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

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

                For the quarterly period ended September 30, 2001
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to _______

                         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

                             -----------------------

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___

The number of shares outstanding of each of the issuers classes of common stock,
as of the latest  practicable  date:  1,573,276  shares of the Company's  Common
Stock (no par value) were outstanding as of September 30, 2001.


                                       1
<PAGE>

                                      INDEX

                                                                        Page
                                                                       Number
Part I.   Financial Information (unaudited):

  Item 1.
  Interim Financial Statements:
  Consolidated Balance Sheet as of Sept. 30, 2001 and Dec. 31, 2000............4
  Consolidated Statements of Income, three months ended
  Sept. 30, 2001 and 2000, and nine months ended  Sept. 30, 2001 and 2000......5
  Consolidated Statement of Stockholders' Equity and Comprehensive
  Income for three months ended September 30, 2001 and 2000....................6
  Consolidated Statement of Stockholders' Equity and Comprehensive
  Income for nine months ended September 30, 2001 and 2000.....................7
  Consolidated Statements of Cash Flows for nine months ended
  September 30, 2001 and 2000..................................................8
  Notes to Interim Consolidated Financial Statements...........................9

  Item 2.
  Management's Discussion and Analysis of
  Financial Condition and Results of Operations...............................10

  Item 3.
  Quantitative and Qualitative Disclosures about Market Risk..................21

Part II.  Other Information

  Item 6......................................................................22

  Signatures..................................................................22

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.
Financial Statements
Unaudited interim consolidated financial statements follow.

                                       3
<PAGE>

                        FNBH BANCORP, INC. AND SUBSIDIARY

<TABLE>
<S>                                                                             <C>             <C>
Consolidated Balance Sheets (unaudited)                                         September 30     December 31
Assets                                                                                  2001            2000
                                                                                        ----            ----
Cash and due from banks                                                         $ 13,858,913    $ 17,501,547
Short term investments                                                            24,851,134      25,743,118
                                                                                  ----------      ----------
   Total cash and cash equivalents                                                38,710,047      43,244,665

Investment securities held to maturity, net (fair value of $19,100,000
   at September 30, 2001 and $19,218,000 at Dec. 31, 2000)                        18,184,560      18,886,677
Investment securities available for sale, at fair value                           23,821,008      19,847,480
Mortgage-backed securities held to maturity, net (fair value of
   $94,000 at September 30, 2001 and $578,000 at Dec. 31, 2000)                       93,722         576,994
Mortgage-backed securities available for sale, at fair value                       7,216,312               0
                                                                                   ---------               -
      Total investment securities                                                 49,315,602      39,311,151

Loans:
   Commercial                                                                    219,160,226     197,203,204
   Consumer                                                                       31,789,316      31,180,063
   Real estate mortgages                                                          25,941,567      27,840,497
                                                                                  ----------      ----------
      Total loans                                                                276,891,109     256,223,764
   Less unearned income                                                              763,227         809,746
   Less allowance for loan losses                                                  5,836,713       5,193,263
                                                                                   ---------       ---------
      Net loans                                                                  270,291,169     250,220,755

Premises and equipment - net                                                       8,706,868       8,238,743
Land available for sale - net                                                      1,530,290       1,530,290
Accrued interest and other assets                                                  5,202,599       5,817,824
                                                                                   ---------       ---------
      Total assets                                                              $373,756,575    $348,363,428
                                                                                ============    ============

Liabilities and Stockholders' Equity
Liabilities
Deposits:
   Non-interest bearing demand                                                  $ 62,622,937    $ 55,252,490
   NOW                                                                            37,015,365      34,637,247
   Savings and money market                                                       96,853,606      98,887,217
   Time                                                                          135,649,350     121,436,864
                                                                                 -----------     -----------
      Total deposits                                                             332,141,258     310,213,818

FHLB advances                                                                      5,792,911       6,000,000
Accrued interest, taxes, and other liabilities                                     3,694,537       3,262,975
                                                                                   ---------       ---------
      Total liabilities                                                          341,628,706     319,476,793

Stockholders' Equity
Common stock, no par value.  Authorized 4,200,000 shares; 1,573,276
shares issued and outstanding at September 30, 2001 and 1,567,748
shares issued and outstanding at December 31, 2000                                 5,245,456       5,025,476
Retained earnings                                                                 26,919,040      24,027,158
Unearned management retention plan                                                  (267,247)       (183,188)
Accumulated other comprehensive income, net                                          230,620          17,189
                                                                                     -------          ------
      Total stockholders' equity                                                  32,127,869      28,886,635
                                                                                  ----------      ----------
      Total liabilities and stockholders' equity                                $373,756,575    $348,363,428
                                                                                ============    ============
   See notes to interim consolidated financial statements
</TABLE>

                                       4
<PAGE>

                        FNBH BANCORP, INC. AND SUBSIDIARY
<TABLE>
<S>                                                          <C>          <C>             <C>            <C>
Consolidated Statements of Income
Unaudited                                                    Three Months Ended Sept.        Nine Months Ended Sept.
                                                                   2001          2000            2001           2000
                                                                   ----          ----            ----           ----
Interest income:
   Interest and fees on loans                                $5,988,400    $6,174,610     $18,284,695    $16,917,505
   Interest and dividends on investment securities:
      U.S. Treasury and agency securities                       321,536       362,583         827,303      1,206,795
      Obligations of state and political subdivisions           223,483       231,629         682,416        681,063
      Other securities                                           50,680        15,231          82,797         49,542
   Interest on short term investments                           192,450        13,088         663,349         98,315
                                                                -------        ------         -------         ------
      Total interest income                                   6,776,549     6,797,141      20,540,560     18,953,220
                                                              ---------     ---------      ----------     ----------

Interest expense:
   Interest on deposits                                       2,638,010     2,428,940       8,121,352      6,898,156
   Other interest expense                                       107,001       178,339         320,020        336,046
                                                                -------       -------         -------        -------
      Total interest expense                                  2,745,011     2,607,279       8,441,372      7,234,202
                                                              ---------     ---------       ---------      ---------

      Net interest income                                     4,031,538     4,189,862      12,099,188     11,719,018

Provision for loan losses                                       290,000       300,000         890,000        900,000
                                                                -------       -------         -------        -------
      Net interest income after provision for loan losses     3,741,538     3,889,862      11,209,188     10,819,018

