# SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
                                      OF THE SECURITIES EXCHANGE ACT OF 1934
                                   For the quarterly period ended June 30, 2002
                                                        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
(State or other jurisdiction of
incorporation or organization) | 38-2869722
 (I.R.S. Employer
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

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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. YesX_No___

The number of shares
outstanding of each of the issuers classes of common stock, as of the latest
practicable date: 3,156,546 shares of the Companys Common Stock (no par
value) were outstanding as of August 13, 2002.



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|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |             | PageNumber
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------- | ----------
|Part I.  | Financial Information (unaudited):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|         | Item 1.                                                                                         
Interim Financial Statements:                                                                          
Consolidated Balance Sheets as of June 30, 2002 and Dec. 31, 2001.......................................                            
Consolidated Statements of Income, three months ended                                                  
June 30, 2002 and 2001, and six months ended June 30, 2002 and 2001.................................
Consolidated Statement of Stockholders' Equity and Comprehensive                                      
Income for three months ended June 30, 2002 and 2001..........................................................                       
Consolidated Statement of Stockholders' Equity and Comprehensive                                      
Income for six months ended June 30, 2002 and 2001..............................................................                       
Consolidated Statements of Cash Flows for six months ended                                           
June 30, 2002 and 2001............................................................................................................
Notes to Interim Consolidated Financial Statements................................................................ | 4
5
6
7
8
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...................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 23         
|Part II. | Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|         | Item 4........................................................................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 23         
|         | Item 6........................................................................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 24         
|         | Signatures...................................................................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 25         

2

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PART I - FINANCIAL INFORMATION

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

3

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# FNBH BANCORP, INC. AND SUBSIDIARY

`Consolidated Balance Sheets (unaudited)                                          June 30     December 31
                                                                                    2002            2001
Assets                                                                              ----            ----
Cash and due from banks                                                      $17,203,037    $ 18,335,732
Short term investments                                                            48,818      16,307,263
                                                                                  ------      ----------
   Total cash and cash equivalents                                            17,251,855      34,642,995

Certificates of deposit                                                        5,626,000       5,917,000
Investment securities held to maturity, net (fair value of $17,720,000
   at June 30, 2002 and $18,581,000 at Dec. 31, 2001)                         16,808,013      17,978,980
Investment securities available for sale, at fair value                       21,516,054      25,249,139
Mortgage-backed securities held to maturity, net (fair value of
   $46,000 at June 30, 2002 and $78,000 at Dec. 31, 2001)                         45,729          78,063
Mortgage-backed securities available for sale, at fair value                  13,386,678      12,682,581
                                                                              ----------      ----------
   Total investment securities                                                51,756,474      55,988,763

Loans:
   Commercial                                                                250,456,689     227,228,805
   Consumer                                                                   32,559,905      32,346,942
   Real estate mortgages                                                      30,432,409      27,548,873
                                                                              ----------      ----------
      Total loans                                                            313,449,003     287,124,620
   Less unearned income                                                          927,462         845,014
   Less allowance for loan losses                                              5,170,350       5,667,906
                                                                               ---------       ---------
      Net loans                                                              307,351,191     280,611,700

Premises and equipment - net                                                   9,916,611       9,106,648
Land available for sale - net                                                  1,530,290       1,530,290
Accrued interest and other assets                                              6,349,683       5,181,098
                                                                               ---------       ---------
      Total assets                                                          $399,782,104    $392,978,494
                                                                            ============    ============

Liabilities and Stockholders' Equity
Liabilities
Deposits:
   Non-interest bearing demand                                              $ 67,072,048    $ 62,938,059
   NOW                                                                        37,600,567      39,566,687
   Savings and money market                                                  110,107,454     114,919,743
   Time                                                                      125,955,509     134,244,261
   Brokered CDs                                                                4,037,000               0
                                                                               ---------     -----------
      Total deposits                                                         344,772,578     351,668,750
Short term borrowings                                                         11,400,000               0
FHLB Advances                                                                  5,569,255       5,792,911
Accrued interest, taxes, and other liabilities                                 2,982,731       3,113,030
                                                                               ---------       ---------
      Total liabilities                                                      364,724,564     360,574,691
Stockholders' Equity
Common stock, no par value.  Authorized 4,200,000 shares; 3,156,312
shares issued and outstanding at June 30, 2002 and 3,146,750 shares
issued and outstanding at Dec. 31, 2001                                        5,435,499       5,246,770
Retained earnings                                                             29,620,051      27,361,215
Unearned management retention plan                                             (300,374)       (231,143)
Accumulated other comprehensive income, net                                      302,364          26,961
                                                                                 -------          ------
      Total stockholders' equity                                              35,057,540      32,403,803
                                                                              ----------      ----------
      Total liabilities and stockholders' equity                            $399,782,104    $392,978,494
                                                                            ============    ============
   See notes to interim consolidated financial statements`

4

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# FNBH BANCORP, INC. AND SUBSIDIARY

`Consolidated Statements of Income                             Three Months Ended June          Six Months Ended June
Unaudited                                                          2002          2001            2002           2001
                                                                   ----          ----            ----           ----
Interest income:
   Interest and fees on loans                                $5,822,468    $6,100,402     $11,439,994    $12,296,295
   Interest and dividends on investment securities:
      U.S. Treasury and agency securities                       312,293       249,185         656,265        505,767
      Obligations of state and political subdivisions           208,604       227,610         427,325        458,933
      Corporate bonds and other securities                      121,221        16,563         262,020         32,117
   Interest on certificates and other bank deposits              48,301           837          95,461          1,940
   Interest on short term investments                             5,707       198,220          34,910        468,959
                                                                  -----       -------          ------        -------
      Total interest income                                   6,518,594     6,792,817      12,915,975     13,764,011
                                                              ---------     ---------      ----------     ----------

