SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K
                              --------------------

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                         Commission file number 0-25752

                               FNBH BANCORP, INC.
             (Exact name of registrant as specified in its charter)

              MICHIGAN                                      38-2869722
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation 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)546-3150

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities 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__X__ No____

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. X

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  based  on a per  share  price  of  $42 as of  March  1,  2001,  was
$65,845,416  (common  stock,  no par value).  As of December 31, 2000 there were
outstanding 1,567,748 shares of the Company's Common Stock (no par value).

Documents Incorporated by Reference:
Portions of the Company's  Proxy Statement and appendix dated March 23, 2001 for
the Annual Meeting of Shareholders to be held April 25, 2001 are incorporated by
reference into Parts I, II and III of this report.

                                       1
<PAGE>
                                     PART I

     Included in this Form 10-K are certain  forward-looking  statements  within
the  meaning of Section  27A of the  Securities  Act of 1993,  as  amended,  and
Section  21 E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  Such
forward-looking  statements are based on the beliefs of the Company's management
as well as on assumptions  made by and  information  currently  available to the
Company at the times such  statements  were made.  Actual  results  could differ
materially  from those included in such  forward-looking  statements as a result
of, among other things,  factors set forth below in this Report  generally,  and
certain economic and business  factors,  some of which may be beyond the control
of the Company.  Investors are  cautioned  that all  forward-looking  statements
involve risks and uncertainty.

Item 1 - Business

     FNBH Bancorp, Inc. (the Company), 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 Company was formed in 1988 for the
purpose  of  acquiring  all of the stock of the Bank in a  shareholder  approved
reorganization, which became effective May, 1989.

     The  Bank  was  originally   organized  in  1934  as  a  national   banking
association.  As of March 1, 2001, the Bank had  approximately 125 full-time and
part-time  employees.  None of the Bank's  employees  is  subject to  collective
bargaining agreements.  The Company does not directly employ any personnel.  The
Bank  serves  primarily  four  communities,   Howell,  Brighton,  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
especially in the southeast  quadrant of the county,  primarily  attributable to
growth around the City of Brighton.

     On November  26, 1997 H.B.  Realty Co., a subsidiary  of the  Company,  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

                                       2
<PAGE>
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  $16,000,000,  of
which  $10,000,000 is available,  $6,000,000 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.

     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, 2000, 43% of outstanding loans were for
either commercial or residential construction or development. As of December 31,
2000,  the  Bank's  certificates  of  deposit of  $100,000  or more  constituted
approximately  11%  of  total  deposit  liabilities.  The  Bank's  deposits  are
primarily  from its service area and the Bank does not seek or  encourage  large
deposits from outside the area.

     The Company'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  81% of total  revenues for the period ended December 31, 2000 and
79% of total  revenues  for the period  ended  December  31,  1999.  Interest on
investment securities,  including short-term investments and federal funds sold,
constituted  approximately  10% of  total  revenues  in 2000  and  12% of  total
revenues in 1999.  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.  Fifty-five percent of the Bank's loan portfolio is in fixed rate
loans.  Most of these  loans,  approximately  83%,  mature  within five years of
issuance.  Approximately  $26,000,000 in loans (or about 10% of the Bank's total
loan portfolio) have fixed rates with maturities exceeding five years. Fifty-two
percent of the Bank's interest-bearing  deposits are in savings, NOW, and MMDAs,
all of which are variable rate products.  Of the  approximately  $121,400,000 in
certificates, $76,500,000 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
$400,000 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, 2000, was 16% asset  sensitive,  compared to 1% asset  sensitive at
December 31, 1999. See discussion and table under  "Quantitative and Qualitative
Disclosures about Market Risk" in Item 7 below.

                                       3
<PAGE>
     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 Freddie Mac while retaining servicing
on 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  considered by management to be generally
conservative. It provides for unlimited investment in U.S. government and agency
bonds,  with a maximum maturity of five years.  Municipal bonds may be purchased
to provide nontaxable  income,  with the maximum life of municipal bonds limited
to  approximately  ten years with a double A rating or better.  A single A rated
bond may be purchased if it matures in four years or less.  Non-rated  bonds may
be  purchased  from local  communities  that are  familiar  to the Bank,  with a
maximum  block size of a single  purchase  limited to $300,000.  Investments  in
states other than  Michigan may not exceed 20% of the municipal  portfolio,  and
investments  in a single issuer may not exceed 10% of equity  capital.  Mortgage
backed  securities,  which  are fully  collateralized  by  securities  issued by
government  sponsored  agencies,  may  be  purchased  in  block  sizes  of up to
$1,000,000, provided the average life expectancy does not exceed seven years. In
addition,  certain collateralized mortgage obligations may be purchased if their
average life does not exceed five years.  In any case,  investments  in mortgage
backed securities may not exceed 10% of the investment portfolio.

     The  acquisition of "high-risk  mortgage  securities" is prohibited.  In no
case may the Bank participate in such activities as gains trading, "when-issued"
trading,  "pair offs", corporate settlement of government and agency securities,
repositioning  repurchase  agreements,  and short sales. 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 seven offices within the four  communities  it serves,  all of
which  are  located  in  Livingston  County,  Michigan.  Three  of the  offices,
including the main office,  are located in Howell.  There are two  facilities in
Brighton, and one each in Hartland, and Fowlerville.  See "Properties" below for
more  detail  on these  facilities.  Within  these  communities,  its  principal
competitors are Old Kent Bank,  National City Bank, D&N Bank, and Bank One. Each
of these financial institutions,  which are headquartered in larger metropolitan
areas,  have  significantly  greater  assets and  financial  resources  than the
Company.  Among the principal  competitors in the  communities in which the Bank
operates,  the Bank is the only locally owned  financial  institution.  Based on
deposit information as of June 30, 2000, the Bank holds approximately  19.87% of
local  deposits,  compared  to  approximately  19.74%  held  by Old  Kent  Bank,
approximately  10.84%  held by D&N Bank,  approximately  11.06% held by National
City Bank, and approximately

                                       4
<PAGE>
8.79% held by Bank One.  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,  Old Kent Bank maintains five
branch  offices,  National City Bank operates six branch  offices,  D&N Bank has
five branch offices,  and Bank One has three branch  offices.  Management is not
aware of any plans by these  financial  institutions to expand their presence in
the Bank's  market.  However,  the purchase of Old Kent Bank by Fifth Third Bank
may have an impact on competition.

     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  providers for funds,  loans, and a
broad array of other financial  services.  Competition  within the Bank's market
has been  relatively  stable  within the past  years.  Management  continues  to
evaluate the opportunities for the expansion of products and services.

Growth of Bank

     The following table sets forth certain information  regarding the growth of
the Bank:
<TABLE>
                                                                Balances as of December 31,
                                                                ---------------------------
                                                                      (in thousands)
                                              2000           1999          1998           1997           1996
                                              -----          ----          ----           ----           ----
<S>                                       <C>            <C>           <C>            <C>            <C>
Total Assets                              $348,363       $296,419      $264,894       $226,314       $202,009
Loans, Net of Unearned Income              255,414        209,952       185,018        158,397        136,067
Securities                                  39,311         50,598        38,646         43,725         47,257
Noninterest-Bearing Deposits                55,252         47,980        47,402         41,631         35,048
Interest-Bearing Deposits                  254,961        221,210       192,155        160,668        145,896
Total Deposits                             310,214        269,190       239,557        202,299        180,944
Shareholders' Equity                        28,887         25,312        23,497         21,732         19,597
</TABLE>

     Through  1998,  the Bank  operated six branch  facilities:  one in downtown
Howell,  one at Lake Chemung  (five miles east of downtown  Howell),  one on the
east side of Brighton, one in Hartland,  one in the village of Fowlerville,  and
the sixth is a grocery store branch,  located west of downtown Howell. In August
of 1999,  the Bank opened a new regional  facility on the west side of Brighton.
As of  December  31,  2000,  this new branch had  approximately  $22,000,000  in
deposits.  In the time period presented,  all of the Bank's branches grew due to
general growth in the county.

Supervision and Regulation

     The following is a summary of certain  statutes and  regulations  affecting
the Company and the Bank. This summary is qualified in its entirety by reference
to the  particular  statutes and  regulations.  Changes in  applicable  laws and
regulations  may have a material  effect on the  Company  and the Bank and their
respective businesses.

                                       5
<PAGE>
General

     Financial   institutions  and  their  holding   companies  are  extensively
regulated  under  federal and state law.  Consequently,  the growth and earnings
performance  of the Company 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 the Board of  Governors of the Federal
Reserve  System  (the  "Federal  Reserve  Board"),  the FDIC,  the Office of the
Comptroller of the Currency (the "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 Company
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 Company.

     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.

Recent Legislation

     The Gramm-Leach-Bliley Act of 1999 (the "GLB Act") removed large parts of a
regulatory  framework  that had its origins in the  Depression Era of the 1930s.
Effective March 11, 2000, new  opportunities  became available for banks,  other
depository institutions,  insurance companies and securities firms to enter into
combinations  that  permit a single  financial  services  organization  to offer
customers more financial  products and services.  The GLB Act provides for a new
regulatory  framework for regulation  through the "financial  holding  company,"
which has as its  umbrella  regulator  the  Federal  Reserve  Board.  Functional
regulation of the financial holding company's separately regulated  subsidiaries
is conducted by their  primary  functional  regulator.  In order to qualify as a
financial  holding  company,  a bank  holding  company  must file an election to
become  a  financial  holding  company  and  each of its  banks  must  be  "well
capitalized" and "well managed." In addition,  the GLB Act makes satisfactory or
above Community Reinvestment Act compliance for insured depository  institutions
and their financial holding  companies  necessary in order for them to engage in
new  financial  activities.  The GLB Act provides a federal  right to privacy of
non-public personal information of

                                       6
<PAGE>
individual customers. The Company and the Bank are also subject to certain state
laws that deal with the use and distribution of non-public personal information.

     The  Company  believes  that  the  GLB  Act  could  significantly  increase
competition  in its business and,  from time to time,  will be evaluating in its
planning  process the  desirability  of  electing to become a financial  holding
company.  The Company  believes that it is qualified to elect financial  holding
company status but has not yet decided to do so.

The Company
     As a registered  bank holding company under the Bank Holding Company Act of
1956,  as amended  (the  "Act"),  the  Company is  subject  to  supervision  and
examination by the Board of Governors of the Federal  Reserve  System  ("Federal
Reserve Board") and is required to file, with the Federal Reserve Board,  annual
reports and  information  regarding  its  business  operations  and those of its
subsidiaries.

     The Act  requires a bank  holding  company to obtain  the  approval  of the
Federal  Reserve Board before it may acquire more than 5% of the voting stock or
substantially  all of the  assets of any bank or merge or  consolidate  with any
other bank holding company. If the effect of a proposed  acquisition,  merger or
consolidation may substantially lessen competition or tend to create a monopoly,
the Federal  Reserve Board cannot approve the  acquisition  unless it finds that
the  anticompetitive  effects of the acquisition,  merger,  or consolidation are
clearly  outweighed by the  convenience and needs of the community to be served.
The Act also  provides  that the  consummation  of any  acquisition,  merger  or
consolidation  must be delayed at least 15 days  following  the  approval of the
Federal  Reserve Board and that any action  brought under the antitrust  laws of
the United States during the time will delay the  effectiveness  of its approval
during the pendency of the action unless otherwise ordered by the board.

     The Riegle-Neal  Interstate Banking and Branching Efficiency Act authorizes
adequately  capitalized and adequately managed bank holding companies to acquire
banks located outside their  respective home states,  irrespective of state law.
This legislation also authorizes,  effective June 1, 1997 (subject to individual
state's rights to accelerate this date or prohibit  interstate  branching within
their borders),  banking  organizations  to branch  nationwide by acquisition or
consolidation  of  existing  banks  in other  states.  Michigan  law  authorizes
out-of-state banks to acquire and establish  branches in Michigan,  provided the
laws of the  state of the  out-of-state  institution  permit  Michigan  banks to
acquire or establish branches in that state. Interstate acquisitions are subject
to the  approval  of various  federal  and state  agencies  and subject to other
conditions.

     Subject to certain  exceptions,  a bank holding  company is also prohibited
from  acquiring  direct or indirect  ownership or control of more than 5% of the
voting  shares of any company that is not a bank and from  engaging  directly or
indirectly in activities  unrelated to banking or managing or controlling banks.
One of the exceptions to this prohibition  permits  activities by a bank holding
company or its subsidiaries  which the Federal Reserve Board has determined,  as
of the day before the enactment of the GLB

                                       7
<PAGE>
act, to be so closely related to banking or managing or controlling  banks as to
be a proper incident thereto.  The Federal Reserve Board has adopted regulations
prescribing  those activities which it presently regards as permissible for bank
holding  companies and their  subsidiaries.  Some of these  activities  include:
performing certain data processing services;  certain personal and real property
leasing; making, acquiring, or servicing loans and other extensions of credit as
would be made by a mortgage,  finance,  credit card or other factoring  company;
bank related courier services;  and, under certain circumstances,  acting as any
or all of the following:  investment or financial  advisor,  insurance  agent or
broker, and underwriter for credit life insurance and credit accident and health
insurance.  The Act does not place geographic  restrictions on the activities of
the  nonbank  subsidiaries  of bank  holding  companies.  The  enactment  of the
Economic Growth and Regulatory  Paperwork  Reduction Act of 1996 streamlines the
nonbanking activities  application process for well capitalized and well managed
bank holding companies.

     The Act, the Federal  Reserve Act, and the Federal  Deposit  Insurance  Act
also  subject  bank  holding   companies  and  their   subsidiaries  to  certain
restrictions on any extensions of credit by subsidiary banks to the bank holding
company  or any of its  subsidiaries,  or  investments  in the  stock  or  other
securities thereof,  and on the taking of such stock or securities as collateral
for loans to any borrower. Further, under the Act and regulations of the Federal
Reserve Board, a bank holding company and its  subsidiaries  are prohibited from
engaging in certain  tie-in  arrangements  in  connection  with any extension of
credit, sale or lease of any property or furnishing of service.

     The Federal  Reserve  Board  provides  guidelines  for the  measurement  of
capital adequacy of bank holding companies.  The Company's capital,  as adjusted
under these guidelines, is referred to as risk-based capital. The Company's Tier
1  risk-based  capital  ratio,  at  December  31,  2000,  was  10.70%  and total
risk-based  capital was 11.96%.  At December 31, 1999,  these ratios were 11.36%
and  12.62%,  respectively.  Minimum  regulatory  Tier 1  risk-based  and  total
risk-based  capital ratios under the Federal Reserve Board guidelines are 4% and
8%, respectively. These same capital ratios are applied at the bank level by the
Federal Deposit Insurance  Corporation,  under which a well-capitalized  bank is
defined as one with at least 10% risk-based  capital.  Capital  guidelines  also
provide for a standard to measure  risk-based  capital to total assets.  This is
referred to as the leverage ratio. The Company 's leverage ratio at December 31,
2000 was 9.19%,  while at December 31, 1999 it was 9.13%.  The minimum  standard
leverage ratio is 3%. See also "Capital" discussion in Item 7 below.

     As a Michigan business  corporation,  the Company may generally declare and
pay dividends, provided the Company is not insolvent and that the payment of the
dividend  would not render it  insolvent,  and,  after  giving the effect of the
distribution,  that the  Company's  total assets would equal or exceed its total
liabilities plus the dissolution  preference of any senior equity securities (of
which there currently are none). The payment of dividends to its shareholders is
limited  by the  Company's  ability  to  obtain  funds  from the Bank and by the
above-referenced regulatory capital guidelines.

                                       8
<PAGE>
The Bank
     The Bank is organized as a national  banking  association  and is therefore
regulated and supervised by the OCC. The deposits of the Bank are insured by the
Federal Deposit Insurance Corporation ("FDIC").  Consequently,  the Bank is also
subject to the provisions of the Federal  Deposit  Insurance Act. As a result of
such supervision and regulation, the Bank is subject to requirements to maintain
reserves against deposits,  restrictions on the nature and amount of loans which
may be made and the interest which may be charged thereon, restrictions relating
to investments and other  activities,  limitations based on capital and surplus,
and  limitations on the payment of dividends on its capital  stock.  The various
regulatory  and  legal  requirements  referenced  above  are  primarily  for the
protection of the Bank's  depositors and customers  rather than the shareholders
of the Company.

     As a national  bank, the Bank may not pay a dividend on its common stock if
the dividend would exceed the net undivided profits then on hand after deducting
losses  and bad debts.  Additionally,  the prior  approval  of the Office of the
Comptroller of the Currency,  or its designee, is required for any dividend to a
bank  holding  company  by an  affiliated  national  bank  if the  total  of all
dividends, including any proposed dividend declared by such bank in any calendar
year,  exceeds  the total of its net  profits  for that year  combined  with its
retained net profits for the preceding two years, less any required transfers to
surplus.

     The  Federal  Deposit  Insurance  Act  was  amended  in  1991  by the  FDIC
Improvement  Act of 1991.  The FDIC  Improvement  Act  provides  for  regulatory
intervention  should a bank's  capital  deteriorate,  limits certain real estate
lending and increases audit requirements. The FDIC has been granted authority to
impose special  assessments  on banks to repay  borrowings of the FDIC. The FDIC
Improvement Act defines a reserve ratio at which the Bank Insurance Fund ("BIF")
is to be maintained through FDIC semi-annual  assessment rates on the BIF member
banks.  The FDIC has also established a system of risk-based  deposit  insurance
premiums under the FDIC Improvement Act. This system  established four levels of
premium rates based on the risk classification of the institution. As a national
bank,  the Bank's  premiums  are paid to BIF.  Given the  designation  as a well
managed, well capitalized institution,  the Bank pays the lowest assessment rate
possible to BIF.

     As required by the Deposit  Insurance  Funds Act of 1996,  in 1997 the Bank
commenced making payments to the FDIC for the Financing Corporation (FICO) bonds
that were issued  previously.  The FICO rate for BIF member  banks is 2.06 basis
points  annually  applied  to  assessable  deposits.  During  2000 the Bank paid
$53,000 to the FDIC.
     In 1996 the  Michigan  Legislature  adopted  the Credit  Reform  Act.  This
statute,  together with  amendments to other  related  laws,  permits  regulated
lenders,  indirectly including  Michigan-chartered  banks, to charge and collect
higher  rates  of  interest  and  increased  fees on  certain  types of loans to
individuals and businesses.  The laws prohibit "excessive fees and charges," and
authorize governmental authorities and borrowers to

                                       9
<PAGE>
bring  actions  for  injunctive  relief and  statutory  and actual  damages  for
violations by lenders.  The statutes  specifically  authorize class actions, and
also civil money penalties, for knowing and willful or persistent violations.