Non-interest income:
   Service charges                                              659,816       666,216       1,931,916      1,661,064
   Gain on sale of loans                                         42,253        20,695         146,796         54,689
   Trust income                                                  42,981        51,232         133,301        142,891
   Other                                                          7,654       (5,479)          68,880          5,582
                                                                  -----       -------          ------          -----
      Total non-interest income                                 752,704       732,664       2,280,893      1,864,226
                                                                -------       -------       ---------      ---------

Non-interest expense:
   Salaries and employee benefits                             1,473,581     1,395,905       4,445,484      4,067,021
   Net occupancy                                                191,979       217,667         595,518        581,877
   Equipment expense                                            206,068       207,350         628,202        669,310
   Outside service fees                                         125,631       166,122         481,268        325,895
   Printing and supplies                                         90,693        47,843         186,958        176,239
   Michigan Single Business Tax                                  63,600        70,100         189,100        190,600
   Other                                                        492,345       612,207       1,546,342      1,571,110
                                                                -------       -------       ---------      ---------
      Total non-interest expense                              2,643,897     2,717,194       8,072,872      7,582,052
                                                              ---------     ---------       ---------      ---------

Income before federal income taxes                            1,850,345     1,905,332       5,417,209      5,101,192

Federal income taxes                                            540,100       591,700       1,583,500      1,517,500
                                                                -------       -------       ---------      ---------

      Net income                                             $1,310,245    $1,313,632      $3,833,709     $3,583,692
                                                             ==========    ==========      ==========     ==========

Per share statistics*
   Basic EPS                                                       $.83          $.84           $2.44          $2.29
   Diluted EPS                                                     $.83          $.84           $2.44          $2.29
   Dividends                                                       $.20          $.20            $.60           $.60

*Based on 1,569,744 average shares outstanding during the period ended September
30,  2001 and  1,566,046  average  shares  outstanding  during the period  ended
September 30, 2000.
See notes to interim consolidated financial statements.
</TABLE>

                                       5
<PAGE>

                        FNBH BANCORP, INC. AND SUBSIDIARY
     Consolidated Statement of Stockholders' Equity and Comprehensive Income
             For the Three Months Ended September 30, 2001 and 2000
                                   (Unaudited)
<TABLE>
<S>                                                      <C>           <C>           <C>              <C>               <C>
                                                                                       Unearned        Accumulated
                                                                                      Management          Other
                                                           Common        Retained      Retention      Comprehensive
                                                            Stock        Earnings        Plan         Income (loss)        Total
                                                            -----        --------        ----         -------------        -----
Balances at June 30, 2000                                 $4,919,280    22,367,336    (118,576)         (201,355)        26,966,685
Issued 2,545 shares for management retention plan            106,890                  (106,890)
Amortization of management retention plan                                               16,135                               16,135
Forfeitures management retention plan                        (12,725)                   12,725
Net income                                                               1,313,632                                        1,313,632
Change in unrealized loss on debt securities
   available for sale, net of tax effect                                                                 145,865            145,865
                                                                                                                            -------
Total comprehensive income                                                                                                1,459,497
                                                                                                                          =========
Cash dividends (20 cents per share)                                       (313,549)                                        (313,549)
                                                          ----------    ----------    ---------         ---------        ----------
Balances at September 30, 2000                            $5,013,445    23,367,419    (196,606)          (55,490)        28,128,768
                                                          ==========    ==========    =========         =========        ==========

See notes to interim consolidated financial statements

                                                                                       Unearned        Accumulated
                                                                                      Management          Other
                                                           Common        Retained      Retention      Comprehensive
                                                            Stock        Earnings        Plan         Income (loss)        Total
                                                            -----        --------        ----         -------------        -----
Balances at June 30, 2001                                 $5,078,051    25,923,283    (154,510)          104,460         30,951,284
Issued 3,219 shares for management retention plan            135,198                  (135,198)
Amortization of management retention plan                                               22,461                               22,461
Issued 842 shares for employee purchase plan                  32,207                                                         32,207
Net income                                                               1,310,245                                        1,310,245
Change in unrealized loss on debt securities
available for sale, net of tax effect                                                                    126,160            126,160
                                                                                                                            -------
Total comprehensive income                                                                                                1,436,405
                                                                                                                          =========
Cash dividends (20 cents per share)                                       (314,488)                                        (314,488)
                                                          ----------    ----------    ---------          -------          ---------
Balances at September 30, 2001                            $5,245,456    26,919,040    (267,247)          230,620         32,127,869
                                                          ==========    ==========    =========          =======         ==========
</TABLE>
                                       6
<PAGE>

                        FNBH BANCORP, INC. AND SUBSIDIARY
     Consolidated Statement of Stockholders' Equity and Comprehensive Income
              For the Nine Months Ended September 30, 2001 and 2000
                                   (Unaudited)
<TABLE>
<S>                                                       <C>           <C>           <C>             <C>                <C>
                                                                                       Unearned        Accumulated
                                                                                      Management          Other
                                                           Common        Retained      Retention      Comprehensive
                                                            Stock        Earnings        Plan         Income (loss)        Total
                                                            -----        --------        ----         -------------        -----
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)
Amortization of management retention plan                                               37,156                               37,156
Forfeitures management retention plan                        (12,725)                   12,725
Net income                                                               3,583,692                                        3,583,692
Change in unrealized gain (loss) on debt securities
   available for sale, net of tax effect                                                                 135,904            135,904
                                                                                                                            -------
Total comprehensive income                                                                                                3,719,596
                                                                                                                          =========
Cash dividends (60 cents per share)                                       (939,630)                                        (939,630)
                                                          ----------    ----------    ---------          --------         ---------
Balances at September 30, 2000                            $5,013,445    23,367,419    (196,606)          (55,490)        28,128,768
                                                          ==========    ==========    =========          ========        ==========

