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 June 30, 1998
                                       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:  1,575,000  shares of the Company's  Common
Stock (no par value) were outstanding as of June 30, 1998.
<PAGE>
                                      INDEX


                                                                            Page
                                                                          Number
Part I.   Financial Information (unaudited):

  Item 1.
  Interim Financial Statements:
  Consolidated Balance Sheet as of June 30, 1998 and Dec. 31, 1997.............4
  Consolidated Statements of Income, three months ended June 30, 1998
  and 1997, and six months ended June 30, 1998 and 1997........................5
  Consolidated  Statement of Shareholders' Equity and Comprehensive
  Income for six months ended June 30, 1998....................................6
  Consolidated Statements of Cash Flows for six months ended
  June 30, 1998 and 1997.......................................................7
  Notes to Interim Consolidated Financial Statements...........................8

  Item 2.
  Management's Discussion and Analysis of
  Financial Condition and Results of Operations................................9

  Item 3.
  Quantitative and Qualitative Disclosures about Market Risk..................20

Part II.  Other Information

  Item 4......................................................................20

  Item 6......................................................................21

  Signatures..................................................................21
<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.
Financial Statements
Unaudited interim consolidated financial statements follow.
<PAGE>
<TABLE>
                        FNBH BANCORP, INC. AND SUBSIDIARY


Consolidated Balance Sheets                                                June 30       December 31
                                                                            1998             1997
Assets                                                                    (unaudited)
<S>                                                                      <C>            <C>
Cash and due from banks ..............................................   $ 12,652,210   $ 15,638,564
Federal funds sold ...................................................      1,200,000      3,100,000
                                                                         ------------   ------------
   Total cash and cash equivalents ...................................     13,852,210     18,738,564

Investment securities held to maturity, net (fair value of $27,540,000
   at June 30, 1998 and $30,571,000 at Dec. 31, 1997) ................     26,953,957     30,065,021
Investment securities available for sale, at fair value ..............      9,024,810     13,026,347
Mortgage-backed securities held to maturity, net (fair value of
   $984,000 at June 30, 1998 and $632,000 at Dec. 31, 1997) ..........        985,900        633,372
                                                                          -----------   ------------
      Total investment securities ....................................     36,964,667     43,724,740

Loans:
   Commercial ........................................................    131,792,622    110,005,566
   Consumer ..........................................................     25,926,259     24,896,572
   Real estate mortgages .............................................     23,355,942     24,108,647
                                                                         ------------   ------------
      Total loans ....................................................    181,074,823    159,010,785
   Less unearned income ..............................................        605,121        613,444
   Less allowance for loan losses ....................................      3,702,785      3,423,847
                                                                         ------------   ------------
      Net loans ......................................................    176,766,917    154,973,494

 Premises and equipment - net ........................................      9,925,813      4,974,412
Accrued interest and other assets ....................................      3,060,858      3,903,047
Other real estate owned ..............................................        275,713              0
                                                                         ------------   ------------
      Total assets ...................................................   $240,846,178   $226,314,257
                                                                         ============   ============

Liabilities and Stockholders' Equity
Liabilities
Deposits:
   Non-interest bearing demand .......................................   $ 47,704,929   $ 41,630,813
   NOW ...............................................................     22,667,539     23,699,151
   Savings and money market ..........................................     65,370,401     60,839,930
   Time ..............................................................     80,310,009     76,129,297
                                                                        -------------   ------------
      Total deposits .................................................    216,052,878    202,299,191

Accrued interest, taxes, and other liabilities .......................      1,579,716      2,283,041
                                                                        -------------   ------------
      Total liabilities ..............................................    217,632,594    204,582,232

Shareholders' Equity*
Common stock, no par value.  Authorized 4,200,000 shares; 1,575,000
shares issued and outstanding at June 30, 1998 and Dec. 31, 1997 .....      5,250,000      5,250,000
Retained earnings ....................................................     17,953,384     16,467,201
Accumulated other comprehensive income, net ..........................         10,200         14,824
                                                                         ------------   ------------
      Total stockholders' equity .....................................     23,213,584     21,732,025

      Total liabilities and stockholders' equity                         $240,846,178   $226,314,257
                                                                         ============   ============
</TABLE>
   See notes to interim consolidated financial statements
<PAGE>
<TABLE>
                        FNBH BANCORP, INC. AND SUBSIDIARY


Consolidated Statements of Income
Unaudited                                                  Three Months Ended June        Six Months Ended June
                                                              1998          1997          1998          1997
Interest income:
<S>                                                         <C>           <C>           <C>            <C>
   Interest and fees on loans                               $4,267,024    $3,510,183    $8,268,832     $6,810,086
   Interest and dividends on investment securities:
      U.S. Treasury and agency securities                      383,088       486,837       805,900      1,007,435
      Obligations of state and political subdivisions          196,705       172,836       386,129        346,464
      Other securities                                          16,822         1,328        16,822          1,328
   Interest on federal funds sold                               43,541         5,694       109,041         57,645
                                                             ---------     ---------     ---------      ---------
      Total interest income                                  4,907,180     4,176,878     9,586,724      8,222,958
                                                             ---------     ---------     ---------      ---------