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, 2000, 1999, and 1998.

     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  increased 18
basis  points in 2000 as a result of an increase of 51 basis  points in yield on
earning  assets,  partially  offset  by an  increase  of 43 basis  points in the
interest cost on deposits. In 1999 the interest margin decreased 28 basis points
due to a 49 basis point  decrease in yield on earning assets while interest cost
decreased 38 basis points.

                                       10
<PAGE>
<TABLE>
                                           Yield Analysis of Consolidated Average Assets and Liabilities
                                                              (dollars in thousands)

                                                  2000                           1999                               1998
                                                  ----                           ----                               ----
                                  Average                   Yield/    Average                Yield/     Average               Yield/
                                  Balance       Interest     Rate     Balance   Interest     Rate       Balance    Interest    Rate
                                  -------       --------     ----     -------   --------     ----       -------    --------    ----
<S>                               <C>          <C>          <C>      <C>        <C>          <C>       <C>         <C>         <C>
Assets:
Interest earning assets:
Short term investments             $  4,278       $271.7    6.35%    $10,384       $507.5    4.89%       $8,630       $449.1   5.20%
Securities:
    Taxable                          29,283      1,607.9    5.49%     30,051      1,526.1    5.08%       23,019      1,386.9   6.02%
   Tax-exempt                        18,580      1,220.3    6.57%     16,896      1,165.6    6.90%       15,221      1,085.1   7.13%
Loans(1)(2)                         238,697     23,407.8    9.81%    198,448     18,790.8    9.47%      175,873     17,317.6   9.85%
                                 ----------   ----------           ---------   ----------              --------    ---------
Total earning assets and total
   interest income                  290,838    $26,507.7    9.11%    255,779    $21,990.0    8.60%      222,743    $20,238.7   9.09%
                                              ---------                         ---------                          ---------
Cash & due from banks                11,615                           11,680                              9,836
 All other assets                    16,022                           15,955                             11,335
Allowance for loan loss              (4,911)                          (4,219)                            (3,777)
                                    -------                           ------                             ------
   Total assets                    $313,564                         $279,195                           $240,137
                                   ========                        =========                          =========

Liabilities and
   Shareholders' Equity
Interest bearing deposits:
Savings, money market, NOW         $120,770      $3,434.0   2.84%   $111,141     $2,991.6    2.69%      $91,552     $2,772.5   3.03%
Time                                104,669       6,158.5   5.88%     92,802      4,970.0    5.36%       81,119      4,617.2   5.69%
 FLHB and other borrowings            6,259         449.3   7.18%         98          5.3    5.40%          179         10.7   5.98%
                                                ---------          ---------       ------             ---------   ----------
Total interest bearing
  liabilities and total interest
  expense                           231,698     $10,041.8   4.33%    204,041     $7,966.9    3.90%      172,850     $7,400.4   4.28%
                                                ---------                        --------                           --------
Non-interest bearing deposits        51,428                           48,240                             43,619
All other liabilities                 3,220                            2,232                              1,751
Shareholders' Equity                 27,218                           24,682                             21,917
                                     ------                           ------                             ------
Total liabilities and
   shareholders' equity            $313,564                         $279,195                           $240,137
                                   ========                         ========                           ========
Interest spread                                             4.78%                            4.70%                             4.81%
                                                            ====                             =====                             =====
Net interest income-FTE                         $16,465.9                       $14,023.1                          $12,838.3
                                                =========                       =========                          =========
Net interest margin                                         5.66%                            5.48%                             5.76%
                                                            =====                            =====                             =====
</TABLE>
(1)  Nonaccruing loans are not significant during the three year period and, for
     purposes of the  computations  above,  are  included in average  daily loan
     balances.
(2)  Interest on loans  includes  origination  fees  totaling  $690,000 in 2000,
     $710,000 in 1999, and $600,000 in 1998.

                                       11
<PAGE>
(C) The following table sets forth the effects of volume and rate changes on net
interest  income  on a taxable  equivalent  basis.  All  figures  are  stated in
thousands of dollars.
<TABLE>
                                                Year ended                                Year ended
                                       December 31, 2000 compared to            December 31, 1999 compared to
                                       Year ended December 31, 1999             Year ended December 31, 1998
                                       ----------------------------             ----------------------------

                                       Amount of Increase/(Decrease)            Amount of Increase/(Decrease)
                                            due to change in                         due to change in
                                            ----------------                         ----------------
                                                                Total                                  Total
                                                               Amount                                  Amount
                                                                 Of                                      of
                                                  Average     Increase/                  Average     Increase/
                                     Volume        Rate      (Decrease)     Volume        Rate       (Decrease)
                                     ------        ----      ----------     ------        ----       ----------
<S>                                  <C>          <C>         <C>           <C>         <C>           <C>
Interest Income:
Short term investments....           $ (298)       $  62       $ (236)       $  91       $ (33)         $  58
Securities:
                                        (39)         121           82          424        (284)           140
Taxable...........................
  Tax                                   116          (61)          55          119         (39)            80
Exempt....................
Loans................................ 3,811          806        4,617        2,223        (750)         1,473

  Total interest income......       $ 3,590       $  928       $4,518      $ 2,857     $(1,106)       $ 1,751

Interest Expense:
Interest bearing deposits:
  Savings/NOW accounts..              $ 259        $ 183     $    442       $  593      $ (374)        $  219
                                        636          553        1,189          665        (312)           353
Time................................
FHLB & other borrowings.                426           18          444           (5)                        (6)
                                                                                            (1)

   Total interest expense....       $ 1,321        $ 754      $ 2,075      $ 1,253      $ (687)        $  566

Net interest income (FTE)            $2,269        $ 174      $ 2,443      $ 1,604       $(419)       $ 1,185
</TABLE>

The  change  in  interest  due to  changes  in both  balance  and  rate has been
allocated to change due to balance and change due to rate in  proportion  to the
relationship of the absolute dollar amounts of change in each.

                                       12
<PAGE>
II  SECURITIES PORTFOLIO

     (A) The following table sets forth the book value of securities at December
31:
<TABLE>
                                                                     (in thousands)
                                                        2000              1999             1998
                                                        ----              ----             ----
<S>                                                 <C>                <C>             <C>
Held to maturity:
U.S. Treasury                                       $      0          $      0         $  1,999
States and political subdivisions                     18,887            17,709           16,279
Mortgage-backed securities                               577               335              602
                                                         ---               ---              ---
   Total                                            $ 19,464          $ 18,044         $ 18,880
Available for sale:
U.S. Treasury                                       $ 13,028          $ 22,860         $ 12,092
U.S. Government agencies                               5,986             8,861            6,982
Mortgage-backed securities                                 0                 0                0
FRB Stock                                                 44                44               44
FHLB Stock                                               789               789              648
                                                    --------          --------         --------
   Total                                            $ 19,847          $ 32,554         $ 19,766
</TABLE>

     (B) The following table sets forth contractual  maturities of securities at
December 31, 2000 and the weighted average yield of such securities:
<TABLE>
                                                             (dollars in thousands)
                                                     Maturing After One Maturing After Five
                               Maturing Within One    But Within Five   But Within Ten Years Maturing After Ten
                                               ----              -----             ---------                ---
                                       Year                Years                                    Years

                                    Amount     Yield     Amount    Yield     Amount    Yield     Amount     Yield
                                    ------     -----     ------    -----     ------    -----     ------     -----
<S>                                <C>         <C>       <C>       <C>      <C>        <C>        <C>        <C>
Held to maturity
   States and political
      subdivisions                   $ 895     7.07%     $7,685    6.80%    $10,307    6.34%          0
   Mortgage backed
      Securities                       460     5.30%        117    5.62%          0                   0
                                       ---                  ---                   -                   -
      Total                        $ 1,355     6.47%     $7,802    6.78%    $10,307    6.34%         $0
                                   =======               ======             =======                  ==
Tax equivalent adjustment
   for calculations of yield           $14                 $113                $180
                                       ===                 ====                ====
Available for sale
   U.S. Treasury                   $11,010     5.83%     $2,018    6.57%
   U.S. Agency                      $2,992     6.13%     $2,994    5.58%
   FRB Stock                                                                                       $ 44     6.00%
   FHLB Stock                                                                                       789     8.25%
                                                                                                    ---
      Total                        $14,002     5.89%     $5,012    5.98%         $0                $833     8.13%
                                   =======               ======                  ==                ====
</TABLE>

     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:

                                       13
<PAGE>
<TABLE>
                                                                                         Rate on Tax
                                 Tax-Exempt Rate              Adjustment              Equivalent Basis
                                 ---------------              ----------              ----------------
<S>                                   <C>                        <C>                        <C>
Under 1 year                          5.44%                      1.63%                      7.07%
1-5 years                             5.17%                      1.63%                      6.80%
5-10 years                            4.71%                      1.62%                      6.34%
</TABLE>

     Additional   statistical   information  concerning  the  Bank's  securities
portfolio is incorporated  by reference in Note 2 of the Company's  Consolidated
Financial  Statements  for the year ended  December  31,  2000  included  in the
Appendix to the  Company's  definitive  proxy  statement,  dated March 23, 2001,
relating to the April 25, 2001,  Annual Meeting of  Shareholders  (as filed with
the Commission as exhibit 13 to the Report).

III LOAN PORTFOLIO

     (A) The table below shows loans outstanding at December 31:
<TABLE>
                                                                       (in thousands)
                                                       2000        1999         1998        1997         1996
                                                       ----        -----        ----        ----         ----
<S>                                                <C>         <C>          <C>         <C>          <C>
Secured by real estate:
   Residential first mortgage                      $ 31,328    $ 29,904     $ 38,051    $ 38,073     $ 36,148
   Residential home equity/other junior liens         9,999       7,822        9,106      13,665       12,883
   Construction and land development                 35,020      23,375       23,048      19,490       14,042
   Other                                            105,041      89,809       68,960      53,743       43,006
Consumer                                             20,700      16,811       16,653      14,011       12,272
Commercial                                           45,239      38,891       26,058      18,299       15,830
Other                                                 8,897       4,043        3,770       1,729        2,360
                                                     ------      ------      -------      ------        -----
   Total Loans (Gross)                             $256,224    $210,655     $185,646    $159,010     $136,541
</TABLE>

     The loan  portfolio  is  periodically  reviewed  and the  results  of these
reviews are reported to the Company'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 evaluate 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, 2000 which, based on remaining
scheduled repayments of principal, are in the periods indicated.
<TABLE>
                                                                          Maturing
                                                                          --------
                                                                       (in thousands)
                                                                    After one
                                                     Within one     but within      After five
                                                        year        five years        years         Total
                                                        ----        ----------        -----         -----
<S>                                                   <C>           <C>             <C>          <C>
Real estate construction & land development....       $23,180        $11,840             0        $ 35,020
Real estate other (secured by commercial &
  multi-family)................................        12,391         90,017         2,633         105,041
 Commercial (secured by business assets or
  Unsecured)...................................        18,963         25,570           706          45,239
Other (loans to farmers, political
  Subdivisions, & overdrafts)                           1,674          2,076         5,147           8,897
                                                      -------       --------        ------        --------
Totals.........................................       $56,208       $129,503        $8,486        $194,197
</TABLE>
                                       14
<PAGE>
     Below is a  schedule  of amounts  due after one year  which are  classified
according to their sensitivity to changes in interest rates.
<TABLE>
                                                                Interest Sensitivity
                                                                --------------------
                                                                   (in thousands)
                                                        Fixed Rate                Variable Rate
                                                        ----------                -------------
<S>                                                     <C>                          <C>
Due after one but within five years..............        $88,114                     $41,389
Due after five years.............................          7,671                        815
</TABLE>

     (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:
<TABLE>
                                                                  (dollars in thousands)
                                             2000           1999           1998           1997           1996
                                             ----           ----           ----           ----           ----
<S>                                          <C>           <C>           <C>            <C>             <C>
Nonperforming Loans:
Nonaccrual loans                             $608          $ 173         $1,519           $809          $ 109
Loans past due 90 days or more                209              4             25            249            448
                                              ---              -             --           ----            ---
    Total nonperforming loans                $817          $ 177         $1,544         $1,058          $ 557
                                             ====          =====         ======         ======          =====
Percent of total loans                       .32%           .08%           .83%           .67%           .41%
</TABLE>

     Additional   information   concerning   nonperforming   loans,  the  Bank's
nonaccrual policy,  loan impairment,  and loan concentrations is incorporated by
reference to Note 4 of the Company's  Consolidated  Financial Statements for the
year  ended  December  31,  2000  included  in the  Appendix  to  the  Company's
definitive  proxy  statement,  dated March 23,  2001,  relating to the April 25,
2001, 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, 2000,  that
would be required to be disclosed under Item III(C), if such assets were loans.

     There were no foreign loans outstanding at December 31, 2000.


                                       15
<PAGE>
IV SUMMARY OF LOAN LOSS EXPERIENCE

     (A) The following table sets forth loan balances and summarizes the changes
in the allowance for loan losses for each of the years ended December 31:
<TABLE>
                                                                      (dollars in thousands)
                                                       2000        1999        1998        1997        1996
                                                       ----        ----        ----        ----        ----
<S>                                                  <C>         <C>         <C>         <C>         <C>
Loans:
  Average daily balance of loans for the year....    $238,860    $198,448    $175,873    $148,096    $130,648
  Amount of loans (gross) outstanding at end
    of the year..................................     256,224     210,655     185,646     159,011     136,541
Allowance for loan losses:
   Balance at beginning of year..................       4,483       3,958       3,424       3,335       3,097
   Loans charged off:
      Real estate................................           0           0         110           0          70
      Commercial.................................         526         322          63         375         129
      Consumer...................................          83         164         129         124          88
                                                           --         ---         ---         ---          --
          Total charge-offs......................         609         486         302         499         287
   Recoveries of loans previously charged off:
       Real estate...............................           0          35          96          32           1
       Commerical................................          79          98          51          43          31
       Consumer                                            40          38          49          27          45
                                                           --          --          --          --          --
           Total recoveries......................         119         171         196         102          77

Net loans charged off............................         490         315         106         397         210
Additions to allowance charged to operations.....       1,200         840         640         486         448
                                                        -----         ---         ---         ---         ---
           Balance at end of year................      $5,193      $4,483      $3,958      $3,424      $3,335

Ratios:
   Net loans charged off to average loans
       outstanding                                       .21%        .16%        .06%        .27%        .16%
   Allowance for loan losses to loans
       outstanding                                      2.03%       2.13%       2.13%       2.15%       2.44%
</TABLE>

     The allowance for loan losses  reflected above is a valuation  allowance in
its entirety and the only allowance available to absorb future loan losses.

     (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:
<TABLE>
                                                            (dollars in thousands)
                             2000               1999               1998               1997              1996
                             ----               ----               ----               ----              ----
                        Amount  Percent    Amount  Percent    Amount  Percent    Amount  Percent   Amount  Percent
                        ------  -------    ------  -------    ------  -------    ------  -------   ------  -------
<S>                     <C>     <C>        <C>     <C>        <C>     <C>        <C>     <C>       <C>     <C>
Commercial......        $4,725   77.0%     $3,803   77.6%     $3,384   74.1%     $2,785   69.2%    $2,401   66.7%
Consumer........           315   12.2%        441   11.8%        355   12.5%        332   15.6%       465   16.2%
Real Estate......          153   10.8%        239   10.6%        219   13.4%        307   15.2%       457   17.1%
                           ---                ---                ---                ---               ---
      Total......       $5,193   100%      $4,483    100%     $3,958    100%     $3,424    100%    $3,335    100%
                        ======   ====      ======    ====     ======    ====     ======   =====    ======
</TABLE>
                                       16
<PAGE>
V  DEPOSITS

     The following  table sets forth average  deposit  balances and the weighted
average rates paid thereon for the years ended December 31:
<TABLE>
                                                                   (dollars in thousands)
                                                    2000                    1999                    1998
                                                    ----                    ----                    ----
                                            Average                 Average                 Average
                                            Balance       Rate      Balance       Rate      Balance       Rate
                                            -------       ----      -------       ----      -------       ----
<S>                                        <C>            <C>      <C>            <C>      <C>            <C>
Non-interest bearing demand                 $51,428                 $48,240                 $43,619
Savings, money market and NOW               120,769       2.84%     111,141       2.69%      91,552       3.03%
Time deposits                               104,669       5.88%      92,802       5.36%      81,119       5.69%
                                            -------                  ------                  ------
      Total                                $276,866       4.26%    $252,183       3.90%    $216,290       4.28%
                                           ========                ========                ========
</TABLE>

     The table for  maturities of  negotiated  rate time deposits of $100,000 or
more  outstanding at December 31, 2000 is incorporated by reference to Note 8 of
the Company's  Consolidated Financial Statements for the year ended December 31,
2000 included in the Appendix to the Company's definitive proxy statement, dated
March 23, 2001,  relating to the April 25, 2001,  Annual Meeting of Shareholders
(as filed with the Commission as exhibit 13 to the Report).

VI  RETURN ON EQUITY AND ASSETS

     The ratio of net  income to  average  shareholders'  equity  and to average
total assets, and certain other ratios, for the years ended December 31 follow:
<TABLE>
                                             2000           1999          1998           1997           1996
                                             ----           ----          ----           ----           ----
<S>                                         <C>            <C>           <C>            <C>            <C>
Net income as a percent of:
   Average common equity                    18.76%         15.05%        17.83%         17.84%         19.12%
   Average total assets                      1.63%          1.33%         1.63%          1.79%          1.88%
</TABLE>

     Additional  performance ratios are set forth in Selected Financial Data, in
Item 6, Part II of this Report. 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 the Appendix to the
Company's  definitive  proxy  statement,  dated March 23, 2001,  relating to the
April 25, 2001,  Annual Meeting of Shareholders  and is  incorporated  herein by
reference.

VII  SHORT-TERM BORROWING

     The information required in this item is not applicable for this Company.

                                       17
<PAGE>
Item 2 - Properties

     The Bank operates from seven facilities,  located in four  communities,  in
Livingston County, Michigan. The executive offices of the Company are located at
the  Bank's  main  office,  101 East Grand  River,  Howell,  Michigan.  The Bank
maintains  two  branches  in Howell at 5990 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, and 10700 Highland Road, Hartland, Michigan. All
of the offices  have ATM  machines  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 fifteen years,  expiring  September 2007. The average lease payment
over the life of the lease is $3,167 monthly.