See notes to interim consolidated financial statements


                                                                                       Unearned        Accumulated
                                                                                      Management          Other
                                                           Common        Retained      Retention      Comprehensive
                                                            Stock        Earnings        Plan         Income (loss)        Total
                                                            -----        --------        ----         -------------        -----
Balances at December 31, 2000                             $5,025,476    24,027,158    (183,188)           17,189         28,886,635
Issued 3,219 shares for management retention plan            135,198                  (135,198)
Amortization of management retention plan                                               51,139                               51,139
Issued 2,309 shares for employee purchase plan                84,782                                                         84,782
Net income                                                               3,833,709                                        3,833,709
Change in unrealized loss on debt securities
available for sale, net of tax effect                                                                                       213,431
                                                                                                                            -------
Total comprehensive income                                                                                                4,047,140
                                                                                                                          =========
Cash dividends (60 cents per share)                                       (941,827)                                        (941,827)
                                                          ----------    ----------    ---------          -------          ---------
Balances at September 30, 2001                            $5,245,456    26,919,040    (267,247)          230,620         32,127,869
                                                          ==========    ==========    =========          =======         ==========

</TABLE>
                                       7
<PAGE>


                        FNBH BANCORP, INC. AND SUBSIDIARY
<TABLE>
<S>                                                                             <C>             <C>
Consolidated Statements of Cash Flows
Unaudited                                                                        Nine months ended Sept. 30
                                                                                        2001            2000
                                                                                        ----            ----
Cash flows from operating activities:
   Net income                                                                   $  3,833,709     $ 3,583,692
   Adjustments to reconcile net income to net cash provided by operating activities:
      Provision for loan losses                                                      890,000         900,000
      Depreciation and amortization                                                  657,581         690,650
      Net amortization on investment securities                                       14,932          25,735
      Earned portion of management retention plan                                     51,139          37,156
      Loss on disposal of equipment                                                        0          79,866
      Gain on sale of loans                                                         (146,796)        (54,689)
      Proceeds from sale of loans                                                 11,000,914       2,864,415
      Origination of loans held for sale                                         (11,476,857)     (2,873,815)
      (Increase) decrease in accrued interest income and other assets                615,225        (423,336)
      Increase in accrued interest, taxes, and other liabilities                     321,562         742,741
                                                                                     -------         -------
         Net cash provided by operating activities                                 5,761,409       5,572,415
                                                                                   ---------       ---------

Cash flows from investing activities:
   Purchases of available for sale securities                                    (20,254,834)     (7,973,357)
   Proceeds  from maturities and calls of available for sale securities            9,000,000      16,000,000
   Proceeds from mortgage-backed securities paydowns-afs                             484,309               0
   Purchases of held to maturity securities                                                0     (2,496,205)
   Proceeds from maturities and calls of held to maturity securities                 690,000         605,000
   Proceeds from mortgage-backed securities paydowns-held to maturity                384,573         305,829
   Purchase of loans                                                                (792,540)              0
   Net increase in loans                                                         (19,545,135)    (42,142,108)
   Capital expenditures                                                           (1,125,706)       (167,112)
                                                                                 -----------       ---------
         Net cash used in investing activities                                   (31,159,333)    (35,867,953)
                                                                                 -----------     -----------

Cash flows from financing activities:
   Net increase in deposits                                                       21,927,440      17,671,729
   Increase in borrowings                                                                  0       6,000,000
   Payments on borrowings                                                           (207,089)              0
   Shares issued for employee purchase plan                                           84,782               0
   Dividends paid                                                                   (941,827)       (939,630)
                                                                                   ---------       ---------
         Net cash provided by financing activities                                20,863,306      22,732,099
                                                                                  ----------      ----------

Net decrease in cash and cash equivalents                                         (4,534,618)     (7,563,439)

Cash and cash equivalents at beginning of year                                    43,244,665      24,414,282
                                                                                  ----------      ----------

Cash and cash equivalents at end of period                                       $38,710,047     $16,850,843
                                                                                 ===========     ===========

Supplemental disclosures:
   Interest paid                                                                 $ 8,186,866     $ 6,773,553
   Federal income taxes paid                                                       1,172,000       1,482,000
   Loans charged off                                                                 326,916         282,368
</TABLE>

See notes to interim consolidated financial statements

                                       8
<PAGE>

Notes to Interim Consolidated Financial Statements(unaudited)
The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim  financial  information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X.  Accordingly,  they do not include all of
the  information  and  footnotes  required by  accounting  principles  generally
accepted in the United States of America for complete financial statements.

1. In the opinion of management of the  Registrant,  the unaudited  consolidated
financial   statements  filed  with  this  Form  10-Q  contain  all  adjustments
(consisting of only normal recurring  accruals)  necessary to present fairly the
consolidated  financial position of the Registrant as of September 30, 2001, and
consolidated  results of  operations  for the three months and nine months ended
September  30,  2001 and 2000 and  consolidated  cash flows for the nine  months
ended September 30, 2001 and 2000.

2. The  results  of  operations  for the  three  months  and nine  months  ended
September 30, 2001 are not necessarily  indicative of the results to be expected
for the full year.

3. The accompanying  unaudited  consolidated financial statements should be read
in conjunction with the 2000 Annual Report contained in the Registrant's  report
on Form 10-K.

4. The  provision  for  income  taxes  represents  Federal  income  tax  expense
calculated  using  annualized  rates on  taxable  income  generated  during  the
respective periods.

5.  Management's  assessment  of the  allowance  for loan  losses is based on an
evaluation  of the loan  portfolio,  recent loss  experience,  current  economic
conditions,  and other pertinent factors.  Loans on non-accrual status and those
past due more  than 90 days  amounted  to  $3,076,000  at  September  30,  2001,
$1,978,000  at  September  30, 2000,  and  $817,000 at December  31, 2000.  (See
Management's  Discussion  and  Analysis of  financial  condition  and results of
operations).

6. Basic and  dilutive  earnings  per share (EPS) are  computed by dividing  net
income by the respective weighted average common shares outstanding.

<TABLE>
<S>                                              <C>             <C>              <C>             <C>
                                                          Third Quarter                     Year to Date
                                                       2001            2000             2001            2000
                                                       ----            ----             ----            ----
Net income                                       $1,310,245      $1,313,632       $3,833,709      $3,583,692

Shares outstanding (basic)                        1,572,461       1,567,715        1,569,744       1,566,046
Dilutive shares                                           0               0                0               0
                                                  ---------       ---------        ---------       ---------
   Shares outstanding (diluted)                   1,572,461       1,567,715        1,569,744       1,566,046
Earnings per share:
   Basic EPS                                           $.83            $.84            $2.44           $2.29
   Diluted EPS                                         $.83            $.84            $2.44           $2.29

</TABLE>
                                       9
<PAGE>

Item 2.