Interest expense:
   Interest on deposits                                       1,827,796     2,685,892       3,843,410      5,483,342
   Other interest expense                                       197,575       107,002         315,240        213,019
                                                                -------       -------         -------        -------
      Total interest expense                                  2,025,371     2,792,894       4,158,650      5,696,361
                                                              ---------     ---------       ---------      ---------

      Net interest income                                     4,493,223     3,999,923       8,757,325      8,067,650

Provision for loan losses                                             0       300,000               0        600,000
                                                              ---------       -------       ---------        -------
      Net interest income after provision for loan            4,493,223     3,699,923       8,757,325      7,467,650
                                                              ---------     ---------       ---------      ---------
losses

Non-interest income:
   Service charges                                              740,641       671,974       1,384,444      1,272,100
   Gain on sale of loans                                         47,527        60,713         154,888        104,543
   Gain on sale/call of investments                               3,488             0           6,269              0
   Trust income                                                  63,418        29,489         108,822         90,320
   Other                                                        (3,010)        40,702         (7,009)         61,226
                                                                -------        ------         -------         ------
      Total non-interest income                                 852,064       802,878       1,647,414      1,528,189
                                                                -------       -------       ---------      ---------

Non-interest expense:
   Salaries and employee benefits                             1,700,741     1,476,023       3,265,828      2,971,903
   Net occupancy                                                231,831       187,662         437,662        403,539
   Equipment expense                                            212,564       208,887         423,053        422,134
   Fees                                                         153,483       179,984         288,504        355,637
   Printing and supplies                                         87,238        66,774         159,293        125,156
   Advertising                                                   67,497        53,990         153,979        110,699
   Other                                                        593,702       585,325       1,118,837      1,039,907
                                                                -------       -------       ---------      ---------
      Total non-interest expense                              3,047,056     2,758,645       5,847,156      5,428,975
                                                              ---------     ---------       ---------      ---------

Income before federal income taxes                            2,298,231     1,744,156       4,557,583      3,566,864

Federal income taxes                                            709,100       512,400       1,392,900      1,043,400
                                                                -------       -------       ---------      ---------
      Net income                                             $1,589,131    $1,231,756      $3,164,683     $2,523,464
                                                             ==========    ==========      ==========     ==========

Per share statistics*
   Basic EPS                                                       $.50          $.39           $1.01           $.80
   Diluted EPS                                                     $.50          $.39           $1.01           $.80
   Dividends                                                      $.163          $.10           $.288           $.20
*Based on 3,148,492 average shares outstanding during the period ended June 30, 2002 and 3,136,724 average shares
outstanding during the period ended June 30, 2001.  Shares restated to give effect of a 2 for 1 stock split,
payable as a dividend of one share for each share of company stock held of record July 1, 2002, paid July 10,
2002.
See notes to interim consolidated financial statements.`

5

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FNBH BANCORP,INC. AND SUBSIDIARY
                      Consolidated Statement of Stockholders' Equity and Comprehensive Income
                           For the Three Months Ended June 30, 2002 and 2001 (Unaudited)

`Unearned        Accumulated
                                                                                         Management          Other
                                                             Common       Retained       Retention       Comprehensive
                                                             Stock        Earnings          Plan         Income (loss)        Total
                                                             -----        --------          ----         -------------        -----
Balances at March 31, 2001                                  $5,068,423    25,005,317     (167,958)          107,098          30,012,880
Amortization of management retention plan                                                  13,448                                13,448
Issued 528 shares for employee purchase plan                     9,628                                                            9,628
Comprehensive income:
   Net income                                                              1,231,756                                          1,231,756
   Change in unrealized loss on debt securities
   available for sale, net of tax effect                                                                    (2,638)             (2,638)
                                                                                                                                -------
        Total comprehensive income                                                                                            1,229,118
                                                                                                                              =========
Cash dividends (10(cent)per share)                                         (313,790)                                          (313,790)
                                                             ---------    ----------     ---------          -------           ---------
Balances at June 30, 2001                                   $5,078,051    25,923,283     (154,510)          104,460          30,951,284
                                                            ==========    ==========     =========          =======          ==========

                                                                                          Unearned        Accumulated
                                                                                         Management          Other
                                                             Common       Retained       Retention       Comprehensive
                                                             Stock        Earnings          Plan         Income (loss)        Total
                                                             -----        --------          ----         -------------        -----
Balances at March 31, 2002                                  $5,256,419    28,543,423     (209,801)         (103,820)         33,486,221
Issued 5,246 shares for management retention plan              109,799                   (109,799)
Amortization of management retention plan                                                  19,226                                19,226
Issued 2,448 shares for employee purchase plan                  40,931                                                           40,931
Issued 218 shares for current directors fees                     4,741                                                            4,741
Issued 1,128 shares for directors' variable fee plan            23,609                                                           23,609
Comprehensive income:
   Net income                                                              1,589,131                                          1,589,131
   Change in unrealized gain on debt
securities                                                                                                  406,184             406,184
                                                                                                                                -------
available for sale, net of tax effect
        Total comprehensive income                                                                                            1,995,315
                                                                                                                              =========
Cash dividends (16.25(cent)per share)                                      (512,503)                                          (512,503)
                                                            ----------    ----------     ---------          -------           ---------
Balances at June 30, 2002                                   $5,435,499    29,620,051     (300,374)          302,364          35,057,540
                                                            ==========    ==========     =========          =======          ==========
See notes to interim consolidated financial statements`

6

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FNBH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statement of Stockholders' Equity and Comprehensive Income
                            For the Six Months Ended June 30, 2002 and 2001 (Unaudited)