Item 3 - Legal Proceedings

     The Company 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 Company 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 Company or the Bank,  or any  associate  of the
foregoing,  is a party or has a material  interest adverse to the Company 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 2000.

                       Additional Item--Executive Officers

     Executive  officers of the Company are  appointed  annually by the Board of
Directors.  There are no family  relationships  among these officers  and/or the
directors  of the  Company,  or any  arrangement  or  understanding  between any
officer and any other person pursuant to which the officer was elected.

                                       18
<PAGE>
     The  following  table sets forth  certain  information  with respect to the
Company's executive officers as of December 31, 2000:
<TABLE>
                                                                            First Selected as an Officer
        Name (Age)                        Position with Company                   of the Company
        ----------                        ---------------------                   --------------
<S>                                 <C>                                              <C>
Barbara D. Martin (54)              President,  Chief Executive Officer,             1983
                                    and  Director of the Company and the
                                    Bank
Barbara J. Nelson (53)              Secretary/Treasurer  of the  Company             1985
                                    and    Senior    Vice     President,
                                    Cashier,    and   Chief    Financial
                                    Officer of the Bank
Herbert W. Bursch (48)              Senior   Vice   President,    Retail             1999
                                    Services, of the Bank
James Wibby (50)                    Senior   Vice   President,    Senior             1997
                                    Lender, of the Bank
Nancy Morgan (50)                   Vice  President,  Human Resources of             1988
                                    the Bank
Jerry Armstong (41)                 Vice President,  Operations,  of the             1997
                                    Bank
</TABLE>

                                     PART II

Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters

     There is no active market for the Company's  Common Stock,  and there is no
published  information  with respect to its market price.  There are  occasional
direct sales by  shareholders  of which the  Company's  management  is generally
aware.  It is the  understanding  of the management of the Company that over the
last two years,  the Company's Common Stock has sold at a premium to book value.
From  January 1, 1999,  through  December 31,  2000,  there were,  so far as the
Company's  management  knows, 301 sales of shares of the Company's Common Stock,
involving a total of 52,305  shares.  The price was  reported to  management  in
these transactions; however there may have been other transactions involving the
Company  stock at prices not reported to  management.  During this  period,  the
highest price known to be paid was $42.00 per share  throughout  2000 and during
the last two quarters of 1999,  and the lowest price was $40.00 per share in the
first two quarters of 1999.  To the  knowledge of  management,  the last sale of
Common Stock occurred on February 23, 2001.

     As of March 1, 2001, there were  approximately 850 holders of record of the
Company's  Stock. The following table sets forth the range of high and low sales
prices of the Company's  Common Stock during 1999 and 2000, based on information
made  available to the  Company,  as well as per share cash  dividends  declared
during those periods.  Although  management is not aware of any  transactions at
higher or lower prices,  there may have been  transactions at prices outside the
ranges listed in the table.
                                       19
<PAGE>
Sales price and dividend information for the years 1999 and 2000:
<TABLE>
                                               Sales Prices                      Cash Dividends Declared
                                               ------------                      -----------------------
            1999                       High                    Low
            ----                       ----                    ---
<S>                                   <C>                     <C>                         <C>
First Quarter                         $40.00                  $40.00                      $0.20
Second Quarter                        $40.00                  $40.00                      $0.20
Third Quarter                         $42.00                  $40.00                      $0.20
Fourth Quarter                        $42.00                  $42.00                      $0.5 0(1)

            2000                       High                    Low
            ----                       ----                    ---
First Quarter                         $42.00                  $42.00                      $0.20
Second Quarter                        $42.00                  $42.00                      $0.20
Third Quarter                         $42.00                  $42.00                      $0.20
Fourth Quarter                        $42.00                  $42.00                      $0.55(2)
</TABLE>
(1)  Includes a special dividend of $0.30 per share.
(2)  Includes a special dividend of $0.35 per share.


     The holders of the Company's  Common Stock are entitled to dividends  when,
as,  and if  declared  by the Board of  Directors  of the  Company  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 Company and the Bank, along
with other relevant  factors.  The Company's  principal source of funds for cash
dividends is the dividends paid by the Bank. The ability of the Company and Bank
to pay dividends is subject to regulatory restrictions and requirements.

                                       20
<PAGE>
Item 6 - Selected Financial Data

     The  information  set forth under the caption  "Summary  Financial Data" on
page 52 of the Appendix to the Company's  definitive proxy  statement,  as filed
with the  Commission  and dated March 23,  2001,  relating to the April 25, 2001
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 39 through
51 of the Appendix to the Company's  definitive proxy  statement,  as filed with
the Commission  and dated March 23, 2001,  relating to the April 25, 2001 Annual
Meeting of Shareholders, is incorporated herein by reference.


Item 7a - Quantitative and Qualititative Disclosures about Market Risk
     Included in Management's Discussion and Analysis


Item 8 - Financial Statements and Supplementary Data

     The following  consolidated  financial statements and supplementary data of
the Company  appear on pages 12 to 38 of Appendix I to the Company's  definitive
Proxy  Statement,  dated March 23,  2001,  relating to the April 25, 2001 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' Report
        Quarterly financial data relating to results of operations for the years
        ended December 31, 2000 and 1999 are reported on page 38 of Appendix I.

Item 9 - Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None

                                       21
<PAGE>
                                    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 2 through 4 of the
Company's  definitive  proxy  statement,  as filed with the Commission and dated
March 23, 2001,  relating to the April 25, 2001 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.

Item 11 - Executive Compensation

     The information set forth under the caption "Summary Compensation Table" on
pages 5 through 7 of the Company' s definitive  proxy  statement,  as filed with
the Commission  and dated March 23, 2001,  relating to the April 25, 2001 Annual
Meeting of Shareholders, is incorporated herein by reference.  Information under
the  caption  "Committee  Report  on  Executive  Compensation"  on  page  5  and
"Shareholder  Return  Performance  Graph"  on  page  9 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

The information set forth under the caption  "Ownership of Common Stock" on page
8 of the Company's definitive proxy statement,  as filed with the Commission and
dated  March 23,  2001,  relating  to the  April  25,  2001  Annual  Meeting  of
Shareholders, is incorporated herein by reference.

Item 13 - Certain Relationships and Related Transactions

     The  information  set forth under the caption  "Certain  Transactions  with
Management" on page 7 of the Company's definitive proxy statement, as filed with
the Commission  and dated March 23, 2001,  relating to the April 25, 2001 Annual
Meeting of Shareholders, is incorporated herein by reference.

                                       22
<PAGE>
                                     PART IV

Item 14 - Exhibits, Financial Statement Schedules and Report on Form 8-K

(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,  dated March 23, 2001,  relating to the April 25, 2001 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.

(b)  Reports on Form 8-K
     No reports on  Form 8-K were  filed  during the fourth  quarter of the year
     ended December 31, 2000.



                                       23
<PAGE>
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 15, 2001.

FNBH BANCORP, INC.



/s/ Barbara D. Martin          Barbara D. Martin, President & Chief Executive
                               Officer (Principal Executive Officer)

/s/ Barbara J. Nelson          Barbara J. Nelson, Secretary/Treasurer
                               (Principal Accounting Officer)









                                       24
<PAGE>
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  Barbara D.  Martin and  Barbara J.
Nelson, 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.


W. Rickard Scofield, Chairman of the Board        /s/ W. Rickard Scofield


Donald K. Burkel, Vice Chairman of the Board      /s/ Donald K. Burkel


Gary R. Boss, Director                            /s/ Gary R. Boss


Harry E. Griffith, Director                       /s/ Harry E. Griffith


Dona Scott Laskey, Director                       _________________________


Barbara D. Martin, Director                       /s/ Barbara D. Martin


James R. McAuliffe, Director                      /s/ James R. McAuliffe


Randolph E. Rudisill, Director                    /s/ Randolph E. Rudisill


R. Michael Yost, Director                         /s/ R. Michael Yost


                                       25
<PAGE>
                                  EXHIBIT INDEX

     The  following  exhibits  are  filed  herewith,  indexed  according  to the
applicable assigned number:

Exhibit
Number                                                                      Page
------                                                                      ----
(13) Pages  11-52 of Appendix I to the  Company's  Proxy  Statement,  dated
     March 23,  2001,  for the Annual  Meeting of  Shareholders  to be held
     April 25, 2001 representing that portion of the Appendix  incorporated
     by  reference  in this  report.  This  Appendix  was  filed  with  the
     Commission as part of the Company's  Proxy Statement and was delivered
     to  Company  shareholders  in  compliance  with  Rule  14(a)-3  of the
     Securities Exchange Act of 1934, as amended..............................38

(21) Subsidiaries of the Registrant...........................................40

(23) Consent of Public Accountants

(24) Power of Attorney (included in signature section)

     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.

Exhibit
Number                                          Original Filing Form and Date
------                                          -----------------------------
3.1   Restated Articles of Incorporation       Exhibit 3.1 of Form 10, effective
      of the Registrant                        June 30, 1995 ("Form 10")

3.2   Amendment to the Company's Articles      Appendix I of Proxy Statement
      of Incorporation to Increase             dated March 17, 1998
      Authorized Shares

3.3   Bylaws of the Registrant                 Exhibit 3.2 of Form 10

4     Form of Registrant's Stock Certificate   Exhibit 4 of Form 10

      Material Contracts:

10.1  Howell Branch Lease Agreement            Exhibit 10.2 to Form 10

10.2  Company's Long Term Incentive Plan*      Appendix II of Proxy Statement
                                               dated March 17, 1998

10.3  FNBH Bancorp Inc. Employees' Stock       Exhibit 4 to Registration
      Purchase Plan*                           Statement on Form S-8
                                               (Reg. No. 333-46244)
*Represents a compensation plan

                                       26
<PAGE>
EXHIBIT 13


                                   APPENDIX I


     FNBH  Bancorp,  Inc. 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 May
1989.  The  Bank  was  originally  organized  in  1934  as  a  national  banking
association.  The Bank serves  primarily  four  communities,  Howell,  Brighton,
Hartland,  and  Fowlerville,  all of which are  located  in  Livingston  County,
Michigan.

                              FINANCIAL INFORMATION
                      FNBH BANCORP, INC., AND SUBSIDIARIES


                                                                            Page

Independent Auditor's Report................................................ 12

Consolidated Balance Sheets................................................. 13

Consolidated Statements of Income........................................... 15

Consolidated Statements of Stockholders' Equity............................. 17

Consolidated Statements of Cash Flows....................................... 18

Notes to Consolidated Financial Statements.................................. 20

Management's Discussion and Analysis........................................ 39

Summary Financial Data...................................................... 51

Stock and Earnings Highlights............................................... 52



                                       11
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

The Board of Directors and Stockholders
FNBH Bancorp, Inc.:


We have  audited the  consolidated  balance  sheets of FNBH  Bancorp,  Inc.  and
subsidiaries  ("Corporation")  as of December 31, 2000 and 1999, and the related
consolidated  statements  of  income,  stockholders'  equity  and  comprehensive
income,  and cash  flows for each of the years in the  three-year  period  ended
December  31,   2000.   These   consolidated   financial   statements   are  the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of FNBH Bancorp,  Inc.
and  subsidiaries  as of December  31,  2000 and 1999,  and the results of their
operations  and their cash flows for each of the years in the three-y ear period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States of America.


                                                       /s/ KPMG LLP


January 19, 2001

                                       12
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                           December 31, 2000 and 1999
<TABLE>
 Asset                                                                    2000                        1999
                                                                   ----------------            ----------------
<S>                                                                <C>                         <C>
Cash and cash equivalents:
    Cash and due from banks                                        $     17,501,547                  12,113,652
     Short-term investments                                              25,743,118                  12,300,630
                                                                   ----------------            ----------------
                  Total cash and cash equivalents                        43,244,665                  24,414,282

Investment securities held to maturity, net
    (fair value of $19,218,000 in 2000 and $17,650,000                   18,886,677                  17,709,401
    in 1999)
Investment securities available for sale, at fair value                  19,847,480                  32,554,004

Mortgage-backed securities held to maturity, net (fair                      576,994                     334,451
value of $578,000 in 2000 and $330,000 in 1999)
                                                                   ----------------            ----------------
                  Total investment and mortgage-backed                   39,311,151                  50,597,856
                  securities
Loans:
    Commercial                                                          197,203,204                 163,469,045
    Consumer                                                             31,180,063                  24,826,156
    Real estate mortgage                                                 27,840,497                  22,360,282
                                                                   ----------------            ----------------
                  Total loans                                           256,223,764                 210,655,483

    Less unearned income                                                   (809,746)                   (703,849)
    Less allowance for loan losses                                       (5,193,263)                 (4,483,283)
                                                                   ----------------            ----------------
                  Net loans                                             250,220,755                 205,468,351

Bank premises and equipment, net                                          8,238,743                   9,009,661
Land held for sale, net                                                   1,530,290                   2,835,290
 Accrued interest income and other assets                                 5,817,824                   4,093,780
                                                                   ----------------            ----------------
                  Total assets                                     $    348,363,428                 296,419,220
                                                                   ================            ================
</TABLE>
See accompanying notes to consolidated financial statements.

                                       13
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                           December 31, 2000 and 1999

<TABLE>
Liabilities and Stockholders' Equity                                                      2000                 1999
                                                                                 -----------------      ---------------
<S>                                                                              <C>                    <C>
Deposits:
    Demand (non-interest bearing)                                                $      55,252,490           47,980,695
    NOW                                                                                 34,637,247           34,645,921
    Savings and money market accounts                                                   98,887,217           89,862,739
    Time                                                                               121,436,864           96,701,098
                                                                                 -----------------      ---------------
                  Total deposits                                                       310,213,818          269,190,453

FHLB advances                                                                            6,000,000                   --
Accrued interest, taxes, and other liabilities                                           3,262,975            1,917,121
                                                                                 -----------------      ---------------
                  Total liabilities                                                    319,476,793          271,107,574

Commitments and contingencies

Stockholders' equity:
    Common stock, $-0- par value. Authorized 4,200,000 shares;  1,567,748 shares
       issued and outstanding at December 31, 2000 and 1,565,203 shares issued
       and outstanding at December 31, 1999                                              5,025,476            4,919,280
    Retained earnings                                                                   24,027,158           20,723,357
     Unearned management retention plan                                                   (183,188)            (139,597)
    Accumulated other comprehensive income (loss)                                           17,189             (191,394)
                                                                              --------------------- --------------------
                  Total stockholders' equity                                            28,886,635           25,311,646
                                                                              --------------------- --------------------

                  Total liabilities and stockholders' equity              $            348,363,428          296,419,220
</TABLE>
See accompanying notes to consolidated financial statements.

                                       14
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                        Consolidated Statement of Income

                 Years ended December 31, 2000, 1999, and 1999
<TABLE>
Years Ended                                                        2000                1999               1998
                                                          --------------------  ------------------  -----------------
<S>                                                       <C>                    <C>                <C>
Interest and dividend income:
    Interest and fees on loans                            $        23,254,289          18,725,205         17,293,769
    Interest and dividends on investment and
       mortgage-backed securities:
           U.S. Treasury securities                                 1,159,774             999,431          1,230,696
           Obligations of other U.S. Government
              agencies                                                376,491             461,654            111,575
           Obligations of state and political
              subdivisions                                            913,065             838,532            780,637
           Other securities                                            67,717              64,975             44,600
    Interest on short-term investments                                275,656             507,499            449,102
                                                          --------------------  ------------------  -----------------
                 Total interest and dividend income                26,046,992          21,597,296         19,910,379
                                                          --------------------  ------------------  -----------------
Interest expense:
    Interest on deposits                                            9,592,538           7,961,603          7,389,692
    Interest on other borrowings                                      449,272               5,283             10,712
                                                          --------------------  ------------------  -----------------
                 Total interest expense                            10,041,810           7,966,886          7,400,404
                                                          --------------------  ------------------  -----------------
                 Net interest income                               16,005,182          13,630,410         12,509,975

Provision for loan losses                                           1,200,000             840,000            640,000
                                                          --------------------  ------------------  -----------------
                 Net interest income after
                    provision for loan losses                      14,805,182          12,790,410         11,869,975

Non-interest income:
    Service charges and other fee income                            2,322,591           1,762,678          1,537,841
    Trust income                                                      192,568             143,707             80,438
    Gain on sale of loans                                              74,354              43,262            274,361
    Other                                                              14,377              65,456             61,201
                                                          --------------------  ------------------  -----------------
                 Total non-interest income                          2,603,890           2,015,103          1,953,841
                                                          --------------------  ------------------  -----------------

</TABLE>
See accompanying notes to consolidated financial statements.

                                       15
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                        Consolidated Statement of Income

                  Years ended December 31, 2000, 1999, and 1998
<TABLE>

                                                                    2000             1999                1998
Years Ended                                                  ------------------  ---------------    ----------------
<S>                                                           <C>                 <C>                 <C>
Non-interest expenses:
    Salaries and employee benefits                            $       5,441,548        4,832,475           4,314,012
    Net occupancy expense                                               773,865          689,777             600,472
    Equipment expense                                                   885,036          741,580             724,265
    Professional and service fees                                       456,723          460,742             273,824
    Printing and supplies                                               239,059          335,574             248,406
     Michigan Single Business Tax                                       262,200          164,600             201,900
    Provision for real estate losses                                    155,000          300,000             205,000
    Other                                                             1,975,133        2,018,447           1,669,710
                                                              ------------------  ---------------    ----------------
                Total non-interest expenses                          10,188,564        9,543,195           8,237,589
                                                              ------------------  ---------------    ----------------
                Income before Federal income taxes                    7,220,508        5,262,318           5,586,227

Federal income taxes                                                  2,115,000        1,547,000           1,679,500
                                                              ------------------  ---------------    ----------------

                Net income                                    $       5,105,508        3,715,318           3,906,727
                                                              ==================  ===============    ================

Basic and diluted net income per share                        $            3.26             2.38                2.49
                                                              ==================  ===============    ================

Cash dividends per share                                      $            1.15             1.10                1.05
                                                              ==================  ===============    ================
</TABLE>
See accompanying notes to consolidated financial statements.