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

This report includes certain forward-looking  statements,  within the meaning of
the Private  Securities  Litigation  Reform Act of 1995,  that involve  inherent
risks and  uncertainties.  A number of  important  factors  could  cause  actual
results to differ materially from those in the forward-looking statements. Those
factors include the economic environment,  competition,  products and pricing in
business areas in which FNBH Bancorp,  Inc. (the Company)  operates,  prevailing
interest  rates,  changes  in  government  regulations  and  policies  affecting
financial  service  companies,   credit  quality  and  credit  risk  management,
acquisitions and integration of acquired businesses.

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) and all of the outstanding stock of HB Realty Co., a subsidiary which
owns real estate.  The  following is a discussion  of the  Company's  results of
operations  for the three  months and nine months ended  September  30, 2001 and
2000,  and  also  provides  information  relating  to  the  Company's  financial
condition, focusing on its liquidity and capital resources.

<TABLE>
<S>                        <C>          <C>                  <C>        <C>
Earnings  (in thousands        Third Quarter                    Year-to-Date
except per share data)       2001         2000                2001        2000
                             ----         ----                ----        ----

Net income                 $1,310       $1,314              $3,834      $3,584
Net Income per Share        $ .83        $ .84               $2.44       $2.29

</TABLE>

Net income for the three months ended September 30, 2001 decreased approximately
$4,000 (less than 1%) from that reported for the same period last year. Earnings
decreased in the third  quarter of 2001 because net  interest  income  decreased
$148,000 (4%). The decrease in net interest income was the result of the decline
in net interest margin although the Bank's average net earning assets increased.
Partially  offsetting the net interest  income  decline,  the provision for loan
losses  decreased  $10,000 (3%),  non-interest  income  increased  approximately
$20,000 (3%), non-interest expense decreased approximately $73,000 (3%), and the
provision for federal income tax declined $52,000 (9%).

Net  income  for the first  nine  months  of the year  increased  $250,000  (7%)
compared to the same period last year.  Contributing  to 2001  earnings  were an
increase of $380,000 (3%) in net interest  income, a decrease of $10,000 (1%) in
the provision for loan losses,  and a $417,000  (22%)  increase in  non-interest
income.  Partially offsetting these increases were increases of $491,000 (6%) in
non-interest expense, and $66,000 (4%) in the provision for federal income tax.

                                       10
<PAGE>
<TABLE>
<S>                        <C>          <C>                <C>         <C>
Net Interest Income            Third Quarter                    Year-to-Date
(in thousands)               2001         2000                2001        2000
                             ----         ----                ----        ----

Interest Income            $6,777       $6,797             $20,540     $18,953
Interest Expense            2,745        2,607               8,441       7,234
                           ------        -----               -----       -----
Net Interest Income        $4,032       $4,190             $12,099     $11,719

</TABLE>

The following table illustrates some of the significant factors  contributing to
the increase in net interest income for the period and for the year to date.

                                     TABLE 1
                    INTEREST YIELDS AND COSTS (in thousands)
                           September 30, 2001 and 2000

<TABLE>
<S>                                     <C>          <C>          <C>         <C>        <C>           <C>
                                                ---------------Third Quarter Averages----------------
                                                     2001                                 2000
                                                     ----                                 ----
                                         Average                              Average
                                         Balance     Interest      Rate       Balance     Interest       Rate
Assets:
Short term investments                  $ 20,983      $ 191.4     3.57%         $ 633       $ 13.1      8.09%
Securities:  Taxable                      25,643        373.3     5.87%        27,505        377.8      5.49%
             Tax-exempt(1)                18,236        308.4     6.69%        18,895        317.5      6.72%
Loans(2)(3)                              273,705      6,027.0     8.62%       249,341      6,190.4      9.71%
                                         -------      -------                 -------      -------
Total earning assets/total
interest income                          338,567     $6,900.1     7.99%       296,374     $6,898.8      9.13%
                                                     --------                             --------
Cash & due from banks                     13,591                               11,720
All other assets                          16,237                               15,940
Allowance for loan loss                   (5,784)                              (4,976)
                                        --------                             --------
   Total assets                         $362,611                             $319,058
                                        ========                             ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
Savings & NOW accounts                  $127,071      $ 768.8     2.40%     $ 120,243      $ 856.5      2.83%
Time                                     135,790      1,869.2     5.46%       104,787      1,572.5      5.95%
Overnight borrowing                            0            0                   3,880         67.5      6.81%
FHLB advances                              5,793        107.0     7.23%         6,000        110.8      7.23%
                                           -----        -----                   -----      -------
Total interest bearing
liabilities/total interest expense       268,654    $ 2,745.0     4.05%       234,910     $2,607.3      4.40%
                                                    ---------                             --------
Non-interest bearing deposits             59,176                               53,401
All other liabilities                      3,310                                2,899
Stockholders' Equity                      31,471                               27,848
                                          ------                               ------
Total liabilities and
   shareholders' equity                 $362,611                             $319,058
                                        ========                             --------
Interest spread                                                   3.94%                                 4.73%
                                                                  =====                                 =====
Net interest income-FTE                             $ 4,155.1                            $ 4,291.5
                                                    =========                            =========
Net interest margin                                               4.78%                                 5.64%
                                                                  =====                                 =====
</TABLE>

(1)  Average  yields in the above table have been  adjusted to a  tax-equivalent
     basis  using a 34% tax rate and  exclude  the  effect of any  market  value
     adjustments  recorded under  Statement of Financial  Standards No. 115.

                                       11

<PAGE>

(2)  For purposes of the computation  above,  non-accruing loans are included in
     the  average  daily  loan   balances.
(3)  Interest on loans includes  amortization  of capitalized  origination  fees
     totaling $179,000 in 2001 and $177,000 in 2000.