`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
Amortization of management retention plan                                                       28,678                            28,678
Issued 2,934 shares for employee purchase plan                   52,575                                                           52,575
Comprehensive income:
   Net income                                                               2,523,464                                          2,523,464
   Change in unrealized loss on debt securities
   available for sale, net of tax effect                                                                     87,271               87,271
                                                                                                                                  ------
        Total comprehensive income                                                                                             2,610,735
                                                                                                                               =========
Cash dividends (20(cent)per share)                                          (627,339)                                          (627,339)
                                                             ----------    ----------        ---------      -------            ---------
Balances at June 30, 2001                                    $5,078,051    25,923,283        (154,510)      104,460           30,951,284
                                                             ==========    ==========        =========      =======           ==========

                                                                                          Unearned         Accumulated
                                                                                         Management           Other
                                                              Common       Retained       Retention       Comprehensive
                                                              Stock        Earnings         Plan          Income (loss)        Total
                                                              -----        --------         ----          -------------        -----
Balances at December 31, 2001                                $5,246,770    27,361,215     (231,143)           26,961          32,403,803
Issued 5,246 shares for management retention plan               109,799                   (109,799)
Amortization of management retention plan                                                   40,568                                40,568
Issued 2,970 shares for employee purchase plan                   50,580                                                           50,580
Issued 218 shares for current stock directors fees                4,741                                                            4,741
Issued 1,128 shares for directors' variable fee plan             23,609                                                           23,609
Comprehensive income:
   Net income                                                               3,164,683                                          3,164,683
   Change in unrealized loss on debt
securities                                                                                                   275,403             275,403
                                                                                                                                 -------
available for sale, net of tax effect
        Total comprehensive income                                                                                             3,440,086
                                                                                                                               =========
Cash dividends (28.75(cent)per share)                                       (905,847)                                          (905,847)
                                                             ----------    ----------     ---------          -------           ---------
Balances at June 30, 2002                                    $5,435,499    29,620,051     (300,374)          302,364          35,057,540
                                                             ==========    ==========     =========          =======          ==========
See notes to interim consolidated financial statements`

7

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# FNBH BANCORP,
INC. AND SUBSIDIARY

`Consolidated Statements of Cash Flows
Unaudited                                                                     Six months ended June 30
                                                                                    2002            2001
                                                                                    ----            ----
Cash flows from operating activities:
   Net income                                                                 $3,164,683     $ 2,523,464
   Adjustments to reconcile net income to net cash provided by operating
   activities:
      Provision for loan losses                                                        0         600,000
      Depreciation and amortization                                              440,262         450,445
      Net amortization (accretion) on investment securities                      132,304         (1,279)
      Earned portion of management retention plan                                 40,568          28,678
      Gain on sale of investments                                                (6,269)               0
      Gain on sale of loans                                                    (154,888)       (104,543)
      Proceeds from sale of loans                                              9,937,160       6,596,121
      Origination of loans held for sale                                    (10,450,208)     (7,015,535)
      (Increase) decrease in accrued interest income and other assets        (1,168,585)         679,252
      Decrease in accrued interest, taxes, and other liabilities               (272,199)       (301,032)
                                                                               ---------       ---------
         Net cash provided by operating activities                             1,662,828       3,455,571
                                                                               ---------       ---------

Cash flows from investing activities:
   Purchases of available for sale securities                                (6,246,581)     (7,522,894)
   Proceeds from sales of available for sale securities                        5,113,970               0
   Proceeds  from maturities and calls of available for sale securities        3,000,000       5,000,000
   Proceeds from mortgage-backed securities paydowns-available for sale        1,454,972          39,675
   Proceeds from maturities and calls of held to maturity securities           1,169,000         620,000
   Proceeds from mortgage-backed securities paydowns-held to maturity             32,197         474,219
   Maturity of brokered CDs                                                      291,000               0
   Purchase of loans                                                         (1,671,644)       (142,540)
   Net increase in loans                                                    (24,399,912)    (14,013,604)
   Capital expenditures                                                      (1,250,225)       (534,763)
                                                                             -----------       ---------
         Net cash used in investing activities                              (22,507,223)    (16,079,907)
                                                                            ------------    ------------

Cash flows from financing activities:
   Net increase (decrease) in deposits                                      (10,933,172)       8,370,781
   Increase in brokered CDs                                                    4,037,000               0
   Increase in borrowings                                                     11,400,000               0
   Payments on FHLB note                                                       (223,656)       (207,089)
   Shares issued for employee purchase and directors compensation                 78,930          52,575
   Dividends paid                                                              (905,847)       (627,339)
                                                                               ---------       ---------
         Net cash provided by financing activities                             3,453,255       7,588,928
                                                                               ---------       ---------

Net decrease in cash and cash equivalents                                   (17,391,140)     (5,035,408)

Cash and cash equivalents at beginning of year                                34,642,995      43,244,665
                                                                              ----------      ----------
Cash and cash equivalents at end of period                                   $17,251,855     $38,209,257
                                                                             ===========     ===========

Supplemental disclosures:
   Interest paid                                                             $ 4,101,799     $ 5,744,774
   Federal income taxes paid                                                   1,265,000       1,172,000
   Loans transferred to other real estate                                      1,285,018               0
   Loans charged off                                                             534,403         169,775
See notes to interim consolidated financial statements`

8

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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 (GAAP) 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 GAAP 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, 2002, and consolidated  results of operations
for the three  months and six months  ended June 30, 2002 and 2001 and  consolidated  cash flows for the six months
ended June 30, 2002 and 2001.