                                       16
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

    Consolidated Statements of Stockholders' Equity and Comprehensive Income

                 Years ended December 31, 2000, 1999, and 1998
<TABLE>
                                                                                   Unearned      Accumulated
                                                                                  management       other
                                                     Common          Retained      retention    comprehensive
                                                     stock           earnings        plan          income           Total
                                                  -----------      ------------   -----------   -------------   ------------
<S>                                                 <C>            <C>             <C>           <C>            <C>
Balances at December 31, 1997                       5,250,000       16,467,201           --         14,824       21,732,025

Repurchase of 15,000 shares at $35 per share         (525,000)              --           --             --         (525,000)
Issued 2,365 shares for management
  retention plan                                       82,775               --      (82,775)            --               --
Issued 400 shares for directors' compensation          14,000               --           --             --           14,000
Amortization of management retention plan                  --               --       16,555             --           16,555

Comprehensive income:
  Net income                                               --        3,906,727           --             --        3,906,727
  Changes in unrealized gain on securities
     available for sale, net of tax                        --               --           --         (2,633)          (2,633)
                                                                                                                ------------
          Total comprehensive income                                                                              3,904,094

Cash dividends ($1.05 per share)                           --       (1,645,141)          --             --       (1,645,141)
                                                  ------------     ------------   ----------    -----------     ------------
Balances at December 31, 1998                       4,821,775       18,728,787      (66,220)        12,191       23,496,533

Issued 2,435 shares for management
  retention plan                                       97,400               --      (97,400)            --               --
Issued 3 shares for employee awards                       105               --           --             --              105
Amortization of management retention plan                  --               --       24,023             --           24,023

Comprehensive income:
  Net income                                               --        3,715,318           --             --        3,715,318
  Changes in unrealized gain (loss) on securities
    available for sale, net of tax                         --               --           --       (203,585)        (203,585)
                                                                                                                ------------
          Total comprehensive income                                                                              3,511,733

Cash dividends ($1.10 per share)                           --       (1,720,748)          --             --       (1,720,748)
                                                  ------------     ------------   ----------   ------------     ------------
Balances at December 31, 1999                     $ 4,919,280       20,723,357     (139,597)      (191,394)      25,311,646

Issued 2,545 shares for management
  retention plan                                      106,890               --     (106,890)            --               --
Retired 337 shares for management
  retention plan                                      (12,725)              --       12,725             --               --
Issued 337 shares for employee stock                   12,031               --                          --           12,031
  purchase plan
Amortization of management retention plan                  --               --       50,574             --           50,574

Comprehensive income:
  Net income                                               --        5,105,508           --             --        5,105,508
  Changes in unrealized gain on securities
    available for sale, net of tax                         --               --           --        208,583          208,583
                                                                                                                ------------
          Total comprehensive income                                                                              5,314,091

Cash dividends ($1.15 per share)                           --       (1,801,707)          --             --       (1,801,707)
                                                  ------------     ------------   ----------   ------------     ------------
 Balances at December 31, 2000                    $ 5,025,476       24,027,158     (183,188)        17,189       28,886,635
                                                  ============     ============   ==========   ============     ============
</TABLE>
See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                      Consolidated Statement of Cash Flows

                  Years ended December 31, 2000, 1999, and 1998
<TABLE>
                                                                        2000               1999                   1998
                                                                  ---------------    --------------        ---------------
<S>                                                               <C>                 <C>                   <C>
Cash flows from operating activities:
   Net income                                                     $    5,105,508         3,715,318              3,906,727
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Provision for loan losses                                       1,200,000           840,000                640,000
       Depreciation and amortization                                     912,832           760,047                681,339
       Deferred Federal income tax benefit                              (337,000)         (235,600)              (261,800)
       Net amortization on investment securities                          20,635            88,233                 44,771
       Earned portion of management retention plan                        50,574            24,023                 16,555
       Loss on disposal of equipment                                      80,800            18,358                 20,668
       Gain on sale of loans                                             (74,354)          (43,262)              (274,361)
       Proceeds from sale of loans                                     9,336,943        16,044,643             18,030,745
       Origination of loans held for sale                             (9,470,567)      (16,080,472)           (18,305,410)
       Provision for real estate losses                                  155,000           300,000                205,000
       Increase in accrued interest income and
             other assets                                               (237,044)         (109,238)            (2,121,678)
       Increase (decrease) in accrued interest, taxes,
             and other liabilities                                     1,238,554           (30,241)              (236,154)
                                                                  ---------------    --------------        ---------------
                Net cash provided by operating activities              7,981,881         5,291,809              2,346,402

Cash flows from investing activities:
   Purchases of available-for-sale securities                        (10,982,824)      (17,157,030)           (16,067,003)
   Proceeds from maturities of available-for-sale
     securities                                                       24,000,000         3,000,000             10,000,000
   Purchases of held-to-maturity securities                           (2,496,204)       (2,919,503)            (3,865,946)
   Proceeds from maturities and calls of held-to-
     maturity securities                                                 605,000         4,268,000             14,490,000
   Repayments from mortgage-backed securities
     held to maturity                                                    455,981           460,169                472,876
   Purchase of loans                                                  (2,325,000)               --                     --
   Net increase in loans                                             (43,419,426)      (25,181,161)           (26,536,607)
   Capital expenditures                                                 (222,714)       (2,498,605)            (3,017,056)
                                                                  ---------------    --------------        ---------------
                Net cash used in investing activities                (34,385,187)      (40,028,130)           (24,523,736)
</TABLE>
See accompanying notes to consolidated financial statements.

                                       18
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                      Consolidated Statement of Cash Flows

                  Years ended December 31, 2000, 1999, and 1998
<TABLE>
                                                                        2000                1999               1998
                                                                ------------------  ------------------ ------------------
<S>                                                              <C>                     <C>               <C>
Cash flows from financing activities:
    Net increase in deposits                                     $     41,023,365          29,633,689         37,257,573
    Increase in borrowings                                              6,000,000                  --                 --
    Dividends paid                                                    (1,801,707)          (1,720,748)        (1,645,141)
    Shares issued for employee purchase plan                               12,031                  --                 --
    Shares repurchased                                                         --                  --           (525,000)
                                                                 -----------------  ------------------ ------------------
             Net cash provided by financing activities                 45,233,689          27,912,941         35,087,432

             Net increase (decrease) in cash and
                cash equivalents                                       18,830,383          (6,823,380)        12,910,098

Cash and cash equivalents at beginning of year                         24,414,282          31,238,662         18,738,564
                                                                 -----------------  ------------------ ------------------
Cash and cash equivalents at end of year                         $     43,244,665          24,415,282         31,648,662
                                                                 =================  ================== ==================
Supplemental disclosures:
    Interest paid                                                $      9,272,543           7,904,981          7,397,252
    Federal income taxes paid                                           2,208,000           1,607,000          2,085,000

    Supplemental schedule of noncash investing and
     financing activities:
          Loans transferred to other real estate                          649,203             900,000            335,713
          Loans charged off                                               608,520             485,657            301,674
                                                                 =================  ================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.

                                       19
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


(1)    Summary of Significant Accounting Policies

     (a)    Principles of Consolidation

          The  consolidated  financial  statements  include the accounts of FNBH
          Bancorp, Inc. and its wholly-owned  subsidiaries,  First National Bank
          in Howell and H.B.  Realty Co. All significant  intercompany  balances
          and transactions have been eliminated.

          First National Bank in Howell ("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,
          collections,  traveler's checks,  night depository,  safe deposit box,
          U.S. Savings Bonds, and trust services. The Bank serves primarily four
          communities - Howell,  Brighton,  Hartland,  and  Fowlerville - all of
          which are located in Livingston County, Michigan.

          H.B.  Realty Co. was established on November 26, 1997 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.

          The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities and disclosure of contingent  assets
          and  liabilities  at the  date of the  financial  statements,  and the
          reported amounts of revenues and expenses during the reporting period.
          Actual results could differ from those  estimates.  The accounting and
          reporting   policies   of  FNBH   Bancorp,   Inc.   and   subsidiaries
          ("Corporation") conform to accounting principles generally accepted in
          the  United  States of  America  and to  general  practice  within the
          banking  industry.   The  following  is  a  description  of  the  more
          significant of these policies.

     (b)    Investment and Mortgage-backed Securities

          Investment  securities  held to maturity  are those  securities  which
          management  has the ability and  positive  intent to hold to maturity.
          Investment  securities  held to maturity are stated at cost,  adjusted
          for amortization of premium and accretion of discount.

          Investment   securities   that   fail  to   meet   the   ability   and
          positive-intent criteria are accounted for as securities available for
          sale and stated at fair value,  with unrealized gains and losses,  net
          of  income   taxes,   reported  as  a  separate   component  of  other
          comprehensive income until realized.

          Trading  account  securities  are carried at fair value.  Realized and
          unrealized  gains or losses on  trading  securities  are  included  in
          non-interest income.

          Gains or losses on the sale of  securities  are computed  based on the
          adjusted cost of the specific security.

                                       20
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     (c)    Loans

          Loans are  stated at their  principal  amount  outstanding,  net of an
          allowance for loan losses. Interest on loans is accrued daily based on
          the outstanding  principal balance.  Loan origination fees and certain
          direct loan  origination  costs are deferred and  recognized  over the
          lives of the related  loans as an  adjustment  of the yield.  Mortgage
          loans  held for  sale  are  carried  at the  lower of cost or  market,
          determined on a net aggregate basis. Market is determined on the basis
          of delivery prices in the secondary  mortgage  market.  When loans are
          sold,   gains  and  losses  are  recognized   based  on  the  specific
          identification method.

          The Bank  originates  mortgage loans for sale to the secondary  market
          and sells the loans with servicing retained.

          The total cost of mortgage loans originated with the intent to sell is
          allocated  between  the loan  servicing  right and the  mortgage  loan
          without  servicing,  based on their relative fair value at the date of
          origination.   The  capitalized  cost  of  loan  servicing  rights  is
          amortized  in  proportion  to, and over the period of,  estimated  net
          future servicing revenue.

          Mortgage  servicing rights are periodically  evaluated for impairment.
          For purposes of measuring  impairment,  mortgage  servicing rights are
          stratified based on predominant risk characteristics of the underlying
          serviced loans.  These risk  characteristics  include loan type, term,
          year originated,  and note rate.  Impairment  represents the excess of
          cost of an individual  mortgage servicing rights stratum over its fair
          value and is recognized through a valuation allowance.

          Fair values for  individual  strata are based on quoted  market prices
          for comparable  transactions,  if available,  or estimated fair value.
          Estimates of fair value include assumptions about prepayment,  default
          and interest rates, and other factors which are subject to change over
          time.  Changes in these  underlying  assumptions  could cause the fair
          value  of  mortgage   servicing  rights,  and  the  related  valuation
          allowance, to change significantly in the future.

     (d)    Allowance for Loan Losses

          The  allowance  for loan  losses  is based  on  management's  periodic
          evaluation  of the loan  portfolio  and  reflects an amount  that,  in
          management's  opinion,  is adequate to absorb  losses in the  existing
          portfolio.   In  evaluating  the  portfolio,   management  takes  into
          consideration numerous factors, including current economic conditions,
          prior loan loss experience, the composition of the loan portfolio, and
          management's  evaluation  of the  collectibility  of  specific  loans.
          Although the Bank  evaluates  the adequacy of the  allowance  for loan
          losses  based on  information  known to  management  at a given  time,
          various  regulatory  agencies,  as part of  their  normal  examination
          process,  may  require  future  additions  to the  allowance  for loan
          losses.

          Impaired loans have been  identified in accordance  with provisions of
          Statement of Financial Accounting Standards ("SFAS") No. 114. The Bank
          considers  a loan to be impaired  when it is probable  that it will be
          unable  to  collect  all or  part  of  amounts  due  according  to the
          contractual  terms of the loan agreement.  Impaired loans are measured
          based on the present  value of expected  cash flows  discounted at the
          loan's  effective  interest  rate or, as a practical  expedient,  at a
          loan's observable market price, or the fair value of the collateral if
          the loan is collateral dependent.

                                       21
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


     (e)    Nonperforming Assets

          The Bank  charges off all or part of loans when  amounts are deemed to
          be uncollectible,  although collection efforts may continue and future
          recoveries may occur.

          Nonperforming  assets are  comprised of loans for which the accrual of
          interest  has been  discontinued,  loans for which the terms have been
          renegotiated  to less than market rates due to a serious  weakening of
          the borrower's financial  condition,  loans 90 days past due and still
          accruing,  and other real estate,  which has been  acquired  primarily
          through foreclosure and is awaiting disposition.

          Loans are  generally  placed on a nonaccrual  basis when  principal or
          interest  is past  due 90 days or more and  when,  in the  opinion  of
          management,  full collection of principal and interest is unlikely. At
          the time a loan is placed on nonaccrual  status,  interest  previously
          accrued  but not yet  collected  is charged  against  current  income.
          Income on such loans is then  recognized  only to the extent that cash
          is received and where future collection of principal is probable.

          Interest  income on impaired  loans is accrued  based on the principal
          amounts  outstanding.  The accrual of interest is discontinued when an
          impaired  loan becomes 90 days past due.  The Bank  utilized the "fair
          value of collateral" method to measure impairment, as virtually all of
          the loans considered to be impaired are commercial mortgage loans.

     (f)    Real Estate

          Other real estate owned at the time of  foreclosure is recorded at the
          lower of the Bank's cost of  acquisition  or the  asset's  fair market
          value,  net of disposal cost,  which becomes the property's new basis.
          Any  write-downs at date of  acquisition  are charged to the allowance
          for  loan  losses.   Expenses  incurred  in  maintaining   assets  and
          subsequent  write-downs  to reflect  declines  in value are charged to
          other expense.

          Real estate held for sale is recorded at the lower of carrying  amount
          or estimated  fair value less  estimated  disposal  costs.  Subsequent
          declines in estimated fair value and/or disposal costs are recorded as
          a component of non-interest expense.

     (g)    Bank Premises and Equipment

          Bank  premises  and  equipment  are stated at cost,  less  accumulated
          depreciation and amortization. Depreciation and amortization, computed
          on the  straight-line  method,  are  charged  to  operations  over the
          estimated useful lives of the assets.

     (h)    Federal Income Taxes

          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their  respective tax bases.  Deferred tax assets and  liabilities are
          measured  using enacted tax rates  expected to apply to taxable income
          in the years in which those  temporary  differences are expected to be
          recovered   or  settled.   The  effect  on  deferred  tax  assets  and
          liabilities  of a change in tax rates is  recognized  in income in the
          period that includes the enactment date.

                                       22
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


     (i)    Statements of Cash Flows

          For purposes of reporting cash flows, cash equivalents include amounts
          due  from  banks  and   federal   funds  sold  and  other   short-term
          investments.

     (j)    Comprehensive Income

          SFAS No. 130, Reporting Comprehensive Income established standards for
          the reporting and display of  comprehensive  income and its components
          (such  as  changes  in  unrealized  gains  and  losses  on  securities
          available for sale) in a financial  statement  that is displayed  with
          the same prominence as other financial statements.  In accordance with
          the adoption of SFAS No. 130, the Bank  reports  comprehensive  income
          within the statement of  stockholders'  equity.  Comprehensive  income
          include s net income and any changes in equity from non-owner  sources
          that bypass the income statement.

     (k)    Earning Per Share

          Earnings per share of common  stock are based on the weighted  average
          number of common shares outstanding during the year.

(2)    Investment and Mortgage-backed Securities

     A summary of the amortized  cost and  approximate  fair value of investment
     securities at December 31, 2000 follows:
<TABLE>
                                             Held to maturity                       Available for sale
                                      -------------------------------       -------------------------------
                                      Amortized         Approximate         Amortized           Approximate
                                        cost            fair value             cost             fair value
                                     ------------     ---------------      -------------       ------------
       <S>                           <C>              <C>                  <C>                 <C>
       U.S. Treasury and agency
         securities                  $         --                  --         18,988,741         19,014,730
       Obligations of states and
         political subdivisions        18,886,677          19,218,000                 --                 --
       Federal Reserve Bank stock              --                  --             44,250             44,250
       Federal Home Loan Bank stock            --                  --            788,500            788,500
                                     ------------      --------------      -------------      -------------
                                       18,886,677          19,218,000         19,821,491         19,847,480

       Mortgage-backed securities         576,994             578,000                 --                 --
                                     ------------      --------------      -------------      -------------
                                     $ 19,463,671          19,796,000         19,821,491         19,847,480
                                     ============      ==============      =============      =============
</TABLE>

                                       23
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     A summary  of  unrealized  gains and  losses on  investment  securities  at
December 31, 2000 follows:
<TABLE>
                                                      Held to maturity                       Available for sale
                                            --------------------------------------  -------------------------------------
                                                  Gross               Gross              Gross               Gross
                                               unrealized          unrealized          unrealized          unrealized
                                                  gains              losses              gains               losses
                                            ------------------  ------------------  -----------------   -----------------
      <S>                                    <C>                <C>                  <C>                 <C>
      U.S. Treasury and agency securities
                                             $        --                 --             59,585              33,596
      Obligations of states and
      political subdivisions                     377,574             45,976                 --                  --
      Mortgage-backed securities                   1,232                501                 --                  --
                                            ------------------  ------------------  -----------------   -----------------

                                              $  378,806              46,477            59,585              33,596
                                            ==================  ==================  =================   =================
</TABLE>

     The amortized cost and approximate  fair value of investment  securities at
     December 31,  2000,  by  contractual  maturity,  are shown below.  Expected
     maturities will differ from contractual  maturities  because  borrowers may
     have the  right  to call or  prepay  obligations  with or  without  call or
     prepayment penalties.
<TABLE>
                                                 Held to maturity                      Available for sale
                                    -----------------------------------    -----------------------------------
                                       Amortized          Approximate           Amortized        Approximate
                                          cost            fair value              cost            fair value
                                    ---------------     ---------------    ----------------    ---------------
      <S>                           <C>                 <C>                <C>                 <C>
      Due in one year or less           $  895,045             899,000          13,975,405         14,002,391
      Due after one year through
      five years                         7,684,910           7,863,000           5,013,336          5,012,339
      Due after five years through
      ten years                         10,306,722          10,456,000                  --                 --
                                    ---------------     ---------------    ----------------    ---------------
                                        18,886,677          19,218,000          18,988,741         19,014,730

      Federal Reserve Bank stock                --                  --              44,250             44,250
      Federal Home Loan Bank stock              --                  --             788,500            788,500
      Mortgage-backed securities
      (principally short-term)             576,994             578,000                  --                 --
                                    ---------------     ---------------    ----------------    ---------------
                                     $  19,463,671          19,796,000          19,821,491         19,847,480
                                    ===============     ===============    ================    ===============
</TABLE>

                                       24
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


The amortized cost and approximate fair value of investment securities of states
(including all their political  subdivisions) that individually  exceeded 10% of
stockholders' equity at December 31, 2000 and 1999 are as follows:
<TABLE>
                                                        2000                                      1999
                                       ---------------------------------------   ---------------------------------------
                                          Amortized           Approximate            Amortized          Approximate
                                             cost             fair value              cost              fair value
                                       -----------------   -------------------   ------------------  -------------------
       <S>                             <C>                 <C>                   <C>                 <C>
       State of Michigan               $   10,981,883          11,132,000            10,652,008          10,620,000
                                       =================   ===================   ==================  ===================
</TABLE>

Investment  securities,  with an amortized cost of  approximately  $1,800,000 at
December 31, 2000 and 1999, were pledged to secure public deposits and for other
purposes as required or permitted by law.