<TABLE>
<S>                                    <C>          <C>          <C>         <C>         <C>           <C>
                                               ----------------Year to Date Averages-----------------
                                                     2001                                 2000
                                                     ----                                 ----
                                        Average                               Average
                                        Balance       Interest     Rate       Balance     Interest      Rate
Assets:
Short term investments                 $ 20,577       $  660.4    4.23%       $ 2,146       $ 95.7     5.86%
Securities:  Taxable                     20,380          913.1    5.97%        31,155      1,258.9     5.38%
             Tax-exempt(1)               18,516          935.9    6.74%        18,476        936.9     6.76%
Loans(2)(3)                             267,539       18,406.1    9.10%       233,359     17,012.0     9.61%
                                        -------       --------                -------     --------
Total earning assets/total
interest income                         327,012     $ 20,915.5    8.46%       285,136    $19,303.5     8.93%
                                                    ----------                           ---------
Cash & due from banks                    13,164                                11,280
All other assets                         15,239                                16,198
Allowance for loan loss                  (5,529)                               (4,811)
                                       --------                              --------
   Total assets                        $349,886                              $307,803
                                       ========                              ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
Savings & NOW accounts                 $124,502      $ 2,433.3    2.61%      $120,784    $ 2,571.4     2.84%
Time                                    129,863        5,688.1    5.86%       100,888      4,326.8     5.71%
Overnight borrowing                           0              0                  1,754         87.6     6.59%
FHLB advances                             5,804          320.0    7.27%         4,522        248.4     7.25%
                                          -----          -----                  -----        -----
Total interest bearing
liabilities/total interest expense      260,169      $ 8,441.4    4.34%       227,948     $7,234.2     4.23%
                                                     ---------                            --------
Non-interest bearing deposits            55,574                                50,110
All other liabilities                     3,459                                 2,996
Stockholders' Equity                     30,684                                26,749
                                         ------                                ------
Total liabilities and
  shareholders' equity                 $349,886                             $ 307,803
                                       ========                             =========
Interest spread                                                   4.12%                                4.70%
                                                                  =====                                =====
Net interest income-FTE                              $12,474.1                           $12,069.3
                                                     =========                           =========
Net interest margin                                               5.01%                                5.56%
                                                                  =====                                =====
</TABLE>

(1)  Average  yields in the above table have been  adjusted to a  tax-equivalent
     basis  using a 34% tax rate and  exclude  the  effect of any  market  value
     adjustments recorded under Statement of Financial Standards No. 115.
(2)  For purposes of the computations above,  non-accruing loans are included in
     the average daily loan balances.
(3)  Interest on loans includes  amortization  of capitalized  origination  fees
     totaling $572,000 in 2001 and $502,000 in 2000.


Interest Earning Assets/Interest Income

On a tax equivalent basis, interest income increased approximately $1,000 in the
third quarter of 2001 compared to that of 2000.  Although average earning assets
increased

                                       12
<PAGE>

$42,200,000 (14%), interest yields declined 114 basis points in the time period.
Loan interest decreased $163,000 as the rate earned on loans decreased 109 basis
points although the average loan balances  increased  approximately  $24,000,000
(10%).  In the  third  quarter,  tax  equivalent  income  on short and long term
investments  increased  approximately  $165,000  because  the  average  balances
increased approximately  $18,000,000 although the rate earned decreased 66 basis
points.

For the nine  months of the  year,  tax  equivalent  interest  income  increased
$1,612,000.  Loan  interest  income  increased  approximately  $1,400,000,  with
average balances up $34,000,000  (15%) although yields declined 51 basis points.
The  growth in the loan  portfolio  was  primarily  in  commercial  loans  which
increased   $27,600,000  (15%)  on  average,   while  consumer  loans  increased
$4,000,000  (14%)  and  mortgage  loans  increased  $2,600,000  (11%).  With the
declining interest rates, the Bank also had considerable  demand for residential
mortgage loans.  These loans are sold in the secondary market if they conform to
market standards.  The Bank sold approximately  $8,900,000 mortgage loans to the
secondary market during the first three quarters of 2001, compared to $3,300,000
in the first nine months of 2000.

For the  first  three  quarters  of the  year,  income  on short  and long  term
investments  increased  $218,000  from  that  earned  the  prior  year  due to a
$7,700,000 (15%) increase in average  balances  although the yields decreased by
29 basis points.

Interest Bearing Liabilities/Interest Expense

In the third  quarter of 2001,  interest  expense  increased  $138,000 due to an
increase in average  balances of  $33,700,000  (14%)  although the interest rate
paid decreased by 35 basis points.  Savings and NOW interest  expense  decreased
$88,000  because rates  decreased 43 basis points  although  balances  increased
$6,800,000  (6%).  Interest  on time  deposits  increased  $297,000 in the third
quarter  of 2001 over the  prior  year.  Balances  increased  $31,000,000  (30%)
although the rate paid  decreased 49 basis points  compared to that of 2000. The
Bank prices its products competitively in Livingston County.

In the first three quarters of the year,  interest expense was $1,200,000 higher
than the previous year due to average balances of interest  bearing  liabilities
increasing  $32,200,000  (14%) and the average rate  increasing 11 basis points.
Savings and NOW interest  expense  decreased  $138,000 because the interest rate
decreased 23 basis points although balances increased  $3,700,000 (3%). Interest
on time deposits increased $1,360,000 because the balance increased  $29,000,000
(29%) and the rate increased 15 basis points. In the fourth quarter of 2000, the
Bank marketed  certificates of deposit quite  aggressively as loans were growing
faster than  deposits  and the Bank was  borrowing  money  through the Fed Funds
market. Most of these certificates matured in the third quarter of this year and
repriced at market rates.  The average interest rate paid on certificates in the
third quarter was 5.46% compared to 5.86% paid for the year.

The Bank has been very  liquid in 2001,  as  deposit  growth has  outpaced  loan
growth. The Bank has two loans, entered into in 2000, from the Federal Home Loan
Bank of

                                       13
<PAGE>

Indianapolis (FHLBI). One borrowing, originally for $3,000,000, was initiated to
match the  maturity  of a fixed  rate loan made to a local  township.  The other
borrowing was intended to help with the Bank's rate sensitivity  position. It is
reasonable  to expect that part of future loan growth will continue to be funded
with FHLBI borrowings, as necessary.