2.  The  results  of  operations  for the three  months  and six  months  ended  June 30,  2002 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 2001 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 $1,600,000  at June 30, 2002,  $1,697,000  at June 30, 2001,  and
$2,997,000 at December 31, 2001. (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.

|                             | Second Quarter | Year to Date
|---------------------------- | -------------- | ------------
|                             | 2002           | 2001        
|Net income                   | $1,589,131     | $1,231,756  
|                             |                |             
|Shares outstanding (basic)   | 3,150,209      | 3,137,914   
|Dilutive shares              | 0              | 0           
|Shares outstanding (diluted) | 3,150,209      | 3,137,914   
|Earnings per share:          |                |             
|Basic EPS                    | $.50           | $.39        
|Diluted EPS                  | $.50           | $.39        

9

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7.  All references to share
and per share data have been restated to give effect of a two for one stock
split, payable as a dividend of one share for each share of company stock held
of record July 1, 2002, paid July 10, 2002.

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 six months ended June 30, 2002 and 2001, and also provides
information relating to the Companys financial condition, focusing on its
liquidity and capital resources.

`Earnings  (in thousands                   Second Quarter                             Year-to-Date
--------
except per share data)                   2002         2001                          2002      2001
                                         ----         ----                          ----      ----

Net income                              $1,589       $1,232                        $3,165    $2,523
Net Income per Share                     $ .50        $ .39                         $1.01     $ .80`

Net income for the three
months ended June 30, 2002 increased approximately $357,000 (29%) compared to
the same period last year. In the second quarter of the current year net
interest income increased $493,000 (12%), non-interest income grew $49,000 (6%),
and the provision for loan losses decreased $300,000. Offsetting these favorable
occurrences was an increase in non-interest expense of $288,000 (10%) and an
increase of $197,000 (38%) in accrued federal income tax expense.

Net income for the first
half of the year increased $642,000 (25%) from that reported last year.
Contributing to 2002 earnings were an increase of $689,000 (9%) in net interest
income, a $119,000 (8%) increase in non-interest income, and a decrease of
$600,000 in the provision for loan losses. Partially offsetting these increases
in income were increases of $418,000 (8%) in non-interest expense, and of
$350,000 (34%) in the provision for federal income tax.

10

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`Net Interest Income                               Second Quarter                         Year-to-Date
-------------------                             2002         2001                      2002         2001
(in thousands)                                  ----         ----                      ----         ----

Interest Income                               $6,518       $6,793                   $12,916      $13,764
Interest Expense                               2,025        2,793                     4,159        5,696
                                              ------        -----                     -----        -----
Net Interest Income                           $4,493       $4,000                    $8,757       $8,068`

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)
                                              June 30, 2002 and 2001

`----------------Second Quarter Averages----------------
                                                     2002                                 2001
                                                     ----                                 ----
                                         Average                              Average
                                         Balance     Interest      Rate       Balance     Interest       Rate
                                         -------     --------      ----       -------     --------       ----
Assets:
Short term investments                  $  7,054     $   54.0     3.03%      $ 19,285     $  199.0      4.08%
Securities:  Taxable                      36,692        433.5     4.73%        17,174        265.8      6.19%
                   Tax-exempt(1)          17,064        296.5     6.95%        18,499        307.9      6.66%
Loans(2)(3)                              309,101      5,862.3     7.52%       267,633      6,142.2      9.08%
                                        --------     --------                --------     --------
Total earning assets/total
interest income                          369,911     $6,646.3     7.13%       322,591     $6,914.9      8.49%
                                                     --------                             --------
Cash & due from banks                     13,942                               13,375
All other assets                          18,125                               15,172
Allowance for loan loss                  (5,483)                              (5,512)
                                        --------                             --------
   Total assets                         $396,495                             $345,626
                                        ========                             ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
Savings & NOW accounts                  $148,872     $  557.6     1.50%     $ 120,170     $  768.0      2.56%
Time                                     126,998      1,270.2     4.01%       130,432      1,917.9      5.90%
Short term borrowings                     18,563         94.8     2.02%             0            0
FHLB Advances                              5,569        102.8     7.30%         5,793        107.0      7.31%
                                        --------     --------                --------     --------
Total interest bearing
liabilities/total interest expense       300,002     $2,025.4     2.70%       256,395     $2,792.9      4.37%
                                                     --------                             --------
Non-interest bearing deposits             58,633                               55,564
All other liabilities                      3,509                                3,087
Stockholders' Equity                      34,351                               30,580
                                        --------                             --------
Total liabilities and
   shareholders' equity                 $396,495                             $345,626
                                        ========                             --------
Interest spread                                                   4.43%                                 4.12%
                                                                  =====                                 =====
Net interest income-FTE                             $ 4,620.9                            $ 4,122.0
                                                    =========                            =========
Net interest margin                                               4.94%                                 5.02%
                                                                  =====                                 =====


    (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 Accounting Standards No. 115.
    (2)  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 $199,000 in 2002 and $207,000 in 2001.`