A  summary  of the  amortized  cost and  approximate  fair  value of  investment
securities at December 31, 1999 follows:
<TABLE>
                                                   Held to maturity                        Available for sale
                                         --------------------------------------  ---------------------------------------
                                           Amortized           Approximate         Amortized            Approximate
                                              cost              fair value           cost               fair value
                                         ----------------   -------------------  -----------------  --------------------
       <S>                               <C>                <C>                  <C>                 <C>
       U.S. Treasury and agency
       securities                        $           --                 --          32,011,148         31,721,254
       Obligations of states and
       political subdivisions                17,709,401         17,650,000                  --                 --
       Federal Reserve Bank stock                    --                 --              44,250             44,250
       Federal Home Loan Bank stock                  --                 --             788,500            788,500
                                         ----------------   -------------------  -----------------  --------------------
                                             17,709,401         17,650,000          32,843,898         32,554,004
       Mortgage-backed securities               334,451            330,000                  --                 --
                                         ----------------   -------------------  -----------------  --------------------
                                          $  18,043,852         17,980,000          32,843,898         32,554,004
                                         ================   ===================  =================  ====================
</TABLE>
                                       25
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


A summary of unrealized  gains and losses on  investment  securities at December
31, 1999 follows:
<TABLE>
                                                        Held to maturity                     Available for sale
                                               -----------------------------------   -----------------------------------
                                                    Gross              Gross              Gross              Gross
                                                 unrealized         unrealized         unrealized         unrealized
                                                    gains             losses              gains             losses
                                               ----------------   ----------------   ----------------   ----------------
       <S>                                     <C>                <C>                <C>                <C>
       U.S. Treasury and agency
       securities                              $         --                 --             147              290,041
       Obligations of states and
       political subdivisions                       168,724            228,125              --                   --
       Mortgage-backed securities                        --              4,451              --                   --
                                               --------------   ----------------   ----------------   ----------------
                                               $    168,724            232,576             147              290,041
                                               ==============   ================   ================   ================
</TABLE>


(3)    Advances from Federal Home Loan Bank

The Bank has a borrowing capacity of approximately  $16,000,000 with the Federal
Home Loan Bank of  Indianapolis  (" FHLB") and had FHLB advances  outstanding of
$6,000,000  and $-0- at December 31, 2000 and 1999,  respectively.  Variable- or
fixed-rate  advances are available with terms ranging from one day to ten years.
An outstanding  advance requires 145% collateral  coverage by one-to-four family
whole mortgage  loans,  government and agency  securities,  highly rated private
mortgage-backed  securities,  or deposits at the FHLB. A summary of  outstanding
advances at December 31, 2000 follows:
<TABLE>
                                                        Weighted-
                                                         average
                                                         interest
                                  Maturity                 rate                Amount
                                  --------             -----------         ------------
                              <S>                         <C>              <C>
                              Fixed rate:
                              Within one year             7.29%            $     207,089
                              Two years                   7.29                   223,656
                              Three years                 7.29                   241,547
                              Four years                  7.29                   260,872
                              Five years                  7.18                 3,281,742
                              Thereafter                  7.29                 1,785,094
                                                                           --------------
                                                                           $   6,000,000
                                                                           ==============
</TABLE>

(4)    Loans

Loans on nonaccrual amounted to $608,000,  $173,000,  and $1,519,000 at December
31, 2000, 1999, and 1998,  respectively.  If these loans had continued to accrue
interest  in  accordance  with  their  original  terms,  approximately  $87,000,
$21,000,  and $110,000 of interest  income would have been  recognized  in 2000,
1999, and 1998, respectively.  The Bank had no troubled-debt  restructured loans
at December 31, 2000 and 1999.

                                       26
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


  Details of past-due and nonperforming loans follow:
<TABLE>
                                                        90 days past due and
                                                            still accruing                       Nonaccrual
                                                     ------------------------------   ----------------------------------
                                                         2000             1999             2000               1999
                                                     --------------   -------------   ---------------    ---------------
       <S>                                           <C>              <C>             <C>                <C>
       Commercial and mortgage loans secured by
       real estate                                   $    164,000             --          387,000            93,000
       Consumer loans                                      22,000          3,000           28,000            40,000
       Commercial and other loans                          23,000          1,000          193,000            40,000
                                                     --------------   -------------   ---------------    ---------------
                                                     $    209,000          4,000          608,000           173,000
                                                     ==============   =============   ===============    ===============
</TABLE>

Impaired loans totaled  $3,900,000,  $3,400,000,  and $4,300,000 at December 31,
2000, 1999, and 1998,  respectively.  Specific  reserves relating to these loans
were  $1,900,000,  $900,000,  and $500,000 at December 31, 2000, 1999, and 1998,
respectively.  These reserves were  calculated in accordance  with SFAS No. 114.
There were no loans considered  impaired for which there was no related specific
reserve.

Cash receipts  received and recognized as income on impaired loans  approximated
$306,000,  $313,000,  and $291,000 for the years ended December 31, 2000,  1999,
and 1998, respectively.  Average impaired loans for the years ended December 31,
2000, 1999, and 1998 were approximately $5,200,000,  $4,600,000, and $3,800,000,
respectively.

Loans  serviced  for others were  approximately  $53,400,000,  $49,500,000,  and
$44,300,000 at December 31, 2000, 1999, and 1998, respectively.

The Bank capitalized $27,000, $79,000, and $115,000 in mortgage servicing rights
and incurred approximately $44,000, $52,000, and $33,000 in related amortization
expense  during 2000,  1999,  and 1998,  respectively.  At December 31, 2000 and
1999, these mortgage  servicing rights had a book value of $195,000 and $212,000
and fair value of approximately  $390,000 and $380,000,  respectively.  Mortgage
loans  with  mortgage   servicing  rights  capitalized   totaled   approximately
$34,000,000  at December  31, 2000 and  $33,000,000  at December  31,  1999.  No
valuation  allowance for capitalized  mortgage  servicing  rights was considered
necessary as of December 31, 2000 and 1999.

Included in real estate loans at December  31, 2000 and 1999 were  approximately
$181,000 and $-0-, respectively, of fixed-rate mortgage loans held for sale.

The Bank's primary market area is considered to be Livingston County,  Michigan.
The Bank is not dependent  upon any single  industry or business for its banking
opportunities.

Certain directors and executive officers, including their immediate families and
companies in which they are principal  owners,  were loan  customers of the Bank
during 2000 and 1999. Such loans were made in the ordinary course of business in
accordance with the Bank's normal lending policies,  including the interest rate
charged and  collateralization,  and do not represent  more than a normal credit
risk.

                                       27
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


     Loans to related parties are summarized below for the periods indicated:
<TABLE>
                                                                                 2000                  1999
                                                                           ----------------     ----------------
       <S>                                                                  <C>                 <C>
       Balance at beginning of year                                         $     798,000             714,000

       New loans                                                                   24,000             235,000
       Loan repayments                                                           (326,000)           (151,000)
                                                                            ---------------     ----------------
       Balance at end of year                                               $     496,000             798,000
                                                                            ===============     ================
</TABLE>

(5)    Allowance for Loan Losses

     The  following  represents a summary of the activity in the  allowance  for
     loan losses for the years ended December 31, 2000, 1999, and 1998:
<TABLE>
                                                                       2000               1999                1998
                                                                 -----------------   ----------------    ---------------
      <S>                                                        <C>                 <C>                 <C>
       Balance at beginning of year                              $   4,483,283          3,958,008           3,423,847

       Provision charged to operations                               1,200,000            840,000             640,000
       Loans charged off                                              (608,520)          (485,657)           (301,674)
       Recoveries of loans charged off                                 118,500            170,932             195,835
                                                                 -----------------   ----------------    ---------------
       Balance at end of year                                    $   5,193,263          4,483,283           3,958,008
                                                                 =================   ================    ===============
</TABLE>

(6)    Bank Premises and Equipment

     A  summary  of  bank  premises  and  equipment,   and  related  accumulated
     depreciation and amortization at December 31, 2000 and 1999 follows:
<TABLE>
                                                                                        2000                 1999
                                                                                  -----------------    -----------------
       <S>                                                                        <C>                  <C>
       Land and land improvements                                                 $   2,368,791            2,368,791
       Bank premises                                                                  6,496,071            6,523,383
       Furniture and equipment                                                        4,574,756            4,718,009
                                                                                  -----------------    -----------------
                                                                                     13,439,618           13,610,183

       Less accumulated depreciation and amortization                                (5,200,875)          (4,600,522)
                                                                                  -----------------    -----------------

                                                                                  $   8,238,743            9,009,661
                                                                                  =================    =================
</TABLE>

(7)    Land Held for Sale

     In 1997, the Bank purchased an option for $900,000 and, in 1998,  exercised
     that option for  approximately  $3,000,000 for a tract of land.  Subsequent
     improvements to the land were made amounting to approximately $200,000.

                                       28
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


     During  1998,  the Bank  allocated  approximately  $800,000 of the carrying
     value of the property to land for a branch site. During 2000, one parcel of
     the property was sold. The remaining property is held for sale.

     The Bank  also  reduced  the  carrying  cost of the  land  held for sale by
     approximately $155,000, $300,000, and $205,000 during 2000, 1999, and 1998,
     respectively,  to provide for estimated  disposal  costs and/or  decline in
     estimated  market  value.  These  charges are  included  as a component  of
     non-interest expense.

(8)    Time Certificates of Deposit

     At December 31, 2000,  the  scheduled  maturities  of time  deposits with a
     remaining term of more than one year were:
<TABLE>
                  <S>                                                               <C>
                  Year of maturity:
                  2002                                                              $    36,112,665
                  2003                                                                    3,769,746
                  2004                                                                    1,439,043
                  2005                                                                    3,211,202
                  2006 and beyond                                                           451,185
                                                                                    -----------------
                                                                                    $    44,983,841
                                                                                    =================
</TABLE>

     Included  in time  deposits  are  certificates  of  deposit  in  amounts of
     $100,000 or more.  These  certificates  and their  remaining  maturities at
     December 31, 2000, 1999, and 1998 are as follows:
<TABLE>
                                                                  2000                  1999                 1998
                                                           -------------------    -----------------    -----------------
       <S>                                                 <C>                    <C>                   <C>
       Three months or less                                $    12,583,794              5,436,960            3,692,410
       Three through six months                                  8,415,061              5,190,724            7,529,933
       Six through twelve months                                 4,954,522              6,731,297            6,610,965
       Over twelve months                                        7,159,896              5,073,865              248,332
                                                           -------------------    -----------------    -----------------
                                                           $    33,113,273             22,432,846           18,081,640
                                                           ===================    =================    =================
</TABLE>

     Interest   expense   attributable   to  the  above  deposits   amounted  to
     approximately $1,516,000, $1,167,000, and $968,000 in 2000, 1999, and 1998,
     respectively.

(9)    Federal Income Taxes

     Federal income tax expense (benefit) consists of:
<TABLE>
                                                                    2000                1999                1998
                                                              -----------------   -----------------    ----------------
       <S>                                                    <C>                  <C>                  <C>
       Current                                                $   2,452,000           1,782,600            1,941,300
       Deferred                                                    (337,000)           (235,600)            (261,800)
                                                              -----------------   -----------------    ----------------
                                                              $   2,115,000           1,547,000            1,679,500
                                                              =================   =================    ================
</TABLE>
                                       29
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     Federal income tax expense  differed from the amounts  computed by applying
     the U.S. Federal income tax rate of 34% to pretax income as a result of the
     following:
<TABLE>
                                                                     2000                1999                1998
                                                               ------------------  -----------------   -----------------
       <S>                                                     <C>                 <C>                 <C>
       Computed "expected" tax expense                         $   2,455,000            1,789,200           1,899,300
       Increase (reduction) in tax resulting from:
        Tax-exempt interest and dividends, net                      (379,300)            (294,600)           (247,800)
       Other, net                                                     39,300               52,400              28,000
                                                               ------------------  -----------------   -----------------
                                                               $   2,115,000            1,547,000           1,679,500
                                                               ==================  =================   =================
</TABLE>

     The tax  effects of  temporary  differences  that give rise to  significant
     portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
     December 31, 2000 and 1999 are presented below:
<TABLE>
                                                                                       2000                  1999
                                                                                  ----------------     -----------------
       <S>                                                                        <C>                  <C>
       Deferred tax assets:
       Allowance for loan losses                                                  $   1,630,700            1,389,500
       Deferred loan fees                                                                11,700               28,000
       Unrealized loss on securities available for sale                                      --               98,500
       Other                                                                            499,800              346,300
                                                                                  ----------------     -----------------
       Total gross deferred tax assets                                                2,142,200            1,862,300

       Deferred tax liabilities:
       Unrealized gain on securities available for sale                                   8,800                   --
       Other                                                                            189,200              147,800
                                                                                  ----------------     -----------------
       Total gross deferred tax liabilities                                             198,000              147,800
                                                                                  ----------------     -----------------
       Net deferred tax asset                                                     $   1,944,200            1,714,500
                                                                                  ================     =================
</TABLE>

     The deferred  tax assets are subject to certain  asset  realization  tests.
     Management  believes no  valuation  allowance  is required at December  31,
     2000, due to the  combination of potential  recovery of tax previously paid
     and the reversal of certain deductible temporary differences.

                                       30
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


(10)   Leases

     The Bank has a  noncancelable  operating  lease that  provides  for renewal
     options.

     Future minimum lease payments under the noncancelable  lease as of December
     31, 2000 are as follows:
<TABLE>
                        Year ending
                        December 31
                        -----------
                           <S>                                                  <C>
                           2001                                                   $   38,000
                           2002                                                       39,250
                           2003                                                       43,000
                           2004                                                       43,000
                           2005                                                       43,000
                           Later years through 2007                                   75,250
                                                                                --------------
                                                                                  $   281,500
                                                                                ==============
</TABLE>

     Rental  expense  charged to operations in 2000,  1999, and 1998 amounted to
     approximately  $41,000,  $42,000,  and  $41,000,  respectively,   including
     amounts paid under short-term, cancelable leases.

(11)   Pension Plan

     The Bank  sponsors  a  defined  contribution  money  purchase  thrift  plan
     covering all employees 21 years of age or older who have completed one year
     of service as defined in the plan agreement.  Contributions are equal to 5%
     of total employee earnings plus 50% of employee  contributions  (limited to
     10% of their  earnings),  or the maximum  amount  permitted by the Internal
     Revenue Code. The pension plan expense of the Bank for 2000, 1999, and 1998
     was approximately $245,000, $236,000, and $222,000, respectively.

(12)   Management Retention Plan

     Restricted stock was awarded to key employees beginning in 1998,  providing
     for the immediate award of the  Corporation's  stock,  subject to a vesting
     period  which takes place over five years.  The awards are recorded at fair
     market value and amortized into salaries  expense over the vesting  period.
     The  amount of  compensation  costs  related  to  restricted  stock  awards
     included in salary  expense in 2000,  1999,  and 1998  amounted to $50,574,
     $24,023, and $16,555, respectively.

(13)   Financial Instruments with Off-balance-Sheet Risk

     The Bank is a party to financial instruments with off-balance-sheet risk in
     the normal course of business to meet the financing needs of its customers.
     These  financial  instruments  are loan  commitments  to extend  credit and
     letters of credit. These instruments involve, to varying degrees,  elements
     of credit  risk in excess of the  amounts  recognized  in the  consolidated
     balance sheets.

                                       31
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     The Bank's  exposure to credit loss in the event of the  nonperformance  by
     the other party to the financial instruments for loan commitments to extend
     credit and letters of credit is represented by the  contractual  amounts of
     these instruments.  The Bank uses the same credit policies in making credit
     commitments as it does for on-balance-sheet loans.

     Financial  instruments  whose  contract  amounts  represent  credit risk at
     December 31, 2000 and 1999 are as follows:
<TABLE>
                                                                                       2000                  1999
                                                                                 ------------------    -----------------
       <S>                                                                       <C>                    <C>
       Fixed rate                                                                $     6,600,000             3,700,000
       Variable rate                                                                  29,100,000            36,300,000
                                                                                 ------------------    -----------------

       Total credit commitments                                                  $    35,700,000            40,000,000
                                                                                 ==================    =================

       Letters of credit                                                         $    2,030,000              1,048,000
                                                                                 ==================    =================
</TABLE>

     Loan  commitments  to extend credit are agreements to lend to a customer as
     long as there is no violation of any condition established in the contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses and may require payment of a fee. Since many of the commitments are
     expected to expire without being drawn upon, the total  commitment  amounts
     do not necessarily  represent future cash requirements.  The Bank evaluates
     each customer's  creditworthiness  on a case-by-case  basis.  The amount of
     collateral  obtained,  if deemed  necessary  by the Bank upon  extension of
     credit,  is based on management's  credit  evaluation of the  counterparty.
     Collateral held varies,  but may include  accounts  receivable;  inventory;
     property,   plant,   and   equipment;    residential   real   estate;   and
     income-producing  commercial properties.  Market risk may arise if interest
     rates move adversely subsequent to the extension of commitments.

     Letters of credit written are conditional commitments issued by the Bank to
     guarantee the  performance  of a customer to a third party.  All letters of
     credit are  short-term  guarantees  of one year or less.  The  credit  risk
     involved  in  issuing  letters  of credit is  essentially  the same as that
     involved in extending  loans to customers.  The Bank  primarily  holds real
     estate as collateral  supporting those  commitments for which collateral is
     deemed  necessary.  The extent of collateral  held on those  commitments at
     December 31, 2000 and 1999 is in excess of the committed amount.