Liquidity

Liquidity is monitored by the Bank's Asset/Liability Management Committee (ALCO)
which meets at least monthly.  With the availability of lines of credit from the
Federal Home Loan Bank,  the way liquidity is viewed and the ratios to calculate
it have changed recently. The Board of Directors has approved a liquidity policy
which requires the Bank,  while it is well capitalized as defined by the Federal
Financial Institutions  Examination Council (FFIEC), to maintain a current ratio
of no less  than 1:1  (core  basic  surplus  liquidity  equal to 0).  Additional
requirements of the policy are that when FHLBI available credit is added to core
basic surplus liquidity,  the Bank must have liquidity totaling 5% of assets and
when  brokered CDs and Fed Funds lines are added,  the Bank must have  liquidity
totaling  8% of assets.  Should the Bank's  capital  ratios fall below the "well
capitalized" level, additional liquidity totaling 5% of assets will be required.
As of September 30, 2001, the Bank had excess liquidity of 5% of assets.

Deposits are the  principal  source of funds for the Bank.  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 makeup of the Bank's "Large
Certificates"  (over  $100,000),  which  are  generally  considered  to be  more
volatile and sensitive to changes in rates,  consists of local  depositors known
to the Bank. As of September 30, 2001, the Bank had Large Certificates  totaling
approximately $43,000,000 compared to $33,100,000 at December 31, 2000.

It is the  intention of the Bank's  management  to handle  unexpected  liquidity
needs  through its  Federal  Funds  position  with a  correspondent  bank and by
Federal Home Loan Bank  borrowings.  The Bank has a  $16,000,000  line of credit
available  at the  FHLBI  ($6,000,000  of which  has  been  used,  as  mentioned
previously)  and the Bank has pledged  certain  mortgage loans as collateral for
this borrowing.  The Bank also has a blanket repurchase agreement in place where
it can  borrow  from  a  broker  pledging  Treasury  and  Agency  securities  as
collateral. 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.

Interest Rate Risk

Interest  rate  risk  is also  addressed  by  ALCO.  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 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

                                       14
<PAGE>


standard gap report which lays out the repricing  schedule for various asset and
liability  categories and an interest rate shock report.  The Bank has no market
risk sensitive  instruments held for trading  purposes.  The Bank does not enter
into futures, forwards, swaps, or options to manage interest rate risk. However,
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 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.

In  addition  to  liquidity  and  interest  rate risk  management  issues,  ALCO
discusses the Bank's performance and 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,
other balance sheet ratios, and profitability ratios.

<TABLE>
<S>                                            <C>           <C>          <C>           <C>          <C>
Interest Rate Sensitivity
(dollars in thousands)                              0-3         4-12           1-5           5+
                                                 Months       Months         Years        Years         Total
                                                 ------       ------         -----        -----         -----
Assets:
  Loans......................................  $107,042      $25,472      $132,778      $10,836      $276,128
  Securities.................................     6,077        5,963        26,336       10,940        49,316
  Short term investments.....................    24,851                                                24,851
                                                 ------       ------       -------       ------       -------
      Total assets...........................  $137,970      $31,435      $159,114      $21,776      $350,295

Liabilities & Stockholders' Equity:
  Savings & NOW..............................   $55,568                                 $78,301      $133,869
  Time.......................................    51,621       61,907        21,672          449       135,649
  Other borrowings...........................                    224         4,088        1,481         5,793
                                                -------       ------        ------       ------       -------
      Total liabilities and equity...........  $107,189      $62,131       $25,760      $80,231      $275,311

Rate sensitivity gap and ratios:
   Gap for period............................   $30,781     ($30,696)     $133,354     $(58,455)
   Cumulative gap............................    30,781           85       133,439       74,984

Cumulative rate sensitive ratio..............      1.29         1.00          1.68         1.27
Dec. 31, 2000 rate sensitive ratio...........      1.17         1.16          1.34         1.23
</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  neutral.  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

                                       15
<PAGE>

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,  provides
meaningful  insight into  strategies  management  can take to help  mitigate the
negative impact of interest rate movement.

<TABLE>
<S>                          <C>          <C>                 <C>         <C>
Provision for Loan Losses      Third Quarter                    Year-to-Date
(in thousands)               2001         2000                2001        2000
                             ----         ----                ----        ----

    Total                    $290         $300                $890        $900
                             ====         ====                ====        ====
</TABLE>

The  provision  for loan losses  decreased  $10,000 in the third quarter of 2001
compared to the prior year.  Year to date the provision  has decreased  $10,000.
The decrease in the loan loss provision was deemed  appropriate after a thorough
review of all loans graded  "substandard" and below and an analysis of all other
loans grouped by type showed that  $5,840,000 was an  appropriate  level for the
loan loss reserve  balance.  In addition to the  evaluation  of all  substandard
loans, management's assessment of the allowance for loan losses was based on the
composition of the loan portfolio,  the local and national economic outlook, the
level of  nonperforming  loans and loans that have been  identified as impaired,
and concentrations of credit in real estate related businesses.

As of September 30, 2001,  the allowance for loan loss as a percent of loans was
2.11%,  compared to 2.05% a year earlier and 2.03% at December 31, 2000. For the
first nine months of 2001, the Bank had net charge offs of $246,000, compared to
$219,000 in the first nine months of 2000.  Non-accrual,  past due 90 days,  and
renegotiated  loans were 1.11% and .79% of total loans  outstanding at September
30, 2001 and 2000, respectively, and .32% of total loans at December 31, 2000.

Impaired loans, as defined by Statement of Financial Accounting Standards (SFAS)
No. 114, Accounting by Creditors for Impairment of a Loan, totaled approximately
$8,500,000 at September 30, 2001, and included non-accrual, and past due 90 days
other  than  homogenous  residential  and  consumer  loans,  and  $5,900,000  of
commercial  loans  separately  identified  as impaired.  Impaired  loans totaled
$3,900,000  at December  31,  2000.  A loan is  considered  impaired  when it is
probable that all or part of amounts due according to the  contractual  terms of
the loan agreement will be  uncollectable  on a timely basis.  One of the loans,
for  $2,200,000  is  current  and  making  regular  payments;  however  the cash
generated  solely by the  business  is  currently  not  adequate  to cover  debt
service. Another loan, for $1,200,000, was made to purchase medical buildings in
Lansing.  The  buildings  are not  fully  leased  and  cash  flow  has not  been
sufficient to cover debt service. Both loans are secured with first mortgages on
commercial  real  estate  and the real  estate  is being  actively  marketed.  A
different  relationship,  for $1,400,000,  is with a builder who is putting up a
development  of  condominiums  and stepped up care for people as they age. Sales
have been  slower than  anticipated  and the  builder is  discounting  prices to
stimulate

                                       16
<PAGE>

interest in the program.  Impaired  loans had specific  reserves  calculated  in
accordance with SFAS No. 114 of $3,000,000 at September 30, 2001.