11

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`----------------Year to Date Averages-----------------
                                                     2002                                 2001
                                                     ----                                 ----
                                        Average                               Average
                                        Balance       Interest     Rate       Balance     Interest      Rate
                                        -------       --------     ----       -------  -- --------      ----
Assets:
Short term investments                 $  9,424      $   128.4    2.71%      $ 19,909    $   468.9     4.69%
Securities:  Taxable                     38,392          918.3    4.78%        17,611        539.8     6.13%
             Tax-exempt(1)               17,459          605.9    6.94%        18,658        627.5     6.73%
Loans(2)(3)                             301,737       11,518.3    7.61%       264,334     12,379.2     9.34%
                                       --------      ---------               --------    ---------
Total earning assets/total
interest income                         367,012      $13,170.9    7.16%       320,512    $14,015.4     8.72%
                                                     ---------                           ---------
Cash & due from banks                    14,163                                12,961
All other assets                         17,260                                15,255
Allowance for loan loss                 (5,546)                               (5,400)
                                        -------                              --------
   Total assets                        $392,889                              $343,328
                                       ========                              ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
Savings & NOW accounts                 $151,132      $ 1,130.2    1.51%      $123,360    $ 1,664.5     2.72%
Time                                    129,408        2,713.2    4.23%       126,859      3,818.9     6.07%
Purchased funds                          10,979          110.4    2.00%             0            0
FHLB Notes                                5,587          204.8    7.29%         5,810        213.0     7.29%
                                       --------      ---------               --------    ---------
Total interest bearing
liabilities/total interest expense      297,106      $ 4,158.6    2.82%       256,029    $ 5,696.4     4.48%
                                                     ---------                           ---------
Non-interest bearing deposits            58,606                                53,744
All other liabilities                     3,456                                 3,372
Stockholders' Equity                     33,721                                30,183
                                       --------                              --------
Total liabilities and
  shareholders' equity                 $392,889                              $343,328
                                       ========                              ========
Interest spread                                                   4.34%                                4.24%
                                                                  =====                                =====
Net interest income-FTE                               $9,012.3                            $8,319.0
                                                      ========                            ========
Net interest margin                                               4.87%                                5.14%
                                                                  =====                                =====

    (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 Accounting 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 $409,000 in 2002 and $394,000 in 2001.`

12

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Interest Earning Assets/Interest Income
On a tax equivalent basis,
interest income decreased approximately $269,000 in the second quarter of 2002
compared to that of 2001. The decrease was the result of a 136 basis point
reduction in the yield on earning assets. This negative trend was partially
offset by a $47,000,000 (15%) growth in average balances on earning assets.

Loan interest decreased
approximately $280,000 due to a 156 basis point decrease in interest rates
although average balances increased $41,000,000 (15%). The decline in loans
rates was the result of overall lower interest rates this year compared to last.
In particular, the prime interest rate was 4.75% throughout the second quarter
of this year compared to an average rate of 7.34% in the second quarter of 2001.
In the second quarter, tax equivalent income on short and long term investments
increased approximately $11,000. The increase can be attributed to a $5,900,000
increase in average balances as well as the mix of investments. Last year the
average balance in short term investments, which carry a lower yield, was more
than $19,000,000 while the average balance was $7,000,000 in 2002. Partially
offsetting these favorable trends was a 46 basis point decline in yields.

For the first half of the
year, tax equivalent interest income decreased approximately $845,000. Loan
interest income decreased approximately $861,000. The interest rate earned on
loans decreased 173 basis points while average balances increased $37,000,000
(14%). Loan growth was concentrated in the commercial portfolio where balances
increased $36,000,000 (18%) on average. Consumer loans had a slight decrease
while mortgage loans increased $1,300,000 (5%). In addition to the growth in
mortgage loans retained in the portfolio, the Bank sold approximately $9,700,000
residential mortgage loans, compared to $6,500,000 in the first half of 2001.
The Banks resources in the loan department are primarily deployed making
commercial loans. For the first six months of the year, income on short and long
term investments increased $16,000 from that earned in the prior year due to a
$9,100,000 increase in average balances and a change in mix as described above,
although the yields earned decreased by 76 basis points.

Interest Bearing Liabilities/Interest Expense
In the second quarter of
2002, interest expense decreased $768,000 due to a decrease in the interest rate
paid of 167 basis points although average balances increased $43,600,000 (17%).
The make-up of interest bearing funds has seen some noticeable change this year.
Savings and NOW interest expense decreased approximately $210,000. The decrease
was due to the interest rate declining 106 basis points as the average balance
increased $28,700,000 (24%). Interest on time deposits decreased $648,000 in the
second quarter of 2002 over the prior year. The decrease was due to both a
decline in average balances of approximately $3,400,000 (3%) and a decrease of
189 basis points in rates paid. In the second quarter of 2002 the Company had
average short term borrowings of $18,600,000 while there were no short term
borrowings in the second quarter of 2001.

13

---

The interest rate averaged 2.02% for
the quarter on these borrowings. Management has increased reliance on
third-party funding sources as they have provided a favorable rate over other
funding strategies. Included in the average balance for short term borrowings
were Fed Funds Purchased, Federal Home Loan Bank of Indianapolis (FHLBI) short
term borrowings, and repurchase agreements. Included in FHLB advances are two
loans, entered into in 2000, from the 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.

In the first half of the
year, interest expense decreased $1,500,000 from that of the previous year.
Contributing to this decrease was a 166 basis point decrease in rates while
average balances of interest bearing liabilities increased $41,100,000 (16%).
Savings and NOW interest expense decreased approximately $534,000 because the
interest rate decreased 121 basis points although average balances increased
$27,800,000 (23%). Interest on time deposits decreased approximately $1,100,000
because the rate decreased 184 basis points although the average balance
increased $2,500,000 (2%). In the first half of 2002, the Bank incurred interest
expense of $110,000 to borrow short term money. There were no short term
borrowings in 2001. The short term borrowings were necessary as loan growth
outpaced deposit growth in 2002. The FHLBI advances are discussed above.

Liquidity
Liquidity is monitored by
the Banks Asset/Liability Management Committee (ALCO) which meets at least
monthly. 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), representing that the
Banks contingency for unexpected funding outflows is being primarily met
by short-term investments and unencumbered treasury and agency securities.
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 June 30, 2002, the Company had a $9,000,000
deficit of core basic liquidity. Included in the calculation is a contingency
reserve covering $21,000,000 (10%) of DDA, NOW and savings accounts if they
unexpectedly left the Bank in a 30 day period. As there has already been a 1%
decrease in these balances in the first half of the year, it is not anticipated
that this will occur. Historically the Bank has experienced strong deposit
growth in the second half of the year. To bridge the gap in deposit growth, the
Company issued $4,000,000 in brokered certificates through a dealer in the
second quarter. Included in the issuance were $2,000,000 in three month
certificates maturing in September and $2,000,000 in six month certificates
maturing in December. Management is committed to rectifying the liquidity
deficiency and will take further action if necessary.