(14)   Capital

     The Bank is subject to various regulatory capital requirements administered
     by  the  federal  banking   agencies.   Failure  to  meet  minimum  capital
     requirements  can  initiate  certain  mandatory  and  possibly   additional
     discretionary  actions by  regulators  that,  if  undertaken,  could have a
     direct material effect on the Bank's  financial  statements.  Under capital
     adequacy  guidelines  and the  regulatory  framework for prompt  corrective
     action,  the Bank  must  meet  specific  capital  guidelines  that  involve
     quantitative  measures  of the  Bank's  assets,  liabilities,  and  certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices. The Bank's capital classification is also subject to qualitative
     judgments  by  regulators  about  components,  risk  weightings,  and other
     factors.

     Quantitative  measures established by regulation to ensure capital adequacy
     require the Bank to maintain minimum amounts and ratios of total and Tier 1
     capital  (as  defined  in the  regulations)  to  risk-weighted  assets  (as
     defined), and Tier 1 capital (as defined) to average assets (as defined).

                                       32
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     The most  recent  notification  from the Office of the  Comptroller  of the
     Currency  categorized  the Bank as well  capitalized  under the  regulatory
     framework  for  prompt  corrective   action.  To  be  categorized  as  well
     capitalized,  the Bank  must  maintain  minimum  total  risk-based,  Tier 1
     risk-based, and Tier 1 leverage ratios as set forth in the table. There are
     no conditions or events since that  notification  that management  believes
     have changed the institution's category.

     The Bank's  actual  capital  amounts and ratios are also  presented  in the
     following table as of December 31, 2000 and 1999:
<TABLE>
                                                                                                          To be well
                                                                                                       capitalized under
                                                                              For capital              prompt corrective
                                                     Actual                 adequacy purposes          action provisions
                                         -----------------------------   -----------------------   ------------------------
                                            Amount            Ratio        Amount        Ratio       Amount        Ratio
                                         --------------     ----------   ------------   --------   ------------   ---------
       <S>                                <C>               <C>         <C>              <C>        <C>            <C>
       As of December 31, 2000:
        Total capital
         (to risk-weighted assets)        $   29,658,000       11.00%   $ 21,572,000       8%      $ 26,965,000      10%

        Tier 1 capital
         (to risk-weighted assets)            26,292,000        9.75%     10,786,000       4%        16,179,000       6%

        Tier 1 capital
         (to average assets)                  26,292,000        8.02%     13,121,000       4%        16,401,000       5%

       As of December 31, 1999:
        Total capital
         (to risk-weighted assets)            24,811,000       11.15%     17,794,900       8%        22,243,500      10%

        Tier 1 capital
         (to risk-weighted assets)            22,031,000        9.90%      8,897,400       4%        11,121,750       6%

        Tier 1 capital
         (to average assets)                  22,031,000        7.74%     11,029,000       4%        13,786,200       5%
                                           ==============   ==========   ============  =======      ============   =========
</TABLE>

(15)   Net Income Per Common Share

     Basic net  income per  common  share is  computed  by  dividing  net income
     applicable  to common  stock by the  weighted  average  number of shares of
     common stock outstanding  during the period.  Diluted net income per common
     share is computed by dividing net income  applicable to common stock by the
     weighted  average  number of shares,  and potential  common stock,  such as
     stock options outstanding during the period, of which there were none.
<TABLE>
                                                                          Year ended December 31
                                                        -----------------------------------------------------------
                                                              2000                1999                 1998
                                                        ------------------  ------------------   ------------------
       <S>                                              <C>                 <C>                  <C>
       Basic -
                average shares outstanding              $    1,566,390           1,563,996            1,570,537
                                                        ==================  ==================   ==================
       Net income                                       $    5,105,508           3,715,318            3,906,727
                                                        ==================  ==================   ==================
       Net income applicable to common stock            $    5,105,508           3,715,318            3,906,727
                                                        ==================  ==================   ==================
       Basic net income per share                       $         3.26                2.38                 2.49
                                                        ==================  ==================   ==================
</TABLE>
                                       33
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


(16)   Contingent Liabilities

     The Bank is subject to various claims and legal proceedings  arising out of
     the normal course of business, none of which, in the opinion of management,
     based on the advice of legal counsel, is expected to have a material effect
     on the Bank's financial position or results of operations.

(17)   Fair Value of Financial Instruments

     SFAS No.  107,  Disclosures  About  Fair  Value of  Financial  Instruments,
     requires disclosure of fair-value  information about financial  instruments
     for which it is practicable  to estimate that value.  In cases where quoted
     market prices are not available,  fair values are based on estimates  using
     present  value  or  other  valuation   techniques.   Those  techniques  are
     significantly affected by the assumptions used, including the discount rate
     and estimates of future cash flows. In that regard,  the derived fair-value
     estimates cannot be substantiated by comparison to independent markets and,
     in  many  cases,  cannot  be  realized  in  immediate   settlement  of  the
     instrument.

     Fair-value methods and assumptions for the Bank's financial instruments are
     as follows:

     Cash  and  Cash   Equivalents  -  The  carrying  amounts  reported  in  the
     consolidated   balance  sheet  for  cash  federal   funds  and   short-term
     investments sold reasonably approximate those assets' fair values.

     Investment and Mortgage-backed  Securities - Fair values for investment and
     mortgage-backed securities are based on quoted market prices.

     Loans  - For  variable-rate  loans  that  reprice  frequently  and  with no
     significant  change in credit  risk,  fair  values are  generally  based on
     carrying  values.  The fair  value of  fixed-rate  loans  is  estimated  by
     discounting  future  cash flows using the  current  rates at which  similar
     loans would be made to borrowers  with similar  credit  ratings and for the
     same remaining maturities.

     FHLB  Advances  - The fair value of FHLB  advances  is  estimated  based on
     quoted market prices.

     Accrued Interest Income - The carrying amount of accrued interest income is
     a reasonable estimate of fair value.

     Deposit  Liabilities - The fair value of deposits with no stated  maturity,
     such as demand deposit,  savings,  NOW, and money market accounts, is equal
     to the amount payable on demand.  The fair value of certificates of deposit
     is  estimated  using rates  currently  offered for  deposits  with  similar
     remaining maturities.

     Accrued  Interest Payable - The carrying amount of accrued interest payable
     is a reasonable estimate of fair value.

     Off-Balance-Sheet  Instruments  - The fair value of  commitments  to extend
     credit is estimated using the fees currently  charged to enter into similar
     agreements,  taking into account the remaining  terms of the agreements and
     the present  creditworthiness  of the  counterparties.  For fixed-rate loan
     commitments,  fair value also  considers  the  difference  between  current
     levels  of  interest  rates  and the  committed  rates.  The fair  value of
     commitments to extend  credit,  including  letters of credit,  approximates
     book  value of  $700,000  and  $450,000  at  December  31,  2000 and  1999,
     respectively.

                                       34
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     The  estimated  fair  values of the  Bank's  financial  instruments  are as
     follows:
<TABLE>
                                                         2000                                   1999
                                          ------------------------------------   ------------------------------------
                                              Carrying             Fair             Carrying              Fair
                Financial Assets               value               value              value              value
                                          -----------------   ----------------   ----------------   -----------------
       <S>                                <C>                  <C>               <C>                 <C>
       Cash and cash equivalents          $   43,245,000          43,200,000         24,414,000          24,000,000
       Investment and mortgage-
         backed securities                    39,311,000          39,600,000         50,598,000          50,500,000
       Loans, net                            250,221,000         248,400,000        205,468,000         203,100,000
       Accrued interest income                 2,408,000           2,400,000          1,841,000           1,800,000

             Financial Liabilities

       Deposits:
         Demand                                55,252,000          55,300,000         47,981,000         48,000,000
         NOW                                   34,637,000          34,600,000         34,646,000         34,600,000
         Savings and money
           market accounts                     98,887,000          98,900,000         89,863,000         89,900,000
         Time                                 121,437,000         122,300,000         96,701,000         97,000,000
         FHLB advances                          6,000,000           6,300,000                 --                 --
         Accrued interest payable                 993,000           1,000,000            628,000            600,000
                                          ================    ================   ================   ================
</TABLE>

     Limitations

     Fair-value  estimates  are  made at a  specific  point  in  time,  based on
     relevant market information and information about the financial instrument.
     These  estimates do not reflect any premium or discounts  that could result
     from offering for sale at one time the  Corporation's  entire holdings of a
     particular financial instrument. Because no market exists for a significant
     portion of the Corporation's  financial  instruments,  fair-value estimates
     are based on judgments  regarding future loss experience,  current economic
     conditions,  risk  characteristics  of various financial  instruments,  and
     other  factors.  These  estimates  are  subjective  in nature  and  involve
     uncertainties and matters of significant judgment,  and therefore cannot be
     determined  with  precision.  Changes in  assumptions  could  significantly
     affect the estimates.

(18)   Dividend Restrictions

     On a parent  company-only  basis, the Corporation's only source of funds is
     dividends  paid by the Bank.  The ability of the Bank to pay  dividends  is
     subject to limitations  under various laws and regulations,  and to prudent
     and sound banking  principles.  The Bank may declare a dividend without the
     approval of the Office of Comptroller of the Currency  ("OCC"),  unless the
     total  dividend in a calendar year exceeds the total of its net profits for
     the year  combined with its retained  profits of the two  preceding  years.
     Under  these  provisions,   approximately   $4,600,000  was  available  for
     dividends on December 31, 2000 without the approval of the OCC.

                                       35
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


(19)   Condensed Financial Information - Parent Company Only

     The  condensed  balance  sheets at  December  31,  2000 and  1999,  and the
     condensed  statements of income and cash flows for the years ended December
     31, 2000, 1999, and 1998, of FNBH Bancorp, Inc. follow:
<TABLE>
                                                   Condensed Balance Sheets

                                                                               2000                   1999
                                                                         ------------------     ------------------
       <S>                                                               <C>                    <C>
       Assets:
        Cash                                                             $         31,920                 18,784
        Investment in subsidiaries:
         First National Bank in Howell                                         26,309,256             21,839,986
         H.B. Realty Co.                                                        2,442,490              3,399,472
         Other assets                                                             115,719                 59,654
                                                                         ------------------     ------------------
                                                                         $     28,899,385             25,317,896
                                                                         ==================     ==================
       Liabilities and stockholders equity:
         Other liabilities                                               $         12,750                  6,250
         Stockholders' equity                                                  28,886,635             25,311,646
                                                                         ------------------     ------------------
                Total liabilities and stockholders equity                $     28,899,385             25,317,896
                                                                         ==================     ==================
</TABLE>
<TABLE>
                                                Condensed Statements of Income

                                                                          Year ended December 31,
                                                      -----------------------------------------------------------
                                                            2000                  1999                1998
                                                      ------------------    -----------------    ----------------
       <S>                                            <C>                   <C>                  <C>
       Operating income - dividends from
         subsidiaries                                     $   1,835,500            1,720,748           6,872,496
                                                      ------------------    -----------------    ----------------
            Total operating income                            1,835,500            1,720,748           6,872,496
                                                      ------------------    -----------------    ----------------
       Operating expenses - administrative
         and other expenses                                      33,697               37,223              40,683
                                                      ------------------    -----------------    ----------------
            Total operating expenses                             33,697               37,223              40,683
                                                      ------------------    -----------------    ----------------
       Income before equity in undistributed
         net income of subsidiaries                           1,801,803            1,683,525           6,831,813

       Equity in undistributed net income of
       subsidiaries                                           3,303,705            2,031,793          (2,925,086)
                                                      ------------------    -----------------    ----------------

            Net income                                    $   5,105,508            3,715,318           3,906,727
                                                      ==================    =================    ================
</TABLE>
                                       36
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998
<TABLE>
                                              Condensed Statements of Cash Flows

                                                                        Year ended December 31,
                                                     -----------------------------------------------------------
                                                            2000                 1999                1998
                                                     -------------------   -----------------    ----------------
       <S>                                           <C>                    <C>                 <C>
       Net income                                      $  5,105,508             3,715,318           3,906,727
       Adjustments to reconcile net income to
         net cash from operating activities:
           Increase in other assets                         (56,065)              (20,097)            (28,056)
           Increase in other liabilities                      6,500                 6,250                  --
           Equity in undistributed net income
             of subsidiaries                             (3,303,705)           (2,031,793)          2,925,086
                                                   -------------------   -----------------    ----------------
               Total adjustments                         (3,353,270)           (2,045,640)          2,897,030
                                                   -------------------   -----------------    ----------------
               Net cash provided by
                 operating activities                     1,752,238             1,669,678           6,803,757
                                                   -------------------   -----------------    ----------------
       Cash flow from investing activities
         -investments in and advancements
         to subsidiary, net                                      --                    --          (4,678,372)
                                                   -------------------   -----------------    ----------------
               Net cash used in investing
                 activities                                      --                    --          (4,678,372)
                                                   -------------------   -----------------    ----------------
       Cash flow from financing activities:
         Dividends paid                                  (1,801,707)           (1,720,748)         (1,645,141)
         Common stock repurchased                                --                    --            (525,000)
         Common stock issued                                106,196                97,505              96,775
         Change in management retention plan                (43,591)              (73,377)            (66,220)
                                                   -------------------   -----------------    ----------------
               Net cash used in
                 financing activities                    (1,739,102)           (1,696,620)         (2,139,586)
                                                   -------------------   -----------------    ----------------
               Net increase (decrease) in
                 cash                                        13,136               (26,942)            (14,201)

       Cash at beginning of year                             18,784                45,726              59,927
                                                   -------------------   -----------------    ----------------
       Cash at end of year                                $  31,920                18,784              45,726
                                                   ===================   =================    ================
</TABLE>
                                       37
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998


(20)   Quarterly Financial Data - Unaudited

     The following table presents summarized  quarterly data for each of the two
     years ended December 31:
<TABLE>
                                                                  Quarters ended in 2000
                                          ------------------------------------------------------------------------
                                             March 31         June 30         September 30         December 31
                                          --------------- ---------------- -------------------- ------------------
     <S>                                  <C>              <C>               <C>                 <C>
     Selected operations data:
       Interest income                    $    5,853,715       6,302,364        6,797,141            7,093,772
       Net interest income                     3,603,459       3,925,697        4,189,862            4,286,164
       Provision for loan losses                 300,000         300,000          300,000              300,000
       Income before income taxes              1,440,452       1,755,408        1,905,332            2,119,316
       Net income                              1,029,652       1,240,408        1,313,632            1,521,816

       Basic net income per share                0.66            0.79             0.84                 0.97
       Cash dividends per share                  0.20            0.20             0.20                 0.55
                                          =============== ================ ==================== ==================

                                                                  Quarters ended in 1999
                                          ------------------------------------------------------------------------
                                             March 31         June 30         September 30         December 31
                                          ---------------  --------------- -------------------- ------------------
     Selected operations data:
       Interest income                    $    5,086,427        5,132,300       5,631,057            5,747,512
       Net interest income                     3,148,976        3,180,674       3,664,933            3,635,827
       Provision for loan losses                 210,000          210,000         210,000              210,000
       Income before income taxes              1,144,177        1,166,272       1,561,401            1,390,468
       Net income                                827,177          822,372       1,092,101              973,668

       Basic net income per share                0.53             0.53            0.70                 0.62
       Cash dividends per share                  0.20             0.20            0.20                 0.50
                                          ===============  =============== ==================== ==================
</TABLE>

(21)   Impact of New Accounting Standards

     The Financial  Accounting  Standards Board issued SFAS No. 133,  Accounting
     for Derivative Instruments and Hedging Activities, in June 1998.

     SFAS No. 133, which has been subsequently  amended by SFAS No. 137 and SFAS
     No. 138, requires  companies to record  derivatives on the balance sheet as
     assets  and  liabilities,  measured  at  fair  value.  The  accounting  for
     increases  and decreases in the value of  derivatives  will depend upon the
     use of  derivatives  and whether  the  derivatives  will  qualify for hedge
     accounting. Management has evaluated the impact of SFAS No. 133 at December
     31, 2000 and has  concluded  that the adoption of this  statement  will not
     have a material effect on the Bank.

     The  Financial  Accounting  Standards  Board  has  adopted  SFAS  No.  140,
     Accounting   for   Transfers   and   Servicing  of  Financial   Assets  and
     Extinguishments of Liabilities.

     SFAS No. 140,  which  replaces SFAS No. 125,  Accounting  for Transfers and
     Servicing of Financial Assets and  Extinguishments of Liabilities,  revises
     the standards for accounting for the  securitization and other transfers of
     financial  assets  and  collateral.  SFAS  No.  140 also  requires  certain
     disclosures, but carries over most of the provisions of SFAS No. 125.

                                       38
<PAGE>
                      FNBH BANCORP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


                       December 31, 2000, 1999, and 1998

     This  statement is effective  for  transactions  occurring  after March 31,
     2001,   with  earlier   application  not  allowed  and  is  to  be  applied
     prospectively.  The  adoption of this  statement  is not expected to have a
     material impact on the Bank's financial statements.




           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

     This  discussion  provides  information  about the  consolidated  financial
condition and results of  operations of FNBH Bancorp,  Inc. (" Company") and its
subsidiaries,  First  National  Bank in Howell  ("Bank")  and HB Realty Co., and
should be read in conjunction with the Consolidated Financial Statements.

FINANCIAL CONDITION

     At year  end  2000  total  assets  were  $348,363,000  representing  an 18%
increase  from  the  prior  year  when  assets  were  $296,419,000.   Investment
securities  decreased  $11.3  million  (22%) to  $39,311,000  while  gross loans
increased $45.6 million (22%) to  $256,224,000.  Deposits  increased $41 million
(15%) to  $310,214,000.  Stockholders'  equity  increased  $3.6 million (14%) to
$28,887,000.

Securities
     Throughout  2000, the securities  portfolio  provided  liquidity as deposit
growth  was  insufficient  to meet the  funding  needs  of the loan  department.
Generally,  the maturity of U.S.  Treasury and Agency securities are laddered to
provide cash flow to meet various  funding needs.  Approximately  $20,000,000 of
the securities portfolio is invested in US government and agency obligations. An
additional  $19,000,000 of the portfolio  consists of tax exempt  obligations of
states and  political  subdivisions.  The  Company's  current and  projected tax
position makes these investments advantageous to the Bank. The Bank's investment
policy requires purchases of tax exempt issues to be of bonds with AA ratings or
better if the  maturity  exceeds 4 years  unless  the bond is a local,  nonrated
issue. "Other" securities consist of equity holdings in the Federal Reserve Bank
and the Federal Home Loan Bank.