Interest expense:
   Interest on deposits                                      1,796,380     1,505,860     3,552,737      2,986,256
   Other interest expense                                        6,156        21,492         6,822         21,492
                                                             ---------     ---------     ---------      ---------
      Total interest expense                                 1,802,536     1,527,352     3,559,559      3,007,748
                                                             ---------     ---------     ---------      ---------

      Net interest income                                    3,104,644     2,649,526     6,027,165      5,215,210

Provision for loan losses                                      150,000       112,125       300,000        224,250
                                                             ---------     ---------     ---------      ---------
      Net interest income after provision for loan losses    2,954,644     2,537,401     5,727,165      4,990,960
                                                             ---------     ---------     ---------      ---------

Non-interest income:
   Service charges                                             400,656       386,069       772,717        766,269
   Gain on sale of securities                                        0         1,546             0          1,546
   Gain on sale of loans                                        80,044        34,316       139,474         72,155
   Other                                                        20,504         8,946        36,905         19,254
                                                               -------       -------       -------        -------
      Total non-interest income                                501,204       430,877       949,096        859,224
                                                               -------       -------       -------        -------
Non-interest expense:                                                                                        

   Salaries and employee benefits                            1,076,685       895,682     2,118,517      1,812,233
   Net occupancy                                               147,303       129,578       280,208        271,427
   Equipment expense                                           146,665       109,638       261,998        217,880
   Fees                                                         73,118       143,021       124,813        189,930
   Printing and supplies                                        41,498        67,933       107,219        121,714
   Michigan Single Business Tax                                 43,500        39,100        95,500         88,100
   Other                                                       367,588       382,104       776,823        664,972
                                                             ---------     ---------     ---------      ---------
      Total non-interest expense                             1,896,357     1,767,056     3,765,078      3,366,256
                                                             ---------     ---------     ---------      ---------

Income before federal income taxes                           1,559,491     1,201,222     2,911,183      2,483,928

Federal income taxes                                           453,000       353,000       858,000        737,500
                                                            ----------     ---------    ----------     ----------

      Net income                                            $1,106,491    $  848,222    $2,053,183     $1,746,428
                                                            ==========    ==========    ==========     ==========
Per share statistics*
   Basic EPS                                                    $  .70          $.54         $1.30          $1.11
   Diluted EPS                                                  $  .70          $.54         $1.30          $1.11
   Dividends                                                    $  .18          $.15        $  .36         $  .30
   Book Value                                                   $14.74        $13.24        $14.74         $13.24

*Based on 1,575,000 shares outstanding in all time periods.
</TABLE>
See notes to interim consolidated financial statements
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
     Consolidated Statement of Stockholders' Equity and Comprehensive Income
                 For the Six Months Ended June 30, 1998 and 1997
                                   (Unaudited)


<TABLE>
                                                                                     Accumulated
                                                                                     Other
                                                  Common         Retained            Comprehensive
                                                   Stock         Earnings            Income             Total
<S>                                                <C>           <C>                 <C>                 <C>
Balances at December 31, 1996                      $5,250,000    14,308,934            38,174            19,597,108

 Net income                                                       1,746,428                               1,746,428
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                              (17,651)              (17,651)
Cash dividends (30 cents per share)                                (472,500)                               (472,500)


Balances at June 30, 1997                          $5,250,000    15,582,862            20,523            20,853,385
</TABLE>

See notes to interim consolidated financial statements
<TABLE>

          
                                                                                 Accumulated
                                                                                 Other
                                                   Common         Retained       Comprehensive
                                                    Stock         Earnings       Income              Total
<S>                                                <C>            <C>            <C>                 <C>
Balances at December 31, 1997                      $5,250,000    16,467,201      14,824              21,732,025

Net income                                                        2,053,183                            2,053,183
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                         (4,624)                  (4,624)
Cash dividends (36 cents per share)                                (567,000)                            (567,000)


Balances at June 30, 1998                          $5,250,000    17,953,384      10,200               23,213,584
</TABLE>
See notes to interim consolidated financial statements
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
<TABLE>
Consolidated Statements of Cash Flows
Unaudited                                                                           Six months ended June 30
                                                                                      1998             1997
<S>                                                                                <C>             <C>
Cash flows from operating activities:
   Net income ..................................................................   $  2,053,183    $  1,746,428

   Adjustments  to  reconcile  net  income  to net cash  provided  by  operating
activities:

      Provision for loan losses ................................................        300,000         224,250
      Depreciation and amortization ............................................        247,042         208,695
      Net amortization on investment securities ................................         15,534          18,330
      Loss on disposal of equipment ............................................            723             718
      Gain on sale of loans ....................................................       (139,574)        (72,155)
      Gain on sale of securities ...............................................              0          (1,546)
      Proceeds from sale of loans ..............................................     11,276,972       4,825,189
      Origination of loans held for sale .......................................    (11,493,348)     (4,784,694)
      Decrease in accrued interest income and other assets .....................        566,476          78,067
      Increase (decrease) in accrued interest, taxes, and other liabilities ....       (700,975)        105,215
                                                                                   ------------    ------------
         Net cash provided by operating activities .............................      2,126,033       2,348,497
                                                                                   ------------    ------------

Cash flows from investing activities:
   Purchases of available for sale securities ..................................     (2,006,021)       (995,781)
   Proceeds from sales of available for sale securities ........................              0       4,001,563
   Proceeds  from maturities and calls of available for sale securities ........      6,000,000       4,000,000
   Proceeds from mortgage-backed securities paydowns-available for sale ........              0           6,372
   Purchases of held to maturity securities ....................................     (2,636,291)     (4,555,522)
   Proceeds from maturities and calls of held to maturity securities ...........      5,290,000         500,000
   Proceeds from mortgage-backed securities paydowns-held to maturity ..........         89,878         207,347
   Net increase in loans .......................................................    (21,737,473)    (11,482,899)
   Capital expenditures ........................................................     (5,199,167)       (166,615)
                                                                                   ------------    ------------
         Net cash used in investing activities .................................    (20,199,074)     (8,485,535)
                                                                                   ------------    ------------

Cash flows from financing activities:
   Net increase in deposits ....................................................     13,753,687       3,063,347
   Dividends paid ..............................................................       (567,000)       (472,500)
                                                                                   ------------    ------------
         Net cash provided by financing activities .............................     13,186,687       2,590,847
                                                                                   ------------    ------------

Net decrease in cash and cash equivalents ......................................     (4,886,354)     (3,546,191)

Cash and cash equivalents at beginning of year .................................     18,738,564      13,569,216
                                                                                   ------------    ------------
Cash and cash equivalents at end of period .....................................   $ 13,852,210    $ 10,023,025
                                                                                   ============    ============
Supplemental disclosures:
   Interest paid ...............................................................   $  3,551,715    $  2,949,393
   Federal income taxes paid ...................................................        915,000         600,000
   Loans transferred from other real estate ....................................        335,713          38,600
   Loans charged off ...........................................................         66,945          95,899
</TABLE>
See notes to interim consolidated financial statements
<PAGE>
Notes to Interim Consolidated Financial Statements(unaudited)

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  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 generally  accepted  accounting  principles  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 June 30,  1998,  and
consolidated  results of  operations  for the three  months and six months ended
June 30, 1998 and 1997 and consolidated cash flows for the six months ended June
30, 1998 and 1997.

2. The results of operations  for the three months and six months ended June 30,
1998 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 Notes to Consolidated  Financial  Statements in the 1997
Annual Report contained in the Registrant's report on Form 10-K filing.

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  $1,057,000  at June  30,  1998  and
$1,058,000 at December 31, 1997.  (See  Management's  Discussion and Analysis of
financial condition and results of operations).

6. The Company has adopted Financial Accounting Standards Board (FASB) Statement
No. 128,  Earnings Per Share,  effective for periods  ending after  December 15,
1997. SFAS 128 establishes  standards for computing and presenting  earnings per
share  (EPS).  Basic EPS is  computed  by  dividing  net income by the  weighted
average common shares  outstanding.  Diluted EPS reflects dilution if options to
issue common stock were exercised or converted into common stock.
<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 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.

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) 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 six months ended June
30, 1998 and 1997,  and also  provides  information  relating  to the  Company's
financial condition, focusing on its liquidity and capital resources.
<TABLE>
Earnings  (in thousands          Second Quarter                             Year-to-Date
except per share data)          1998         1997                       1998           1997
                                ----         ----                       ----           ----
<S>                           <C>            <C>                      <C>            <C>
Net income                    $1,106          $848                    $2,053         $1,746
Net Income per Share           $ .70         $ .54                    $1.30           $1.11
</TABLE>
Net income for the three  months  ended June 30,  1998  increased  approximately
$258,000  (30%)  over  the  amount  reported  for the  same  period  last  year.
Contributing to this increase were quarterly increases in net interest income of
approximately  $455,000  (17%) as well as  increases in  non-interest  income of
approximately $70,000 (16%). However, there were also increases of approximately
$129,000 (7%) in non-interest expense, $38,000 (16%) in the loan loss provision,
and $100,000 (28%) in the federal  income tax accrual.  Net income for the first
half of the year increased $307,000 (18%) compared to the same period last year.
Contributing to this increase was an increase of
$812,000  (16%)  in  net  interest  income  and  a  $90,000  (10%)  increase  in
non-interest  income,  partially  offset  by  increases  of  $399,000  (12%)  in
non-interest  expense,  $76,000 (34%) in the loan loss  provision,  and $120,000
(16%) in federal tax accruals.
<PAGE>
<TABLE>
Net Interest Income              Second Quarter                            Year-to-Date
(in thousands)                 1998         1997                        1998           1997
                               ----         ----                        ----           ----
<S>                           <C>            <C>                        <C>            <C>
Interest Income               $4,907         $4,177                     $9,587         $8,223
Interest Expense               1,802          1,527                      3,560          3,008
                              ------          -----                      -----          -----
Net Interest Income           $3,105         $2,650                     $6,027         $5,215
</TABLE>
The Company's 1998 second quarter net interest income  increased  $455,000 (17%)
when compared with the same period in the prior year,  while net interest income
for the year to date was $812,000  (16%) higher than that of 1997. The following
table  illustrates  some of the  factors  contributing  to the  increase  in net
interest income for the period and for the year to date.
<PAGE>
<TABLE>
                                     TABLE 1
                    INTEREST YIELDS AND COSTS (in thousands)
                             June 30, 1998 and 1997