14

---

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, which are generally considered to be more volatile and
sensitive to changes in rates, consists principally of local depositors known to
the Bank. As of June 30, 2002, the Bank had Large Certificates totaling
approximately $37,600,000 compared to $44,600,000 at December 31, 2001.

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 line of credit of approximately $22,000,000 available
at the FHLBI. As of June 30, 2002 approximately $14,000,000 of the line had been
used for overnight borrowings and for long term advances, previously described.
The Bank has pledged certain mortgage loans as collateral for this borrowing.
The Bank also has a repurchase agreement in place where it can borrow from a
broker who will lend money against certain securities of the Bank. Finally,
management may look to available for sale securities in the
investment portfolio to meet additional liquidity needs.

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 standard GAP report which lays out the repricing schedule
for various asset and liability categories and an interest rate simulation
report. The Bank has no market risk sensitive instruments held for trading
purposes. The Bank has not entered into futures, forwards, swaps, or options to
manage interest rate risk. However, the Bank is party to financial instruments
with off-balance sheet risk in the normal course of business to meet the
financing needs of its customers including commitments to extend credit and
letters of credit. A commitment or letter of credit is not recorded as an asset
until the instrument is exercised.

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.

15

---

`Interest Rate Sensitivity
-------------------------
(dollars in thousands)                              0-3         4-12           1-5           5+
                                                 Months       Months         Years        Years         Total
                                                 ------       ------         -----        -----         -----
Assets:
Loans...................................        $58,093      $82,852      $162,857       $8,720      $312,522
Securities..............................          2,619        3,939        36,794        8,404        51,756
   Short term investments...............             49                                                    49
                                                -------      -------      --------      -------      --------
      Total rate sensitive assets.......        $60,761      $86,791      $199,651      $17,124      $364,327

Liabilities & Stockholders' Equity:
   Savings & NOW........................        $65,244                                 $82,464      $147,708
   Time.................................         29,605       47,610        51,457        1,321       129,993
   Other borrowings.....................         11,400          242         4,175        1,152        16,969
                                                -------      -------      --------      -------      --------
      Total rate sensitive liabilities..       $106,249      $47,852       $55,632      $84,937      $294,670


Rate sensitivity gap and ratios:
   Gap for period.......................      ($45,488)      $38,939      $144,019    $(67,813)
   Cumulative gap.......................       (45,488)      (6,549)       137,470       69,657

Cumulative rate sensitive ratio.........            .57          .96          1.66         1.24
Dec. 31, 2001 rate sensitive ratio......           1.01          .87          1.63         1.24`

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 4%
liability sensitive as of June 30, 2002. However, gap analysis is limited and
may not provide an accurate indication of the impact of general interest rate
movements on the net interest margin since repricing of various categories of
assets and liabilities is subject to the Banks needs, competitive
pressures, and the needs of the Banks customers. In addition, various
assets and liabilities indicated as repricing within the same period may in fact
reprice at different times within the period and at different rate indices.
Additionally, simulation modeling, which measures the impact of upward and
downward movements of interest rates on interest margin, provides meaningful
insight into strategies management can take to help mitigate the negative impact
of interest rates moving upward.

`Provision for Loan Losses               Second Quarter                       Year-to-Date
-------------------------               2002      2000                      2002      2001
(in thousands)                          ----      ----                      ----      ----

         Total                             0      $300                         0      $600
                                           =      ====                         =      ====`

16

---

The Company did not provide
a loan loss provision in the second quarter of 2002 having provided $300,000 in
the same period last year. Net charge offs for the second quarter of 2002 were
$326,000 compared to $65,000 in the same period in 2001. Included in 2002 charge
offs was a $254,000 charge off to a commercial customer where the collateral was
insufficient to cover the debt. Collection is being pursued through the courts.

Year to date the provision
is also zero compared to $600,000 last year. Although loans increased 9% in the
first half of the year, management determined the allowance to be sufficient
based on the level of risk in the portfolio. At June 30, 2002, the allowance for
loan loss as a percent of loans was 1.65%, compared to 2.11% a year earlier and
1.97% at December 31, 2001. For the first six months of 2002, the Bank had net
charge offs of $498,000, compared to $101,000 in the first half of 2001. The
increase in net charge offs is largely due to the loan mentioned above and a
$100,000 charge off related to a collateral deficiency in the property in other
real estate which occurred in the first quarter. Non-accrual, past due 90 days,
and renegotiated loans were .51% and .63% of total loans outstanding at June 30,
2002 and 2001, respectively, and 1.04% of total loans at December 31, 2001.

Impaired loans, as defined
by Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by
Creditors for Impairment of a Loan, totaled approximately $8,200,000 at June
30, 2002, and included non-accrual, and past due 90 days other than homogenous
residential and consumer loans, and $6,900,000 of commercial loans separately
identified as impaired. Impaired loans totaled $8,700,000 at December 31, 2001.
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 decline in impaired loans is primarily due
to the foreclosure of a previously impaired loan and its transfer to other real
estate.

Of the loans currently
impaired, one of the loans, with a balance of $2,100,000, is current and making
regular payments; however, the cash generated solely by the business is
presently not adequate to cover debt service. Another loan, for $1,100,000, was
made to purchase medical buildings in Lansing. The buildings are not fully
leased and cash flow from the leases 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. Nonperforming loans are reviewed
regularly for collectability. Any uncollectable balances are promptly charged
off.

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. Management continues to refine its techniques in
this analysis. Impaired loans had specific reserves calculated in accordance
with SFAS No. 114 of $1,200,000 at June 30, 2002, compared to specific reserves
of $2,800,000 at June 30, 2001.