Nonperforming  assets  are  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.  Nonperforming loans are reviewed regularly for collectability. Any
uncollectable  balances are promptly  charged off. The following table describes
nonperforming assets at September 30, 2001 compared to December 31, 2000.

<TABLE>
<S>                                                           <C>                       <C>
Nonperforming Assets
(in thousands)                                                September 30, 2001        December 31, 2000
                                                              ------------------        -----------------
Non-accrual loans                                                        $2,918                  $  608
90 days or more past due and still accruing                                 158                     209
                                                                          -----                     ---
         Total nonperforming loans                                        3,076                     817
Other real estate                                                             0                     604
                                                                          -----                    ----
         Total nonperforming assets                                      $3,076                 $ 1,421

Nonperforming loans as a percent of total loans                            1.11%                    .32%
Nonperforming assets as a percent of total loans                           1.11%                    .57%
Loan loss reserve as a percent of nonperforming loans                       190%                    636%
</TABLE>


The following  table sets forth loan balances and  summarizes the changes in the
allowance for loan losses for the first nine months of 2001 and 2000.
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
                                                                       Year to date         Year to date
Loans:   (dollars in thousands)                                       Sept. 30, 2001       Sept. 30, 2000
                                                                      --------------       --------------
 Average daily balance of loans for the year to date                      267,539               233,359
 Amount  of  loans,  net of  unearned  income,
outstanding  at end of the quarter                                        276,128               251,939
Allowance for loan losses:
 Balance at beginning of year                                               5,193                 4,483
 Loans charged off:
  Real estate                                                                   0                     0
  Commercial                                                                  159                   239
  Consumer                                                                    168                    43
                                                                              ---                    --
   Total charge-offs                                                          327                   282
Recoveries of loans previously charged off:
  Real estate                                                                   0                     0
  Commercial                                                                   47                    25
  Consumer                                                                     34                    38
                                                                               --                    --
   Total recoveries                                                            81                    63

Net loans charged off                                                         246                   219
Additions to allowance charged to operations                                  890                   900
                                                                            -----                 -----
     Balance at end of quarter                                             $5,837                $5,164

Ratios:
    Net loans charged off (annualized) to average
    loans outstanding                                                         .12%                  .13%
    Allowance for loan losses to loans outstanding                           2.11%                 2.05%
</TABLE>
                                       17
<PAGE>
<TABLE>
<S>                         <C>          <C>              <C>         <C>
Non-interest Income           Third Quarter                    Year-to-Date
(in thousands)              2001         2000                2001        2000
                            ----         ----                ----        ----

Total                       $753         $733              $2,281      $1,864
                            ====         ====              ======      ======
</TABLE>

Non-interest  income,  which includes service charges on deposit accounts,  loan
fees, customer service fees, trust fees, other operating income, and gain (loss)
on sale of  assets,  increased  by  $20,000  (3%) in the third  quarter  of 2001
compared to the same period in the previous year. Most of the increase came from
gains on the sale of loans which  increased  $21,600 (104%) compared to the same
period last year. For the quarter, mortgage loans totaling $2,300,000 were sold,
a 74% increase over the prior year.  Additionally other income increased $13,000
primarily because disposal of some computer equipment  generated losses in 2000.
Partially  offsetting  these  increases  was an $8,000  (16%)  decrease in trust
income, the result of declining trust balances due to market deterioration.

For the year,  non-interest  income  increased  $417,000 (22%). The increase was
primarily due to a $271,000 (16%)  increase in service  charge income.  This was
primarily the result of management's  analysis of bank-wide service charges last
year which led to service charge increases which took place in the middle of the
second quarter of 2000.  Additionally,  non-interest  income  increased due to a
$92,000  increase in gains on the sale of loans.  As previously  indicated,  the
Bank sold nearly  $9,000,000 in loans to Federal Home Loan Mortgage  Corporation
(FHLMC) this year,  an increase of 270% over last year, as the low interest rate
environment  prompted  many  customers  to refinance  their homes.  Other income
increased $63,000 but includes $58,000 in non-recurring gains due to the sale of
property.  Partially offsetting these increases was a decline in trust income as
discussed above.

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Non-interest Expense          Third Quarter                    Year-to-Date
(in thousands)              2001         2000                2001        2000
                            ----         ----                ----        ----

Total                     $2,644       $2,717              $8,073      $7,582
                          ======       ======              ======       =====
</TABLE>

Non-interest  expense  decreased  $73,000  (3%)  in the  third  quarter  of 2001
compared to the same period last year. There were decreases in occupancy expense
of $26,000 (12%)  primarily  due to decreases in building  repairs and utilities
compared to the previous  year. In the third quarter of last year  approximately
$20,000  was spent to restore  brick work and paving on the  outside of the main
office. Professional fees decreased $40,000 (24%). In the third quarter of 2000,
fees were  unusually  large due to the $70,000 write off of

                                       18
<PAGE>

architectural  fees  related  to a branch  project  which  had  been  abandoned.
Michigan  Single Business Tax decreased  $6,500 (9%) due to declining  earnings.
Other  non-interest  expense decreased $120,000 (20%) in the current year. Other
expense in the third  quarter of 2000  included a $100,000  write down in market
value of real estate held for sale.

For the  first  three  quarters  of the  year,  non-interest  expense  increased
$491,000 (6%) compared to the prior year.  There was a $378,000 (9%) increase in
salaries and benefits,  made up of a $195,000 (7%) increase in salary expense, a
$40,000 (17%)  increase in payroll taxes, a $51,000 (30%) increase in retirement
costs, and a $56,000 (9%) increase in profit sharing  accruals.  The increase in
salary expense was the result of normal salary  increases and staffing  changes.
The  increase in payroll tax was the result of a larger  profit  share payout in
2001. The increase in retirement  cost is because last year the Company had some
credits in the plan which kept 2000 costs low.  The  increase in profit  sharing
accruals is the result of the  increased  salary base and employee  eligibility.
Fees are $155,000  (48%) higher  primarily  due to costs related to staffing the
trust  department until a manager could be found and hiring a consultant to lead
management through the strategic planning process.