                                              ---------------Second Quarter Averages----------------
                                                     1998                                   1997
                                      Average                                Average
                                      Balance       Interest      Rate       Balance      Interest      Rate
Assets:
<S>                                   <C>           <C>           <C>        <C>          <C>           <C>
Fed funds sold                        $    3,165    $    43.5     5.43%      $    422     $    5.7      5.35%
Securities:  Taxable                      26,233        399.9     6.10%        32,724        488.1      5.97%
                   Tax-exempt(1)          15,325        272.9     7.12%        13,074        240.9      7.37%
Loans(2)(3)                              173,449      4,272.3     9.74%       145,205      3,587.6      9.77%

Total earning assets/total
interest income                          218,172     $4,988.6     9.05%       191,425     $4,322.3      8.95%

Cash & due from banks                      9,099                                7,458
All other assets                          11,090                                8,349
Allowance for loan loss                   (3,656)                              (3,471)

   Total assets                         $234,705                             $203,761

Liabilities and
  Shareholders' Equity
Interest bearing deposits:
Savings & NOW accounts                 $  87,383    $   653.4     3.00%     $  76,848    $   515.8      2.69%
Time                                      79,830      1,143.0     5.74%        70,008        990.1      5.67%
Purchased funds                              426          6.1     5.66%         1,493         21.5      5.69%

Total interest bearing
liabilities/total interest expense       167,639    $ 1,802.5     4.31%       148,349     $1,527.4      4.13%


Non-interest bearing deposits             42,277                               33,239
All other liabilities                      2,003                                1,527
Shareholders' Equity                      22,786                               20,646

Total liabilities and
   shareholders' equity                 $234,705                             $203,761

Interest spread                                                   4.74%                                 4.82%

Net interest income-FTE                             $ 3,186.1                            $ 2,794.9

Net interest margin                                               5.75%                                 5.75%
</TABLE>
<PAGE>
    (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. For purposes of the computation above, non-accruing
          loans are included in the average daily loan balances.

    (3)   Interest  on loans includes origination fees totaling $138,000 in 1998
          and $72,000 in 1997.
<TABLE>
                                              ----------------Year to Date Averages-----------------
                                                     1998                                    1997
                                     Average                               Average
                                     Balance        Interest      Rate     Balance        Interest     Rate
<S>                                  <C>            <C>           <C>      <C>            <C>          <C>
Assets:
Fed. funds sold                      $    3,991     $    109.0    5.43%    $    2,195   $     57.6     5.22%
Securities:  Taxable                     27,402          822.7    6.05%        33,874      1,008.8     5.96%
                   Tax-exempt(1)         14,964          535.6    7.16%        13,040        483.7     7.42%
Loans(2)(3)                             168,341        8,278.4    9.80%       141,366      6,820.1     9.63%

Total earning assets/total
interest income                         214,698      $ 9,745.7    9.06%       190,475     $8,370.2     8.77%

Cash & due from banks                     8,718                                 7,266
 All other assets                        10,261                                 8,411
Allowance for loan loss                  (3,578)                               (3,419)

   Total assets                        $230,099                            $  202,733

Liabilities and
  Shareholders' Equity
Interest bearing deposits:
Savings & NOW accounts                 $ 86,893    $   1,289.9    2.99%    $   79,466    $ 1,070.5     2.72%
Time                                     79,058        2,262.9    5.77%        68,557      1,915.7     5.64%
Purchased funds                             237            6.8    5.73%           751         21.5     5.69%


Total interest bearing
liabilities/total interest expense      166,188    $   3,559.6    4.32%       148,774     $3,007.7     4.08%

Non-interest bearing deposits            39,462                                32,092
All other liabilities                     1,979                                 1,673
Shareholders' Equity                     22,470                                20,194

Total liabilities and
  shareholders' equity                 $230,099                             $ 202,733

Interest spread                                                   4.74%                                4.69%