17

---

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 $1,113,000 in
other real estate at June 30, 2002 consists of property being developed for
condominiums. There were twenty-eight condo units in various stages of
construction when the borrower defaulted. Sale of the property is being pursued.

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. Loans categorized as ninety days past due and still accruing are well
secured and in the process of collection. The following table describes
nonperforming assets at June 30, 2002 compared to December 31, 2001.

`Nonperforming Assets
--------------------                                                June 30,2002       December 31, 2001
(in thousands)                                                      ------------       -----------------
Non-accrual loans                                                         $  894                 $2,636
90 days or more past due and still accruing                                  706                    361
                                                                            ----                    ---
         Total nonperforming loans                                         1,600                  2,997
Other real estate                                                          1,113                      0
                                                                           -----                      -
         Total nonperforming assets                                       $2,713                 $2,997

Nonperforming loans as a percent of total loans                             .51%                  1.04%
Loan loss reserve as a percent of nonperforming loans                       323%                   189%`

The following table sets
forth loan balances and summarizes the changes in the allowance for loan losses
for the first six months of 2002 and 2001.

`Year to date        Year to date
                                                                      June 30, 2002        June 30, 2001
Loans:   (dollars in thousands)                                       -------------        -------------
   Average daily balance of loans for the year to date                    301,737              264,334
   Amount  of  loans,  net of  unearned  income,  outstanding  at
end of the quarter                                                        312,522              269,992
Allowance for loan losses:
   Balance at beginning of year                                             5,668                5,193
   Loans charged off:
      Real estate                                                               0                    0
      Commercial                                                              493                   57
      Consumer                                                                 42                  112
                                                                               --                  ---
         Total charge-offs                                                    535                  169
   Recoveries of loans previously charged off:
      Real estate                                                               0                    0
      Commercial                                                                8                   46
      Consumer                                                                 29                   22
                                                                               --                   --
         Total recoveries                                                      37                   68

Net loans charged off                                                         498                  101
Additions to allowance charged to operations                                    0                  600
                                                                              ---                  ---
         Balance at end of quarter                                         $5,170               $5,692

Ratios:
    Net loans charged off (annualized) to average
    loans outstanding                                                        .33%                 .08%
   Allowance for loan losses to loans outstanding                           1.65%                2.11%`

18

---

`Non-interest income                     Second Quarter                       Year-to-Date
-------------------                     2002      2000                      2002      2001
(in thousands)                          ----      ----                      ----      ----

Total                                   $852      $803                     $1,647     $1,528
                                        ====      ====                     ======     ======`

Non-interest income, which
includes service charges on deposit accounts, loan fees, trust fees, other
operating income, and gain (loss) on sale of assets, increased by $49,000 (6%)
in the second quarter of 2002 compared to the same period in the previous year.
Service charge income increased approximately $69,000 (10%) primarily the result
of growth in the Bank. Trust fees increased $34,000 (115%) as there was a
correction in the second quarter of last year resulting in a decrease in fees
and there were two lump sum payments in 2002 boosting income. Gain on the sale
of loans decreased $13,000 (22%) due to decreased volume of residential mortgage
sale. In the second quarter of 2002 the Company sold $2,700,000 in residential
mortgage loans compared to $3,900,000 in the same period the previous year.
Other income decreased $44,000. Last years other income was higher due to
a $42,000 gain on the sale of other real estate.

For the year, non-interest
income increased $119,000 (8%). Contributing to the increase was a $112,000 (9%)
increase in service charge income primarily the result of increased business.
Gains on the sale of loans increased approximately $50,000 (48%) due to
increased volume for the year to date, $9,700,000 in the current year compared
to $6,500,000 in the previous. Trust fees increased $19,000 (20%) due to the
lump sum payments mentioned above. Other income decreased $68,000 because last
years income included $58,000 in non-recurring gains due to the sale of
property while this year the Company has lost $12,000 on the sale of repossessed
vehicles and equipment.

`Non-interest Expense                    Second Quarter                       Year-to-Date
--------------------                    2002      2000                      2002      2001
(in thousands)                          ----      ----                      ----      ----

Total                                  $3,047    $2,759                   $5,847     $5,429
                                       ======    ======                   ======     ======`

Non-interest expense
increased $288,000 (10%) in the second quarter of 2002 compared to the same
period last year. There were increases in salaries and benefits expense of
$225,000 (15%) principally due to a $78,000 (8%) increase in salary expense and
a $115,000 (54%) increase in the profit share accrual.

19

---

The salary increase is
the result of normal annual wage increases and increased staffing for the new
branch and the trust department. The increase in the profit share accrual is the
result of the higher salary base and an anticipated higher payout based on
improved Return on Assets (ROA). Occupancy expense increased $44,000 (24%)
primarily due to costs associated with the new branch which opened in April
2002. Printing and supplies increased $20,000 (31%) again due primarily to costs
related to the new branch. Partly offsetting these increases was a $27,000 (15%)
decrease in fees for services. Fees were high in 2001 due to hiring a consultant
for strategic planning and staffing the trust department with contract help.

For the first half of the
year, non-interest expense increased $418,000 (8%) compared to the prior year.
There was a $294,000 (10%) increase in salaries and benefits, made up of a
$177,000 (9%) increase in salary expense and a $149,000 (34%) increase in profit
sharing accruals for the reasons previously mentioned. Occupancy expense was
$34,000 (8%) higher due primarily to the new branch in Genoa Township which
opened this year. Printing and supplies increased $34,000 (27%) also due to
supplying the new branch. Advertising increased $43,000 (39%) due to promotional
efforts for the new branch and deposit products. Other non-interest
expense increased $79,000 (8%) primarily due to increases in directors
fees as a result of the payout of a profit share payment approved by the
shareholders in April and increased legal fees related to collecting loans and
corporate matters. Partly offsetting these increases was a $67,000 (19%)
decrease in fees as mentioned above.

