
    
    
    
    for future issuanceissued upon
    
    
    Weighted  average
    
    
    under equityexercise of
    
    
    exercise price of
    
    
    compensation plansoutstanding
    
    
    outstanding
    
    
    (excluding securitiesoptions, warrants,
    
    
    options, warrants,
    
    
    reflected in columnPlan Category
    
    
    and rights
    
    
    and rights
    
    
    (a))(a
    )
    
    
    
    (b
    )
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    
    0
    
    
    
    
    0
    
    
    
    281,242 (1)
 (1) Includes 166,493 shares available under the Long Term Incentive Plan, 73,424 shares available
under the Compensation Plan for Nonemployee Directors and 41,325 shares included under the Employee
Stock Purchase Plan. 
 Item 13  Certain Relationships and Related Transactions The information set forth under the caption Certain Transactions with Management on page IX
of the Corporations definitive proxy statement, as filed with the Commission relating to the April
20, 2005, Annual Meeting of Shareholders, is incorporated herein by reference. 
 Item 14  Principal Accountant Fees and Services The information set forth under the caption Audit Matters and Our Relationship with Our
Independent Public Accountants on pages V and VI of the Corporations definitive proxy statement,
as filed with the Commission relating to the April 20, 2005, Annual Meeting of Shareholders, is
incorporated herein by reference. 
 PART IV 
 Item 15  Exhibits and Financial Statement Schedules (a) 1. Financial Statements All financial statements of the Registrant are incorporated herein by reference as set forth
in Appendix I to the Registrants Definitive Proxy Statement, relating to the April 20, 2005 Annual
Meeting of Shareholders, a copy of which is filed as exhibit 13 to this Report on Form 10-K. 2. Financial Statement Schedules Not applicable. 3. Exhibits (Numbered in accordance with Item 601 of Regulation S-K) The Exhibit Index is located on the final page of this report on Form 10-K. 26




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, dated March 16, 2005. FNBH BANCORP, INC. /s/ HERBERT W. BURSCHHerbert W. Bursch, President & Chief Executive
                                                                                Officer (Principal Executive Officer) /s/
JANICE B. TROUBAJanice B. Trouba, Chief Financial Officer
                                                                      (Principal Financial and Accounting Officer) 27




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##### Table of Contents



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Each director of the Registrant, whos signature appears below, hereby appoints Herbert W. Bursch
and Janice B. Trouba, and each of them severally, as his or her attorney-in-fact, to sign in his or
her name and on his or her behalf, as a director of the Registrant, and to file with the Commission
any and all Amendments to this Report on Form 10-K. Signature
    
    DateW. Rickard Scofield, Chairman of the Board
    

/s/ W. RICKARD SCOFIELD
    
    3/10/2005Donald K. Burkel, Vice Chairman of the Board
    
    /s/ DONALD K. BURKEL
    
    3/7/2005Athena Bacalis, Director
    
    /s/ ATHENA BACALIS
    
    3/9/2005Gary R. Boss, Director
    
    /s/ GARY R. BOSS
    
    3/8/2005Herbert W. Bursch, Director
    
    /s/ HERBERT W. BURSCH
    
    3/10/2005Barbara Draper, Director
    
    /s/ BARBARA DRAPER
    
    3/9/2005Richard F. Hopper, Director
    
    /s/ RICHARD F. HOPPER
    
    3/8/2005Dona Scott Laskey, Director
    
    /s/ DONA SCOTT LASKEY
    
    3/10/2005James R. McAuliffe, Director
    
    /s/ JAMES R. MCAULIFFE
    
    3/7/2005Randolph E. Rudisill, Director
    
    /s/ RANDOLPH E. RUDISILL
    
    3/9/2005R. Michael Yost, Director
    
    /s/ R. MICHAEL YOST
    
    3/9/2005
 28




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##### Table of Contents



EXHIBIT INDEX The following exhibits are filed herewith, indexed according to the applicable assigned
number: ExhibitNumber(13)
    
    Appendix I to the Corporations Proxy Statement, for the Annual Meeting of Shareholders to be
held April 20, 2005, representing pages 1  42 of that Appendix I to that Proxy Statement
incorporated by reference in this report. This Appendix will also be filed with the Commission as
part of the Corporations Proxy Statement and will be delivered to Corporations shareholders in
compliance with Rule 14(a)-3 of the Securities Exchange Act of 1934, as amended.(21)
    
    Subsidiaries of the Registrant(24)
    
    Power of Attorney (included in signature section)(31.1)
    
    Certificate of the Chief Executive Officer of FNBH Bancorp, Inc. pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).(31.2)
    
    Certificate of the Chief Financial Officer of FNBH Bancorp, Inc. pursuant to Section 302 of
the Sarbanes- Oxley Act of 2002 (18 U.S.C. 1350).(32.1)
    
    Certificate of the Chief Executive Officer of FNBH Bancorp, Inc. pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).(32.2)
    
    Certificate of the Chief Financial Officer of FNBH Bancorp, Inc. pursuant to Section 906 of
the Sarbanes Oxley Act of 2002 (18 U.S.C. 1350).
 29




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##### Table of Contents



The following exhibits, indexed according to the applicable assigned number, were previously filed
by the Registrant and are incorporated by reference in this Form 10-K Annual Report. ExhibitNumber
    
    
    
    Original Filing Form and Date(3.1)
    
    Restated Articles of Incorporation of the
Registrant
    
    Exhibit 3.1 of Form 10, effective
June 30, 1995 (Form 10)(3.2)
    
    Amendment to the Corporations Articles of
Incorporation to Increase Authorized Shares
    
    Appendix I of Proxy Statement
dated March 17, 1998(3.3)
    
    Bylaws of the Registrant
    
    Exhibit 3.2 of Form 10(4)
    
    Form of Registrants Stock Certificate
Material Contracts:
    
    Exhibit 4 of Form 10(10.1)
    
    Howell Branch Lease Agreement
    
    Exhibit 10.2 to Form 10(10.2)
    
    Corporations Long Term Incentive Plan*
    
    Appendix II of Proxy Statementdated March 17, 1998(10.3)
    
    FNBH Bancorp Inc. Employees Stock
    
    Exhibit 4 to RegistrationPurchase Plan
    
    Statement on Form S-8 (Reg.No. 333-46244)(10.4)
    
    Amended and Restated Compensation
    
    Appendix II of Proxy StatementPlan for Nonemployee Directors*
    
    dated March 15, 2002
   *Represents a compensation plan 30