     The following table shows the percentage makeup of the securities portfolio
as of December 31:
<TABLE>
                                                                                2000        1999
                                                                                ----        ----
<S>                                                                            <C>         <C>
U.S. Treasury & agency securities....................................           48.4%       62.7%
Agency mortgage backed securities....................................            1.5%         .7%
Tax exempt obligations of states and political subdivisions..........           48.0%       35.0%
Other                                                                            2.1%        1.6%
                                                                                ----        ----
      Total securities...............................................          100.0%      100.0%
</TABLE>

Loans

     The loan  personnel of the Bank are committed to making  quality loans that
produce a good  rate of return  for the Bank and also  serve  the  community  by
providing funds for home purchases,  business purposes,  and consumer needs. The
overall loan portfolio grew $46,000,000 (22%) in 2000.

     As a full service  lender,  the Bank offers a variety of home mortgage loan
products.  The  Bank  makes,  and  subsequently  sells,  fixed  rate,  long-term
mortgages which conform to secondary market standards.  This practice allows the
Bank to meet the housing  credit  needs of its service  area,  while at the same

                                       39
<PAGE>
time maintaining  loan to deposit ratios and interest  sensitivity and liquidity
positions  within Bank  policy.  The Bank retains  servicing  on sold  mortgages
thereby  furthering the customer  relationship  and adding to servicing  income.
During 2000 the Bank sold $4,400,000 in residential mortgages.

     The Bank has also been able to service  customers  with loan needs which do
not conform to secondary market  requirements by offering variable rate products
which are retained in the mortgage portfolio. While not meeting secondary market
requirements,  these  nonconforming  mortgages do meet bank loan  guidelines and
have an  acceptable  payment  record.  During  2000 the Bank made  approximately
$7,500,000  in variable  rate  mortgage  loans which it retained in the mortgage
portfolio.
     The Bank experienced a significant  amount of loan demand  throughout 2000.
Growth  in  Livingston  County  resulted  in a  need  for  financing  commercial
projects,  some of which were for the  construction of commercial  buildings and
some of which were for the development of residential  subdivisions.  Commercial
loans ended the year at $197,203,000, a 21% increase for the year. Additionally,
the Bank  originated  $5,000,000  in  commercial  loans which it sold in part or
total to other  banks due to legal  lending  limits.  Consumer  loans  increased
$6,400,000, or about 25%, from the preceding year.

     The  following  table  reflects the makeup of the  commercial  and consumer
loans in the  Consolidated  Financial  Statements.  Included in the  residential
first mortgage  totals below are the "real estate  mortgage" loans listed in the
Consolidated  Financial Statements and other loans to customers who pledge their
homes as  collateral  for their  borrowings.  A portion  of the loans  listed in
residential  first mortgages  represent  commercial loans where the borrower has
pledged  his/her  residence  as  collateral.  In the  majority  of the  loans to
commercial customers, the Bank is relying on the borrower's cash flow to service
the loans.  "Other" real estate loans include  $103,000,000  in loans secured by
commercial  property,  with the  remaining  $2,000,000  secured by  multi-family
units.  The most  significant  loan growth was in  commercial  loans  secured by
business property which increased  $15,200,000,  17% over the prior year, and in
construction  and land  development  loans which  increased  $11,600,000,  a 50%
increase.

     The following table shows the balance and percentage  makeup of loans as of
December 31:
<TABLE>
                                                                        (dollars in thousands)
                                                               2000                                1999
                                                               ----                                ----
                                                      Balances        Percentage         Balances        Percentage
                                                      --------        ----------         --------        ----------
<S>                                                   <C>               <C>              <C>               <C>
Secured by real estate:
   Residential first mortgage                         $ 31,328           12.2%           $ 29,904           14.2%
   Residential home equity/other junior liens            9,999            3.9%              7,822            3.7%
   Construction and land development                    35,020           13.7%             23,375           11.1%
   Other                                               105,041           41.0%             89,809           42.6%
Consumer                                                20,700            8.1%             16,811            8.0%
Commercial                                              45,239           17.6%             38,891           18.5%
Other                                                    8,897            3.5%              4,043            1.9%
                                                         -----            ----            -------           ----
   Total Loans (Gross)                                $256,224          100.0%           $210,655          100.0%
</TABLE>
                                       40
<PAGE>
The Bank's loan  personnel  have  endeavored  to make  quality  loans using well
established policies and procedures and a thorough loan review process. Loans in
excess of $400,000 are  approved by a committee  of the Board or the Board.  The
Bank has hired an  independent  consultant  to review  the  quality  of the loan
portfolio  on a regular  basis.  Loan quality is  demonstrated  by the ratios of
nonperforming  loans  and  assets  as a  percentage  of the  loan  portfolio  as
illustrated in the table below for December 31:
<TABLE>
                                                                     (Dollars in thousands)
                                                                  2000        1999        1998
                                                                  ----        ----        ----
<S>                                                              <C>          <C>        <C>
Nonperforming Loans:
Nonaccrual loans......................................            $ 608        $173      $1,519
Loans past due 90 days and still accruing.............              209           4          25
                                                                    ---           -          --
   Total nonperforming loans..........................              817         177       1,544
Other real estate.....................................              649           0           0
  Total nonperforming assets..........................           $1,466       $ 177      $1,544
                                                                 ======       =====      ======

Nonperforming loans as a percent of total loans.......             .32%        .08%        .83%
Nonperforming assets as a percent of total loans......             .57%        .08%        .83%
Nonperforming loans as a percent of the loan loss
  reserve.............................................              16%          4%         27%
</TABLE>

     Nonperforming  assets  are  comprised  of loans for which  the  accrual  of
interest  has been  discontinued,  accruing  loans  90 days or more  past due in
payments,  and other  real  estate  which has been  acquired  primarily  through
foreclosure  and  is  waiting  disposition.  Loans  are  generally  placed  on a
nonaccrual  basis when  principal  or  interest  is past due 90 days or more and
when, in the opinion of management, full collection of principal and interest is
unlikely.

     The increase in nonperforming assets is primarily due to the foreclosure of
a commercial  piece of property  resulting in a $649,000  increase in other real
estate. Additionally, there were two large loans more than 90 days delinquent as
of year end. These loans are well collateralized and should not result in losses
for the Company.

     Impaired  loans  totaled  $3,900,000  at  December  31,  2000,  compared to
$3,400,000 at the prior year end.  Included in impaired loans are  nonperforming
loans from the above  table,  except for  homogenous  residential  mortgage  and
consumer  loans,  and an additional  $3,200,000 of commercial  loans  separately
identified as impaired.

     During 2000 the Bank  charged off loans  totaling  $609,000  and  recovered
$119,000 for a net charge off amount of $490,000. In the previous year, the Bank
had net charge offs totaling $315,000.

     The  allowance  for loan losses  totaled  $5,193,000  at year end which was
2.03% of  total  loans,  compared  to  $4,483,000  (2.13%)  in 1999.  Management
considers this to be adequate to cover probable losses.

     Management  regularly  evaluates the allowance for loan losses based on the
composition of the loan portfolio, an evaluation of specific credits, historical
loss  experience,  the level of  nonperforming  loans  and loans  that have been
identified as impaired. Externally, the local economy and events or trends which
might negatively impact the loan portfolio are also considered. Economic factors
considered in arriving at the loan loss reserve adequacy as of December 31, 2000
included  layoffs  in  the  automotive   industry,   lower  levels  of  consumer
confidence, and fewer housing starts. Management also considered the increase in
nonperforming  loans,  an upward trend in charge offs, and the increased size of
the loan portfolio.  In light of these factors,  management  determined that the
increased  provision  of  $1,200,000  and  resulting  $5,200,000  allowance  was
appropriate.

                                       41
<PAGE>
     The  following  table shows  changes in the loan loss reserve for the years
ended December 31:
<TABLE>
                                                                                    (Dollars in thousands)
                                                                               2000          1999        1998
                                                                               ----          ----        ----
<S>                                                                          <C>           <C>         <C>
Balance at beginning of the year.......................                      $4,483        $3,958      $3,424
Additions (deduction):
   Loans charged off...................................                        (609)         (486)       (302)
   Recoveries of loans previously charged off..........                         119           171         196
   Provision charged to operations.....................                       1,200           840         640
                                                                            -------         -----         ---
Balance at end of the year.............................                      $5,193        $4,483      $3,958

Allowance for loan losses to loans outstanding                                2.03%         2.13%       2.13%
</TABLE>

Deposits
     Deposit  balances of $310,214,000  at December 31, 2000 were  approximately
$41 million (15.2%) higher than the previous year end.  Because year end deposit
balances can fluctuate in unusual ways, it is more meaningful to analyze changes
in average balances.  Average deposits  increased $24 million (10%) during 2000.
Non-interest  bearing  demand  deposits  increased  $2.6  million,  about  5% on
average.  Average  savings and NOW  balances  increased  $9.6 million (9%) while
average time deposits increased $12 million or about 13%.

The  following  table sets forth  average  deposit  balances for the years ended
December 31:
<TABLE>
                                                                                  (in thousands)
                                                                 2000                  1999             1998
                                                                 ----                  ----             ----
<S>                                                          <C>                   <C>              <C>
Non-interest bearing demand                                  $ 51,528              $ 48,914         $ 43,619
Savings, NOW and money market                                 120,770               111,141           91,463
Time deposits                                                 104,669                92,802           81,118
                                                              -------                ------           ------
      Total average deposits                                 $276,967              $252,857         $216,200
</TABLE>

     The increase in savings  deposits was primarily due to a $8.3 million (18%)
increase in money market accounts. The 13% growth in certificates was the result
of maintaining  competitive rates in the market and selectively offering special
rates on particular time products.

     The  majority of the Bank's  deposits are from core  customer  sources-long
term relationships with local personal,  business, and public customers. In some
financial  institutions,  the presence of interest bearing  certificates greater
than  $100,000  indicates  a  reliance  upon  purchased  funds.  However,  large
certificates in the Bank's portfolio consist primarily of core deposits of local
customers.  See Note 8 of the Consolidated  Financial  Statements for a maturity
schedule of over $100,000 certificates.

Capital
     The Company's capital at year end totaled  $28,887,000,  a $3,575,000 (14%)
increase over the prior year. Banking regulators have established various ratios
of  capital  to assets to assess a  financial  institution's  soundness.  Tier 1
capital is equal to shareholders' equity while Tier 2 capital includes a portion
of the  allowance  for loan losses.  The  regulatory  agencies  have set capital
standards for "well capitalized" institutions. The leverage ratio, which divides
Tier 1 capital by three months average assets, must

                                       42
<PAGE>
be 5% for a well capitalized institution. The Bank's leverage ratio was 8.02% at
year end 2000. Tier 1 risk-based capital,  which includes some off balance sheet
items in assets and weights  assets by risk,  must be 6% for a well  capitalized
institution.  The Bank's was 9.75% at year end 2000. Total  risk-based  capital,
which  includes  Tier 1 and Tier 2 capital,  must be 10% for a well  capitalized
institution.  The Bank's total risk based  capital ratio was 11.00% at year end.
The Bank's  capital ratios put it in the best  classification  on which the FDIC
bases its assessment charge.

The following table lists various Bank capital ratios at December 31:
<TABLE>
                                                    2000               1999                1998
                                                    ----               ----                ----
<S>                                              <C>                 <C>                 <C>
Equity to asset ratio                              7.59%              7.44%               7.14%
Tier 1 leverage ratio                              8.02%              7.74%               7.47%
Tier 1 risk-based capital                          9.75%              9.90%              10.17%
Total risk-based capital                          11.00%             11.15%              11.42%
</TABLE>

     The  Company's  ability to pay  dividends is subject to various  regulatory
requirements.  Management  believes,  however,  that  earnings  will continue to
generate  adequate  capital to continue  the payment of  dividends.  In 2000 the
Company paid dividends totaling  $1,802,000,  or 35% of earnings.  Book value of
the stock was $18.43 at year end.

     The  Company  maintains  a five year plan  which was the result of a formal
strategic  planning  process.  Management and the Board continue to monitor long
term goals  which  include  expanded  services to achieve  growth and  retaining
earnings to fund growth, while providing return to shareholders.

     In 1999,  the Bank opened a new branch in the  northwest  part of Brighton.
Adjoining the building  site are three  parcels of vacant land.  The Company has
sold one parcel,  and intends to sell the  remaining two pieces which are valued
at approximately $1.5 million.


Liquidity and Funds Management
     Liquidity is monitored by the Bank's  Asset/Liability  Management Committee
(ALCO) which meets at least monthly. ALCO developed,  and the Board of Directors
approved,  a liquidity  policy which targets a minimum 15% liquidity  ratio. The
Company's liquidity ratio averaged 15.5% in 2000.

     Deposits  are the  principal  source of funds for the  Company.  Management
monitors rates at other financial institutions in the area to ascertain that its
rates are  competitive in the market.  Management  also attempts to offer a wide
variety of products  to meet the needs of its  customers.  The Company  does not
deal in brokered funds and the makeup of its over $100,000  certificates,  which
amounted to $33,100,000  at December 31, 2000 compared to $22,400,000  the prior
year, consists of local depositors known to the Bank.

     It is management's  intention to handle unexpected  liquidity needs through
the Bank's Federal Funds  position.  In addition,  the Company has a $16,000,000
line of credit available at the Federal Home Loan Bank of Indianapolis  (FHLBI).
The line of credit can be increased by purchasing more FHLBI stock.  The Company
has pledged certain  mortgage loans and investment  securities as collateral for
the  borrowing.  At December 31, 2000,  the Company had $6,000,000 in borrowings
against  the line.  In the event the Bank must  borrow for an  extended  period,
management  may  look to  "available  for  sale"  securities  in the  investment
portfolio for liquidity.

     Throughout   the  past  year,   Fed  Funds  Sold   balances  have  averaged
approximately  $4,300,000.  Periodically the Bank borrowed money through the Fed
Funds market. Fed Funds Purchased balances averaged $1,400,000 for the year.

                                       43
<PAGE>
Quantitative and Qualitative Disclosures about Market Risk
     ALCO reviews other areas of the Bank's performance. The committee discusses
the current  economic  outlook  and its impact on the Bank and current  interest
rate  forecasts.  Actual  results are  compared to budget in terms of growth and
income. A yield and cost analysis is done to monitor  interest  margin.  Various
ratios are discussed including capital ratios and liquidity.  The quality of the
loan  portfolio  is  reviewed  in light of the  current  allowance.  The  Bank's
exposure to market risk is reviewed.

     Interest rate risk is the potential for economic  losses due to future rate
changes and can be reflected as a loss of future net  interest  income  and/or a
loss of current  market  values.  The  objective is to measure the effect on net
interest  income and to adjust the balance  sheet to minimize the inherent  risk
while at the same time maximizing  income.  Tools used by management include the
standard GAP report which lays out the repricing  schedule for various asset and
liability  categories and an interest rate shock simulation report. The Bank has
no market risk sensitive  instruments held for trading  purposes.  However,  the
Company is party to financial  instruments  with  off-balance  sheet risk in the
normal course of business to meet the financing needs of its customers including
commitments  to extend  credit and letters of credit.  A commitment or letter of
credit is not recorded as an asset until the  instrument is exercised  (see Note
13 of the Consolidated Financial Statements).



                                       44
<PAGE>
     The table below shows the  scheduled  maturity and  repricing of the Bank's
interest sensitive assets and liabilities as of December 31, 2000:
<TABLE>
                                                          0-3           4-12          1-5            5+
                                                       Months         Months         Years         Years         Total
                                                       ------         ------         -----         -----         -----
<S>                                                    <C>            <C>           <C>            <C>          <C>
Assets:
   Loans, net..............................            $87,400        $41,901       $114,293       $12,630      $256,224
   Securities..............................              5,926         10,264         12,814        10,307        39,311
   Short term investments..................             25,743                                                    25,743
                                                        ------         ------       --------        ------        ------
      Total assets                                    $119,069        $52,165       $127,107       $22,937      $321,278

Liabilities & Shareholders'  Equity:
   MMDA, Savings & NOW.....................            $63,612         $7,201        $26,705       $36,006      $133,524
   Time....................................             37,636         38,789         44,561           451       121,437
   FHLB advances...........................                207                         4,008         1,785         6,000
                                                           ---         ------          -----         -----         -----
      Total liabilities and equity.........           $101,455        $45,990        $75,274       $38,242      $260,961

Rate sensitivity gap and ratios:
   Gap for period..........................            $17,614        $ 6,175        $51,833      $(15,305)
   Cumulative gap..........................             17,614         23,789         75,622        60,317

Cumulative rate sensitive ratio............               1.17           1.16           1.34          1.23
 December 31, 1999 rate sensitive ratio....               1.06           1.01           1.36          1.24
</TABLE>

     The preceding table sets forth the time periods in which earning assets and
interest  bearing  liabilities  will mature or may re-price in  accordance  with
their  contractual  terms. The entire balance of savings,  MMDA, and NOW are not
categorized  as 0-3 months,  although they are variable rate  products.  Some of
these  balances  are  core  deposits  and are  not  considered  rate  sensitive.
Allocations are made to time periods based on the Bank's  historical  experience
and management' s analysis of industry trends.

     In the gap  table  above,  the short  term  (one year and less)  cumulative
interest  rate  sensitivity  is 16%  asset  sensitive.  Accordingly,  if  market
interest rates decrease,  this positive gap position indicates that the interest
margin would be negatively  affected.  However,  gap analysis is limited and may
not  provide an  accurate  indication  of the impact of  general  interest  rate
movements on the net interest  margin since  repricing of various  categories of
assets and  liabilities is subject to the Bank's needs,  competitive  pressures,
and the  needs  of the  Bank 's  customers.  In  addition,  various  assets  and
liabilities indicated as repricing within the same period may in fact reprice at
different  times within the period and at different rate indices.  Additionally,
simulation modeling,  which measures the impact of upward and downward movements
of interest  rates on interest  margin,  indicates  that a downward  movement of
interest rates would not significantly reduce net interest income.