Net interest income-FTE                             $  6,186.1                            $5,362.5

Net interest margin                                               5.71%                                5.59%
</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 origination fees totaling $291,000 in 1998
          and $147,000 in 1997.
<PAGE>
Interest Earning Assets/Interest Income
On a tax equivalent basis, interest income increased  approximately  $666,000 in
the second  quarter of 1998  compared to that of 1997.  Improved  earning  asset
yields combined with a $28,000,000  (19%) growth in average loan balances led to
the  net  interest  income  growth.   Commercial  loan   originations   exceeded
$33,500,000 this quarter compared to $29,000,000 in the same quarter a year ago.
Origination fees increased  $66,000 compared to the second quarter of last year.
The growth in the loan  portfolio  has been  funded by  deposit  growth and by a
reduction in the security portfolio. The change in mix in the composition of the
Bank's  earning  assets  has  resulted  in an  increase  in the yield on earning
assets.  Management  is committed to  continuing to meet the credit needs of the
community and will continue to promote deposit growth to do so. In addition, the
Bank has a line of credit  available  at the Federal Home Loan Bank to fund loan
growth if deposits are insufficient. Possible growth in net interest income over
the near term is expected to be reduced by the  acquisition  in June,  1998 of a
$4,000,000 parcel of land, a non-earning asset, as discussed elsewhere.

For the first half of the year,  tax equivalent  net interest  income  increased
$824,000.  Again, the increase was primarily  attributable to loan growth.  Loan
interest income increased  $1,460,000,  with average balances up $27,000,000 and
yields  increased  17 basis  points.  The growth in loans was  primarily  in the
commercial  sector where average balances  increased  approximately  $24,000,000
(25%) for the year. Average consumer loans increased  $2,400,000 (11%).  Average
mortgage loans increased  $650,000 (3%).  This moderate  mortgage loan growth is
due to the Bank's policy of selling fixed rate mortgage  loans with fifteen year
and longer  maturities.  The Bank sold  $10,400,000 in mortgage loans during the
first  half of 1998.  For the first six  months of the year,  income on  taxable
securities  decreased  $186,000  from  that  earned  the  prior  year  due  to a
$6,500,000  decrease in average balances although the yields earned increased by
9 basis points.  Income on  tax-exempt  securities  was $52,000  higher than the
first half of 1997.  Rates  declined  26 basis  points  while  average  balances
increased $1,900,000.


Interest Bearing Liabilities/Interest Expense
In the second quarter of 1998,  interest expense increased  $275,000 both due to
an increase in rates of 18 basis  points and an increase in average  balances of
$19,300,000.  Savings  and  NOW  interest  expense  increased  $138,000  because
balances increased $10,500,000 and rates increased 31 basis points.  Interest on
time  deposits  increased  $153,000 in the second quarter of 1998 over the prior
year. Balances increased $9,800,000 and the rate paid on time deposits increased
7 basis points  compared to that of 1997.  The deposit  growth was the result of
the  Bank's  marketing  efforts  to  increase  its  share of  Livingston  County
deposits.  The increase in rates on certificates  reflects  prevailing trends in
the market.

In the first half of the year,  interest  expense was $552,000  higher than 1997
both  due  to  average  balances  of  interest  bearing  liabilities  increasing
$17,400,000  and the average rate  increasing 24 basis  points.  Savings and NOW
interest expense increased $219,000
<PAGE>
because balances  increased  $7,400,000 and the interest rate increased 27 basis
points.  Interest  on time  deposits  increased  $347,000  because  the  balance
increased $10,500,000 and the rate increased 13 basis points

Liquidity
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 15% liquidity ratio. As of June 30,
the Bank's liquidity ratio was 15.5%.

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 Bank  does not deal in
brokered funds, and the makeup of its over $100,000 certificates, which amounted
to $16,600,000 at June 30, 1998, consists of local depositors known to the Bank.

It is the  intention of the Bank's  management  to handle  unexpected  liquidity
needs  through its Federal Funds  position.  The goal is to maintain a daily Fed
Funds balance sufficient to cover required cash draws.  During the first half of
the year, Fed Funds sold balances  averaged  nearly  $4,000,000  while purchased
funds averaged  $237,000.  In addition,  the Bank purchased stock in the Federal
Home Loan Bank of  Indianapolis  in the first quarter of this year. As a result,
the Bank has a  $13,000,000  line of credit  currently  available.  The Bank has
pledged certain mortgage loans and investment  securities as collateral for this
borrowing.  Also  impacting the Bank's  liquidity  was a $4,000,000  purchase of
land.  Part of this  land  will be used to  build a  branch,  but a  substantial
portion of the land is expected to be sold.  When it is sold, the cash generated
will improve the Bank's  liquidity  ratio. 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.