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>
Income Tax Expense            Third Quarter                    Year-to-Date
(in thousands)              2001         2000                2001        2000
                            ----         ----                ----        ----
Total                       $540         $592              $1,584      $1,518
                            ====         ====              ======      ======
</TABLE>

Fluctuations  in income taxes  resulted  primarily  from changes in the level of
profitability.
<TABLE>
<S>                               <C>                         <C>

Capital (in thousands)            September 30, 2001          December 31, 2000
-------                           ------------------          -----------------

Stockholders' Equity*                   $31,897                     $28,869
Ratio of Equity to Total Assets            8.53%                       8.29%
</TABLE>

*Amounts exclude securities  valuation  adjustments  recorded under Statement of
Financial  Accounting  Standards  No. 115 amounting to $231,000 at September 30,
2001 and $17,000 at December 31, 2000.

A financial institution's capital ratio is looked upon by the regulators and the
public as an indication of its soundness.  Stockholders'  equity,  excluding the
securities  valuation  adjustment,  increased  $3,028,000 (10%) during the first
nine months of the year.  This increase was principally the result of net income
earned by the company reduced by dividends paid of $942,000.

The Federal  Reserve Board provides  guidelines  for the  measurement of capital
adequacy. The Bank's capital, as adjusted under these guidelines, is referred to
as risk-based  capital.  The Bank's Tier 1 risk-based capital ratio at September
30, 2001 was 9.77%,  and total risk-based  capital was 11.02%.  At September 30,
2000 these ratios were 9.51% and 10.76% respectively.  Minimum regulatory Tier 1
risk-based and total  risk-based  capital ratios under the Federal Reserve Board
guidelines are 4% and 8% respectively.

                                       19
<PAGE>

The capital guidelines also provide for a standard to measure risk-based capital
to total assets which is called the leverage  ratio.  The Bank's  leverage ratio
was 8.11% at September 30, 2001 and 8.16% in 2000. The minimum standard leverage
ratio is 3% but financial institutions are expected to maintain a leverage ratio
2 percentage  points above the 3% minimum to be classified as a well capitalized
institution.

In 1998 the Company  exercised an option to purchase an 18 acre tract of land in
northwest  Brighton primarily to acquire a prime site for a new branch. The cost
of the property was approximately  $4,000,000.  In 1999 a new branch of the Bank
was built on land valued at  approximately  $800,000.  During 2000 one parcel of
the property was sold.  The  remaining  property is held for sale.  Improvements
needed to enhance the  salability  of the  property  are not  expected to exceed
$200,000.

The  Company  also  owns two  other  branch  sites,  one in  Howell  which  cost
approximately  $250,000 and one in Hamburg  which cost  approximately  $330,000.
Construction  has begun on the Howell branch with completion  anticipated in the
last quarter of 2001.  The Company  does not expect to build the Hamburg  branch
this year. Additionally, the Company will build a facility, on land it currently
owns, to provide  additional  space for back office  functions.  Construction is
expected to start in the fourth quarter with completion in the second quarter of
2002. All of the building  projects are expected to be financed from  internally
generated funds.

Accounting Standards

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). SFAS 133, which has been subsequently amended
by SFAS No. 137 and SFAS No. 138,  requires  companies to record  derivatives on
the balance sheet as either assets or liabilities,  measured at fair value.  The
accounting  for increases and decreases in the value of  derivatives  depends on
the intended use of the derivative and whether the derivatives  will qualify for
hedge accounting.  This Statement is in effect but has no material impact on the
financial condition or operations of the Company.

The FASB has 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 in effect but has no material
impact on the financial condition or operations of the Company.

On June 29,  2001,  the FASB  approved  for  issuance  SFAS  No.  141,  Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS

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No. 141,  all  business  combinations  initiated  after June 30,  2001,  must be
accounted for using the purchase method of accounting. With the adoption of SFAS
No. 142,  goodwill is no longer  subject to  amortization,  but instead  must be
reviewed for  impairment.  The  amortization of goodwill ceases upon adoption of
SFAS No. 142, which is effective for fiscal years  beginning  after December 15,
2001.  Management  does not expect that these  statements will have an impact on
the Company's results of operations.

Emerging  Issues Task Force (EITF) Issue 99-20,  Recognition of Interest  Income
and  Impairment on Purchased  and Retained  Beneficial  Interest in  Securitized
Financial  Assets,  was effective for the Company's quarter ended June 30, 2001.
The  adoption  of EITF  99-20 did not have a  material  impact on the  financial
condition or operations of the Company.

On October  3, 2001,  the  Financial  Accounting  Standards  Board  issued  FASB
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets.  Statement No. 144 supersedes FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, but
retains many of the fundamental provisions of that Statement.

Statement No. 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30,  Reporting  the Results of  Operations-Reporting  the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions,  for the disposal of a segment of a business.
However,  it  retains  the  requirement  in  Opinion  30  to  report  separately
discontinued  operations  and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment,  or in a distribution to
owners) or is classified as held for sale. By  broadening  the  presentation  of
discontinued  operations  to include more  disposal  transactions,  the FASB has
enhanced  management's  ability to  provide  information  that  helps  financial
statement  users to assess the effects of a disposal  transaction on the ongoing
operations of an entity.

Statement No. 144 is effective  for fiscal years  beginning  after  December 15,
2001 and interim  periods  within  those  fiscal  years.  Early  application  is
encouranged. Management does not expect that the adoption of this statement will
have a significant impact on the Company's results of operations.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There has been no material  change in the market risk faced by the Company since
December 31, 2000 other than previously discussed.

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                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits
         There are none applicable.

(b)  Reports on Form 8-K:

          There were no reports  on Form 8-K filed  during the third  quarter of
     2001.

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly caused this  Quarterly  Report on Form 10-Q for the quarter
ended September 30, 2001 to be signed on its behalf by the undersigned  hereunto
duly authorized.

                  FNBH BANCORP, INC.


                  /s/ Barbara D. Martin
                  Barbara D. Martin
                  President and Chief Executive Officer


                  /s/ Barbara J. Nelson
                  Barbara J. Nelson
                  Treasurer


DATE:  November 6, 2001

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