                                       45
<PAGE>
<TABLE>
                                               Total                  Average Interest Rate     Estimated Fair Value
<S>                                           <C>                             <C>                     <C>
Assets:
   Loans,  net                                $250,221                        9.49%                   $248,400
   Securities                                   39,311                        5.53%                     39,600
   Short term investments                       25,743                        6.50%                     25,700

Liabilities:
   Savings, NOW, MMDA                         $133,524                        2.85%                    133,500
   Time                                        121,437                        6.37%                    122,300
   FHLB borrowings                               6,000                        7.23%                      6,300
</TABLE>

     Estimated fair value for securities are based on quoted market prices.  For
variable rate loans that reprice  frequently and with no  significant  change in
credit risk, fair values are generally based on carrying values.  The fair value
of other loans is estimated by  discounting  future cash flows using the current
rates at which  similar  loans would be made to borrowers  with  similar  credit
ratings  and  for  the  same  remaining  maturities.  Because  it has a one  day
maturity,  the carrying value is used as fair value for fed funds sold. The fair
value of deposits with no stated maturity, such as savings, NOW and money market
accounts  is  equal  to  the  amount  payable  on  demand.  The  fair  value  of
certificates  of deposit and FHLB  borrowings is estimated using rates currently
offered for deposits with similar remaining maturities.

RESULTS OF OPERATIONS

     Net income of  $5,100,000  was an  increase of  $1,400,000  (37%) over 1999
earnings. The Company's earnings resulted in a return on average assets (ROA) of
1.63% and a return on average  stockholders'  equity (ROE) of 18.76%. Net income
per share was $3.26 in 2000 compared  with $2.38 in 1999.  Earnings in 1999 were
hampered  by costs  associated  with  conversion  to a new  computer  system and
preparation for Y2K.

     The  following  table  contains  key  performance  ratios  for years  ended
December 31:
<TABLE>
                                                          2000              1999             1998
                                                          ----              ----             ----
<S>                                                     <C>                <C>              <C>
Net income to:
   Average stockholders' equity                         18.76%             15.05%           17.83%
   Average assets                                        1.63%              1.33%            1.63%
Basic earnings per common share:                        $3.26              $2.38            $2.49
</TABLE>


Net Interest Income
     Net interest  income is the difference  between  interest earned on earning
assets and interest paid on deposits.  It is the major component of earnings for
a  financial  institution.  For  analytical  purposes,  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 table shows the average balance and percentage earned or paid
on key  components of earning assets and paying  liabilities  for the year ended
December 31:

                                       46
<PAGE>
<TABLE>
                                                 2000                     1999                       1998
                                                 ----                     ----                       ----
                                        Average        Yield/      Average   Yield/           Average      Yield/
                                        Balance         Rate       Balance    Rate            Balance       Rate
                                        -------         ----       -------    ----            -------       ----
<S>                                     <C>            <C>         <C>       <C>             <C>          <C>
Interest earning assets:
Short term investments                    $4,278       6.35%       $10,384   4.89%             $8,630     5.31%
Taxable securities                        29,283       5.49%        30,051   5.08%             23,019     6.02%
Tax-exempt securities                     18,580       6.57%        16,896   6.90%             15,221     7.13%
Loans                                    238,697       9.81%       198,448   9.47%            175,873     9.85%
                                         -------                   -------                    -------
   Total earning assets                 $290,838       9.11%      $255,779   8.60%           $222,743     9.09%
Interest bearing funds:
Savings/NOW accounts                    $120,770       2.84%      $111,141   2.69%           $ 91,552     3.03%
Time deposits                            104,669       5.88%        92,802   5.36%             81,119     5.69%
Federal funds purchased                    1,366       6.67%            98   5.40%                179     5.98%
FHLB advances                              4,893       7.23%
                                           -----                  --------                   --------
   Total interest bearing funds:        $231,698       4.33%      $204,041   3.90%           $172,850     4.28%

Interest spread                                        4.78%                 4.70%                        4.81%
Net interest margin                                    5.66%                 5.48%                        5.76%
</TABLE>


     Tax  equivalent  interest  income in each of the three years  includes loan
origination fees. A substantial portion of such fees is deferred for recognition
in future periods or is considered in  determining  the gain or loss on the sale
of real estate mortgage loans. Tax equivalent  interest income includes net loan
origination  fees totaling  $700,000 in 2000,  $710,000 in 1999, and $600,000 in
1998.


                                       47
<PAGE>
     The  following  table sets forth the effects of volume and rate  changes on
net interest  income on a taxable  equivalent  basis.  All figures are stated in
thousands of dollars.  The change in interest due to changes in both balance and
rate has been  allocated  to change  due to  balance  and  change due to rate in
proportion to the relationship of the absolute dollar amounts of change in each.
<TABLE>
                                               Year ended                                Year ended
                                     December 31, 2000 compared                       December 31, 1999
                                      to Year ended December 31,              compared to Year ended December 31,
                                                 1999                                       1998
                                                 ----                                       ----
                                      Amount of Increase/(Decrease)            Amount of Increase/(Decrease)
                                             due to change in                         Due to change in
                                             ----------------                         ----------------
                                                                 Total                                     Total
                                                                 Amount                                    Amount
                                                                   Of                                        Of
                                                  Average       Increase/                 Average        Increase/
                                    Volume         Rate         (Decrease)    Volume       Rate          (Decrease)
                                    ------         ----         ---------     ------       ----          ----------
<S>                                 <C>            <C>          <C>          <C>          <C>               <C>
Interest Income:
Federal funds sold..........        $  (298)        $ 62        $  (236)      $   91       $ (33)            $ 58
Securities:
                                        (39)         121             82          424        (284)             140
 Taxable....................
 Tax Exempt.................            116          (61)            55          119         (39)              80
Loans.......................          3,811          806          4,617        2,223        (750)           1,473

Total interest income.......         $3,590         $928         $4,518      $ 2,857     $(1,106)          $1,751

Interest Expense:
Interest bearing deposits:
 Savings/NOW accounts.......           $259         $183           $442        $ 593       $(374)          $  219
 Time.......................            636          553          1,189          665        (312)             353
Short-term borrowings.......             68           18             86           (5)         (1)              (6)
FHLB advance................            358            0            358
   Total interest expense...        $ 1,321         $754        $ 2,075      $ 1,253      $ (687)            $566

Net interest income (FTE)...        $ 2,269         $174        $ 2,443      $ 1,604      $ (419)          $1,185
</TABLE>

     Tax equivalent net interest  income  increased  $2,443,000 in 2000 over the
prior year due to a $4,518,000  increase in interest income  partially offset by
approximately $2,075,000 increase in interest expense. The increase in income is
attributable  to an increase in average  earning assets of $35,000,000  and a 51
basis point increase in the yield earned on those balances. Loan interest income
was $4,617,000 higher in 2000 than the previous year. The increase was due to an
increase of  $40,200,000  in average  balances and a 34 basis point  increase in
rates.  Loan  growth was fueled by general  growth in  Livingston  County  which
created a demand  for  consumer  and  commercial  building  projects.  Income on
taxable securities increased $82,000 in 2000 due to a 41 basis point increase in
rate. Average balances decreased $800,000.  Tax-exempt bonds earned $55,000 more
in 2000  than the  previous  year.  The  average  balance  of  these  securities
increased $1,700,000 while the rate declined 33 basis points. Interest income on
short term investments  decreased $236,000 due to a decrease in average balances
of $6,100,000, partially offset by an increase in rates of 146 basis points.

     Interest  expense  increased  $2,075,000 in 2000 because  average  balances
increased  approximately  $27,657,000  and  interest  rates  increased  43 basis
points.  The  interest  cost for savings  and NOW  accounts  increased  $442,000
because average savings and NOW balances increased $9,600,000 and interest rates

                                       48
<PAGE>
increased  15 basis  points.  Interest  on time  deposits  increased  $1,189,000
because average time deposits increased $11,900,000 and interest rates increased
52 basis  points.  Growth in savings and NOW  balances  were  primarily in money
market accounts where a tiered rate structure encourages higher balances. Growth
in time deposits was encouraged by competitive pricing and periodically offering
special rates on specific products.  Interest on short term borrowings increased
$86,000  as  deposit  growth  in  the  first  three  quarters  of the  year  was
insufficient  to meet loan  growth.  The  annual  average  balance  in Fed Funds
purchased in 2000 was $1,400,000 compared to just $98,000 in 1999. Additionally,
the Company entered into two long term borrowing  relationships with the Federal
Home Loan Bank of Indianapolis  in 2000. The loans total  $6,000,000 and have an
average interest rate of 7.23%.

     In the previous year,  net interest  income had increased  $1,185,000.  The
increase in net interest income was the result of an increase in interest income
of  $1,751,000,   partially  offset  by  an  increase  in  interest  expense  of
approximately  $566,000.  The increase in interest income in 1999 was the result
of a $33,000,000 increase in earning assets partially offset by a 49 basis point
decrease in interest rates.  The increase in interest  expense was the result of
average balances  increasing  $31,200,000,  partially offset by a 38 basis point
decline in interest rates.

     In the coming year, management expects growth to continue in both loans and
deposits.  An economic  decline could,  however,  adversely  affect growth.  The
interest  spread and  interest  margin will likely  continue to decline  due, in
part,  to the fact that prime will decline if the Fed  continues to cut interest
rates while the interest cost on deposits will not decline  proportionately  due
to competition for deposits between bank and non-bank players.

     The following  table shows the  composition  of average  earning assets and
interest paying liabilities for the years ended December 31:
<TABLE>
                                                               2000                 1999                1998
                                                               ----                 ----                ----
<S>                                                           <C>                 <C>                 <C>
As a percent of average earning assets:
   Loans                                                       82.07%               77.59%              78.95%
   Securities                                                  16.46%               18.35%              17.18%
   Short term investments                                       1.47%                4.06%               3.87%
                                                                -----                -----               -----
      Average earning assets                                  100.00%              100.00%             100.00%

   Savings and NOW                                             41.52%               43.45%              41.10%
   Time deposits                                               35.99%               36.28%              36.42%
   Short term borrowing                                          .47%                 .04%                .08%
   FHLB advances                                                1.68%               ______              ______
                                                                -----
      Average interest bearing liabilities                     79.66%               79.77%              77.60%

Earning asset ratio                                            92.75%               91.61%              92.76%
Free-funds ratio                                               20.34%               20.23%              22.40%
</TABLE>
                                       49
<PAGE>
Provision for Loan Losses
     The provision  for loan losses  increased to $1,200,000 in 2000 compared to
$840,000 in 1999.  At year end the ratio of allowance for loan loss to loans was
2.03%,  compared  to 2.13% in 1999.  Management  analyzes  the  adequacy  of the
allowance quarterly taking into consideration the portfolio mix, historical loss
experience, the level of nonperforming loans and loans that have been identified
as impaired, as well as economic conditions within the Bank's market.

Non-interest Income
     Non-interest  income,  which includes service charges on deposit  accounts,
loan  fees,  other  operating  income,  and  gain(loss)  on sale of  assets  and
securities transactions, increased approximately $600,000 (29%) in 2000 compared
to the  previous  year.  Service  charge  income  increased  32% to  $2,323,000,
primarily due to changes made to service charges on loans,  deposits,  and other
services  that were  instituted  in the second  quarter.  Trust  fees  increased
$49,000 in 2000,  less than  anticipated as the department was not fully staffed
throughout  the year.  The  $74,000  gain  realized  on the sale of real  estate
mortgage loans was a $31,000  increase over 1999. Sales volume was down from the
previous year but a more favorable rate environment allowed for better returns.

Non-interest Expense
     Non-interest  expense  ended the year at  $10,189,000,  a 7% increase  over
other operating  expenses of $9,543,000 in 1999. The most significant  component
of non-interest  expense is salaries and benefits expense.  In 2000 salaries and
benefits  expense  increased 13% to $5,442,000,  due to the combined  effects of
salary increases,  increased cost of medical  insurance,  and an increase in the
employee  profit sharing  bonus.  Occupancy  expense  increased  $84,000,  a 12%
increase due to costs  associated  with having an additional  branch open a full
year. Equipment expense increased $143,000, 19%, due to the depreciation expense
related to technology  and equipment at the new branch.  Overall other  expenses
decreased in 2000,  except for Michigan  Single Business tax which increased due
to increased profitability.

Federal Income Tax Expense
     Fluctuations  in income taxes resulted  primarily from changes in the level
of profitability  and in variations in the amount of tax-exempt  income.  Income
tax  expense  increased  $568,000  to  $2,115,000  (37%)  in 2000.  For  further
information  see Note 9 "Federal  Income  Taxes" in the  Company's  Consolidated
Financial Statements.

Prospective Accounting Changes
     The  Financial  Accounting  Standards  Board issued  Statement of Financial
Accounting Standards No. 133, Accounting for Derivative  Instruments and Hedging
Activities, in June 1998.

     SFAS No. 133, which has been subsequently  amended by SFAS No. 137 and SFAS
No. 138, requires companies to record derivatives on the balance sheet as assets
and  liabilities,  measured at fair value.  The  accounting  for  increases  and
decreases in the value of  derivatives  will depend upon the use of  derivatives
and whether the derivatives  will qualify for hedge  accounting.  Management has
adopted SFAS No. 133 as of January 1, 2001 and has  concluded  that the adoption
of this Statement will not have a material effect on the Company.

     The Financial  Accounting  Standards Board issued SFAS No. 140,  Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities.

     SFAS No. 140,  which  replaces SFAS No. 125,  Accounting  for Transfers and
Servicing of Financial Assets and  Extinguishments  of Liabilities,  revises the
standards for accounting for the securitization and other transfers of financial
assets and  collateral.  SFAS No. 140 also  requires  certain  disclosures,  but
carries over most of the provisions of SFAS No. 125.

         This Statement is effective for transactions  occurring after March 31,
2001, with earlier  application not allowed and is to be applied  prospectively.
The adoption of this Statement is not expected to have a material  impact on the
Company's financial statements.

                                       50
<PAGE>
<TABLE>
                             SUMMARY FINANCIAL DATA
                      (in thousands, except per share data)

                                            2000             1999             1998             1997             1996
                                            ----             ----             ----             ----             ----
<S>                                     <C>                <C>             <C>              <C>               <C>
Income Statement Data:
   Interest income                         $26,047          $21,597          $19,910          $17,276          $15,717
   Interest expense                         10,042            7,967            7,400            6,305            5,644
   Net interest income                      16,005           13,630           12,510           10,971           10,073
   Provision for loan losses                 1,200              840              640              486              448
   Non-interest income                       2,604            2,015            1,954            1,851            1,686
   Non-interest expense                     10,188            9,543            8,238            6,982            6,151
   Income before tax                         7,221            5,262            5,586            5,354            5,160
   Net income                                5,106            3,715            3,907            3,733            3,574
Basic and Diluted Per Share Data(1):
   Net income                                $3.26            $2.38            $2.49            $2.37            $2.27
   Dividends paid                             1.15             1.10             1.05             1.00              .93
   Weighted average shares               1,566,390        1,563,996        1,570,537        1,575,000        1,575,000
     outstanding
Balance Sheet Data:
   Total assets                            348,363          296,419          264,894          226,314          202,009
   Loans, net                              255,414          209,952          185,018          158,397          136,067
   Allowance for loan losses                 5,193            4,483            3,958            3,424            3,335
   Deposits                                310,214          269,193          239,557          202,299          180,944
   Shareholders' equity                     28,887           25,312           23,497           21,732           19,597
Ratios:
   Dividend payout ratio                    35.29%           46.31%           42.11%           42.19%           41.13%
   Equity to asset ratio                     8.68%           8.84 %            9.13%           10.05%            9.82%
</TABLE>

(1) Per  share  data for all  years  has been  restated  to give  effect  to the
three-for-one stock split, payable as a dividend, paid in February 1997.

                                       51
<PAGE>
                         STOCK AND EARNINGS HIGHLIGHTS

     There is no active market for the Company's  Common Stock,  and there is no
published  information  with respect to its market price.  There are  occasional
direct sales by  shareholders  of which the  Company's  management  is generally
aware.  It is the  understanding  of the management of the Company that over the
last two years,  the Company's Common Stock has sold at a premium to book value.
From  January 1, 1999,  through  December 31,  2000,  there were,  so far as the
Company's  management  knows, 301 sales of shares of the Company's Common Stock,
involving a total of 52,305  shares.  The price was  reported to  management  in
these transactions, however there may have been other transactions involving the
company  stock at prices not reported to  management.  During this  period,  the
highest price known to be paid was $42.00 per share  throughout  2000 and during
the last two quarters of 1999,  and the lowest price was $40.00 per share in the
first two quarters of 1999.  To the  knowledge of  management,  the last sale of
Common Stock occurred on February 23, 2001.

     As of March 1, 2001, there were  approximately 850 holders of record of the
Company's  Stock. The following table sets forth the range of high and low sales
prices of the Company's  Common Stock during 1999 and 2000, based on information
made  available to the  Company,  as well as per share cash  dividends  declared
during those periods.  Although  management is not aware of any  transactions at
higher or lower prices,  there may have been  transactions at prices outside the
ranges listed in the table.

     Sales price and dividend information for the years 1999 and 2000:
<TABLE>
                                               Sales Prices                        Cash Dividends Declared
                                               ------------                        -----------------------
            1999                       High                    Low
            ----                       ----                    ---
<S>                                   <C>                     <C>                         <C>
First Quarter                         $40.00                  $40.00                      $0.20
Second Quarter                        $40.00                  $40.00                      $0.20
Third Quarter                         $42.00                  $40.00                      $0.20
Fourth Quarter                        $42.00                  $42.00                      $0.50(1)

            2000                       High                    Low
            ----                       ----                    ---
First Quarter                         $42.00                  $42.00                      $0.20
Second Quarter                        $42.00                  $42.00                      $0.20
Third Quarter                         $42.00                  $42.00                      $0.20
Fourth Quarter                        $42.00                  $42.00                      $0.55(2)
</TABLE>

(1)  Includes a special dividend of $0.30 per share.
(2)  Includes a special dividend of $0.35 per share.



                                       52
<PAGE>
                                   EXHIBIT 21

                                  SUBSIDIARIES


      Name                                         Jurisdiction of Incorporation
      ----                                         -----------------------------
First National Bank in Howell................................Michigan

H.B. Realty Co...............................................Michigan
<PAGE>
                                   EXHIBIT 23

The Board of Directors
FNBH Bancorp, Inc.

We consent to  incorporation  by reference in the  registration  statement  (No.
33-46244)  on Form S-8 of FNBH  Bancorp,  Inc. of our report  dated  January 19,
2001,  relating to the consolidated  balance sheets of FNBH Bancorp,  Inc. as of
December 31, 2000, and 1999, and the related consolidated  statements of income,
stockholder's equity,  comprehensive income and cash flows for each of the years
in the three-year  period ended December 31, 2000, which appears in the December
31, 2000 annual report on Form 10-K of FNBH Bancorp, Inc.


/s/ KPMG


Detroit, Michigan
March 28, 2001