In addition to liquidity issues, ALCO 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 rate sensitivity  report is analyzed and strategies
are  created to attempt to produce  the desired  results.  The rate  sensitivity
report  describes  the  repricing  schedule  for  various  asset  and  liability
categories.
<PAGE>
<TABLE>
Interest Rate Sensitivity
(dollars in thousands)                              0-3         4-12           1-5           5+
                                                 Months       Months         Years        Years        Total
Assets:
<S>                                             <C>          <C>           <C>          <C>         <C>
   Loans......................................  $76,060      $30,863       $67,199      $ 6,348     $180,470
   Securities.................................    9,135        9,950         6,989       10,891       36,965
   Fed funds..................................    1,200                                                1,200
   Other assets...............................                                           22,211       22,211
                                                                                   
      Total assets............................  $86,395      $40,813       $74,188      $39,450     $240,846

Liabilities & Shareholders' Equity:
   Demand, Savings & NOW......................  $39,260      $15,266       $52,665      $28,552     $135,743
   Time.......................................   20,807       35,709        23,457          337       80,310
   Other liabilities and equity...............                                           24,793       24,793
                                                                                   
      Total liabilities and equity............  $60,067      $50,975       $76,122      $53,682     $240,846

Rate sensitivity gap and ratios:
   Gap for period.............................  $26,328    $ (10,162)      $(1,934)    $(14,232)
   Cumulative gap.............................   26,328       16,166        14,232

Cumulative rate sensitive ratio...............     1.44         1.15          1.08         1.00
Dec. 31, 1997 rate sensitive ratio............     1.27         1.16          1.09         1.00
</TABLE>

Given the asset  sensitive  position of the Bank at June 30,  1998,  if interest
rates  decrease 200 basis  points and  management  did not  respond,  management
estimates  that  annualized  net interest  income would  decrease  approximately
$250,000,  while a similar  increase in rates would cause net interest income to
increase  by a like  amount.  In the  preceding  table,  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 which are not
considered rate sensitive based on the Bank's historical experience and industry
practice.
<TABLE>
Provision for Loan Losses             Second Quarter                            Year-to-Date
(in thousands)                      1998         1997                          1998        1997
         <S>                        <C>          <C>                           <C>         <C>
         Total                      $150         $112                          $300        $224
</TABLE>

The provision for loan losses  increased  $38,000 in the second  quarter of 1998
compared to the prior year. Year to date the provision has increased $76,000. In
June of 1998,  the  allowance  for loan  loss as a percent  of loans was  2.05%,
compared to 2.39% a year earlier and 2.15% at December  31, 1997.  For the first
six months of 1998, the Bank had net charge offs of $21,000,  the same amount it
had in the first half of 1997.  Non-accrual,  past due 90 days, and renegotiated
loans were .58% and 1.41% of total loans  outstanding  at June 30, 1998 and 1997
respectively and .67% of total loans at December 31, 1997.
<PAGE>
Impaired  loans, as defined by Statement of Financial  Accounting  Standards No.
114,  Accounting by Creditors for  Impairment of a Loan,  totaled  approximately
$3,900,000  at June 30, 1998,  compared to  $3,100,000  at December 31, 1997 and
included non-accrual, and past due 90 days other than homogenous residential and
consumer loans, and, at June 30, 1998, $3,200,000 of commercial loans separately
identified as impaired.  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. The majority of the impaired
balance   relates  to  one  borrower   whose  loan  is  considered  to  be  well
collateralized.  Any loss that  might  occur from it is not  expected  to have a
material impact on the Company's financial condition or results of operations.

Management  assessment  of  the  allowance  for  loan  losses  is  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. Certain impaired
loans  with  a  balance  of  $3,700,000  had  specific  reserves  calculated  in
accordance with SFAS No. 114 of $500,000 at June 30, 1998.

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. The following table describes nonperforming assets at June 30, 1998
compared to December 31, 1997. The loans categorized as ninety days past due are
all well secured and in the process of collection.
<TABLE>
Nonperforming Assets                                        Quarter Ended          Year Ended
(in thousands)                                              June 30, 1998        December 31, 1997
<S>                                                         <C>                 <C>
Non-accrual loans                                              $1,023                       $809
90 days or more past due and still accruing                        34                        249

         Total nonperforming loans                              1,057                      1,058
Other real estate                                                 276                          0

         Total nonperforming assets                            $1,333                     $1,058

Nonperforming loans as a percent of total loans                  .58%                       .67%
Nonperforming assets as a percent of total loans                 .74%                       .67%
Nonperforming loans as a percent of the loan loss reserve         36%                        31%
</TABLE>
<PAGE>
The following  table sets forth loan balances and  summarizes the changes in the
allowance for loan losses for the first six months of 1998 and 1997.
<TABLE>
Loans:   (dollars in thousands)                                       Year to date         Year to date
                                                                     June 30, 1998         June 30, 1997
<S>                                                                     <C>                   <C>
   Average daily balance of loans for the year to date                  168,341               141,366
   Amount of loans (gross) outstanding at end of the
   quarter                                                              181,075               148,071
Allowance for loan losses:
   Balance at beginning of year                                           3,424                 3,335
   Loans charged off:
      Real estate                                                             0                     0
      Commercial                                                             18                    44
      Consumer                                                               49                    52
         Total charge-offs                                                   67                    96
   Recoveries of loans previously charged off:
      Real estate                                                             0                    33
      Commercial                                                             13                    24
      Consumer                                                               33                    18
         Total recoveries                                                    46                    75

Net loans charged off                                                        21                    21
Additions to allowance charged to operations                                300                   224
         Balance at end of quarter                                       $3,703                $3,538

Ratios:
    Net loans charged off (annualized) to average
    loans outstanding                                                      .02%                  .03%
   Allowance for loan losses to loans outstanding                         2.05%                 2.39%
</TABLE>
Nonperforming  loans  have  decreased  in 1998  compared  to the prior year end,
although  non-performing assets have increased due to the foreclosure of a piece
of commercial real estate.  Management is pursuing sale of this property.  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
<TABLE>
Non-interest Income                             Second Quarter                         Year-to-Date
(in thousands)                                1998          1997                    1998           1997
<S>                                          <C>            <C>                    <C>            <C>
Total                                         $501          $431                    $949          $859
                                              ====          ====                    ====          ====
</TABLE>
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
<PAGE>
by $70,000  (16%) in the second  quarter of 1998  compared to the same period in
the previous year.  Although all categories of non-interest  income increased in
the second quarter, the most significant change was to the gain on sale of loans
which  increased  $46,000  (133%) over the previous  year.  Driven by customers'
desires to refinance in the low rate environment of the current year, the volume
of loan sales in the second quarter of 1998 was four times what it was in 1997.

For the year,  non-interest  income  increased  $90,000 (10%).  Again,  the most
significant  increase was to gain on loan sales which was $67,000 higher in 1998
than it was in the previous year.
<TABLE>
Non-interest Expense                        Second Quarter                             Year-to-Date
(in thousands)                           1998          1997                          1998          1997
<S>                                     <C>            <C>                           <C>            <C>
Total                                   $1,896         $1,767                        $3,765        $3,366
                                        ======         ======                        ======        ======
</TABLE>
Non-interest  expense  increased  $129,000  (7%) in the  second  quarter of 1998
compared to the same  period last year.  Contributing  to this  increase  was an
increase of $180,000 in salaries and benefits  expense and a $37,000 increase in
equipment expense.  Salaries increased due to normal salary increases,  addition
of  a  trust  department,  and  increased  profit  sharing  accruals.  Equipment
depreciation  and  maintenance  costs  increased as the Bank has  purchased  and
installed a personal  computer network in preparation for a computer  conversion
to take place in the fourth quarter.

For the first half of the year,  non-interest  expense increased  $400,000 (12%)
primarily  in the  above  mentioned  categories.  Both  building  and  equipment
expenses are expected to increase as the year  progresses.  Building  costs will
increase  as a new  branch  is  constructed  in  Brighton.  Equipment  cost will
escalate as the Bank's core computer system is changed.  Management is committed
to investing resources in initiatives that will keep the Bank competitive in the
future.
<TABLE>
Income Tax Expense                        Second Quarter                                 Year-to-Date
(in thousands)                          1998           1997                          1998           1997
<S>                                     <C>            <C>                           <C>            <C>
         Total                          $453            $353                         $858           $738
                                        ====            ====                         ====           ====
</TABLE>
Fluctuations  in income taxes  resulted  primarily  from changes in the level of
profitability  and in  variations  in  the  amount  of  tax-exempt  income.  The
increases of $100,000 in the second quarter tax accrual and $120,000 in the year
to date tax accrual were principally the result of increasing income.
<PAGE>
<TABLE>
Capital (in thousands)                            June 30, 1998            December 31, 1997
<S>                                               <C>                      <C>
Shareholders' Equity*                                 $23,203                  $21,717
Ratio of Equity to Total Assets                         9.63%                    9.60%
</TABLE>
*Amounts exclude securities  valuation  adjustments  recorded under Statement of
Financial Accounting Standards No. 115 amounting to $10,000 at June 30, 1998 and
$15,000 at December 31, 1997.

A financial institution's capital ratio is looked upon by the regulators and the
public as an indication of its soundness.  Shareholders'  equity,  excluding the
securities valuation adjustment, increased $1,486,000 (7%) during the first half
of the year.  This  increase was the result of net income  earned by the company
reduced by dividends paid of $567,000.

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 June 30,
1998 was 10.78%, and total risk-based capital was 12.03%. At June 30, 1997 these
ratios were 14.56% and 15.81% respectively. Minimum regulatory Tier 1 risk-based
and total  risk-based  capital ratios under the Federal Reserve Board guidelines
are 4% and 8% respectively.

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 8.15% at June 30,  1998 and 10.20% in 1997.  The minimum  standard  leverage
ratio is 3% but financial institutions are expected to maintain a leverage ratio
1 to 2 percentage points above the 3% minimum.

Year 2000 issues are an important focus of management's  attention.  The Company
is highly  dependent on  technology  and most bank products are dependent on the
software's  ability to make the  transition  to the Year 2000. A committee is in
the  process of testing  applications  that have been  identified  as being date
sensitive.  In the first half of this year, the Company has spent  approximately
$850,000 on hardware and software and will likely spend an  additional  $450,000
on  various  technology  needs as the year  progresses.  When all  upgrades  are
installed,  the Company  expects to be Year 2000  compliant.  In  addition,  the
Company has analyzed  significant vendors and customers' Year 2000 readiness and
has  determined  that any  failures  they may  have are not  expected  to have a
material effect on the Company.

In June of this year,  the  Company  exercised  an option to purchase an 18 acre
tract of land in northwest Brighton.  The cost of the property was approximately
$4,000,000.  A  portion  of the  land  will be used for a new  branch  building.
Construction  is  expected  to begin in the third  quarter.  Cost of the  branch
building is estimated at  approximately  $1,000,000 and  management  anticipates
that the branch will be open in the first half of 1999.  The  Company  currently
has listed for sale a substantial portion of the acreage
<PAGE>
which is not needed for the branch.  Improvements  to the land,  such as a road,
will be  needed  to  enhance  the  salability  of the  property.  Cost of  these
improvements is estimated to be approximately  $250,000.  These projects will be
financed from internally generated funds.

Accounting Standards
In June 1997, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting  Standards No. 130 Reporting  Comprehensive Income (SFAS
130). SFAS 130 establishes standards for reporting and displaying  comprehensive
income and its  components,  including  but not limited to  unrealized  gains or
losses on  securities  available for sale,  in the  financial  statements.  This
statement  was  effective for both interim and annual  periods  beginning  after
December  15,  1997.  SFAS 130  requires  reclassification  of all prior  period
amounts.

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
131,  Disclosures about Segments of an Enterprise and Related  Information (SFAS
131).  SFAS 131  establishes  standards for the way that public  entities report
information about operating segments in financial statements.  This statement is
effective for annual  reporting for 1998 calendar year  entities.  Although this
statement  applies to interim  financial  statements,  interim  reporting is not
required in the initial year of application.

In February 1998, the FASB issued  Statement of Financial  Accounting  Standards
No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits
(SFAS 132).  SFAS 132 revises  employers'  disclosures  about  pension and other
postretirement benefit plans. SFAS 132 standardizes the disclosure  requirements
for pensions and other postretirement benefits,  requires additional information
on  changes in the  benefit  obligations  and fair  values of plan  assets,  and
eliminates  certain  disclosures.  This  Statement is effective for fiscal years
beginning after December 15, 1997, with earlier adoption encouraged. Restatement
of  disclosures  for  earlier  periods  provided  for  comparative  purposes  is
required.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  Accounting for Derivative  Instruments and Hedging  Activities (SFAS 133).
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments and hedging activities.  It requires  recognition of all derivatives
as either  assets or  liabilities  in the  statement of financial  condition and
measurement  of those  instruments  at fair value.  the accounting for gains and
losses on  derivatives  depends  on the  intended  use of the  derivative.  This
Statement is effective for all fiscal  quarters of fiscal years  beginning after
June 15, 1999, with earlier application  encouraged.  Retroactive application is
not  permitted.  SFAS 133 is not  expected to have a  significant  impact on the
financial condition or operations of the Corporation.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk
No material  changes in the market risk faced by the Company has occurred  since
December 31, 1997.
<PAGE>
                           PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
The registrant's  annual meeting of shareholders was held on April 22, 1998. The
shareholders voted on the election of directors.

Votes were cast as follows for the three nominees for the office of director.

Term expiring in 2001:
                                    Shares voted for        Shares voted against
         Rebecca S. English          1,029,281                      8,863
         W. Rickard Scofield         1,037,700                        444
         Barbara D. Martin           1,038,060                         84
         Randolph E. Rudisill        1,037,667                        477

Additionally, the following directors continue in office.

Term expiring in 1999:
         Dona Scott Laskey
         Charles N. Holkins
         R. Michael Yost

Term expiring in 2000:
         Gary R. Boss
         Donald K. Burkel
         Harry E. Griffith

Votes were cast as follows to approve an amendment to the Corporation's Articles
of Incorporation  to increase the number of authorized  shares from 2,100,000 to
4,200,000.
     Shares voted for        Shares voted against            Shares Abstained
         976,942                   25,814                         35,388

Votes  were cast  as follows to  approve the adoption of the Corporation's Long-
Term Incentive Plan.

     Shares voted for        Shares voted against            Shares Abstained
         903,175                   34,752                        100,217
<PAGE>
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 second quarter of 1998.




                                   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 June 30, 1998 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:  August 10, 1998