`Income Tax Expense                      Second Quarter                       Year-to-Date
------------------                      2002      2000                      2002      2001
(in thousands)                          ----      ----                      ----      ----

       Total                            $709      $512                    $1,393     $1,043
                                        ====      ====                    ======     ======`

Fluctuations in income
taxes resulted primarily from changes in the level of profitability and in
variations in the amount of tax-exempt income.

`Capital (in thousands)                  June 30, 2002                     December 31, 2002
-------                                 -------------                     -----------------

Stockholders' Equity*                      $34,755                              $32,377
Ratio of Equity to Total Assets              8.69%                                8.24%

*Amounts exclude securities  valuation  adjustments  recorded  under  Statement of Financial
Accounting Standards  No. 115 amounting to $302,000 at June 30, 2002 and $27,000 at December
31, 2001.`

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 $2,378,000 (8%) during the first half
of the year. This increase was principally the result of net income earned by
the company reduced by dividends paid of $906,000.

20

---

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, 2002 was
9.45%, and total risk-based capital was 10.71%. At June 30, 2001 these ratios
were 9.77% and 11.02% 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 8.25% at June 30,
2002 and 8.26% in 2001. 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.

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 opened a new
branch on the east side of Howell in April 2002 and purchased a building for
back office functions in May 2002. The Company also owns a building site in
Hamburg valued at $330,000. Construction has begun on the Hamburg branch with an
estimated completion date in the second quarter of 2003. Refurbishing will begin
on the building acquired for back office space in the third quarter with
occupancy anticipated in the fourth quarter of 2002. All building projects are
expected to be financed from internally generated funds.

Critical Accounting Policies
The Company maintains
critical accounting policies for the allowance for loan losses and the
classification and evaluation of securities. Refer to notes 1c and 1e of the
Notes to Consolidated Financial Statements for additional information
incorporated by reference to the Annual Report to Shareholders for the year
ended December 31, 2001.

Accounting Standards
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 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 was effective for fiscal years beginning after December 15, 2001. Adoption
of these Statements did not have an impact on the Banks results of
operations.

21

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On October 3, 2001,  the FASB  issued SFAS 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 Accounting Principles
Board (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 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 was effective  for fiscal years  beginning  after  December 15, 2001 and interim  periods  within
those fiscal years.  Adoption of this Statement did not have an impact on the Bank's results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections.  Statement No. 145 rescinds FASB Statement No. 4, Reporting Gains
and Losses from Extinguishment of Debt, and FASB Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements.  This Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets
of Motor Carriers and amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between
the required accounting for sale-leaseback transactions and for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions.  This Statement also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or describe their applicability under
changed conditions.

Statement No. 145 is
effective for fiscal years beginning after May 15, 2002, with early adoption of
the provisions related to the rescission of Statement 4 encouraged. Upon
adoption, enterprises must reclassify prior period items that do not meet the
extraordinary item classification criteria in APB 30.Adoption of this Statement is not expected to have a significant impact on
the Banks results of operations.

In July 2002, the FASB
issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. Statement No. 146 nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). The principal difference between Statement No. 146
and Issue 94-3 relates to its requirements for recognition of a liability for a
cost associated with an exit or disposal activity. This Statement requires that
a liability for a cost associated with an exit or disposal activity be
recognized and measured initially at fair value only when the liability is
incurred. Under Issue 94-3 the liability was recognized at the date of an
entitys commitment to an exit plan.

22

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Statement No. 146 is
effective for exit or disposal activities (including restructuring) that are
initiated after December 31, 2002, with early adoption encouraged. Adoption of
this Statement is not expected to have a significant impact on the Banks
results of operations.

On March 13, 2002, the FASB
Derivatives Implementation Group (DIG) approved for issuance DIG issue C13,
When a Loan Commitment is Included in the Scope of SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities. DIG Issue C13 requires
that loan commitments that relate to the origination or acquisition of mortgage
loans that will be held for resale under SFAS No. 65, Accounting for Certain
Mortgage BankingActivities, be accounted for as derivatives under SFAS No.
133; loan commitments that relate to the origination or acquisition of mortgage
loans that will be held for investment will continue to be accounted for under
Statement No. 65, and commitments that related to the origination of
non-mortgage loans will continue to be accounted for under SFAS No. 91,
Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases.

DIG Issue C13 is effective
the first day of the first fiscal quarter beginning after April 10, 2002. If an
entity had not accounted for a contract as a derivative in its entirety but is
required to do so, the entity shall account for the effects of initially
complying with the implementation guidance in this Issue prospectively for all
existing contracts as of the effective date of this Issue and for all future
transactions. Adoption of this Statement is not expected to have a significant
impact on the Bank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, 2001 other
than previously discussed.

PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
The registrants
annual meeting of stockholders was held on April 17, 2002. The stockholders
voted on the election of directors and the FNBH Bancorp, Inc. Amended and
Restated Compensation Plan for Nonemployee Directors.

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

23

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Term expiring in 2005:

| | R.Michael Yost
Dona Scott Laskey 
Athena Bacalis    
James R. McAuliffe | Shares voted for
    838,741            
    813,490            
    841,086            
    840,700 | Shares voted against
            2,839   
          28,090      
                  494  
                  880 | Shares Abstained
76,536
76,536
76,536
76,536 | 
| | ----------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | 

Additionally, the following directors continue in office.

Term expiring in 2003:

| | Donald K. Burkel
         Harry E. Griffith
         Gary R. Boss
| | -----------------------------------------------------------------

Term expiring in 2004:

| | W. Rickard Scofield
         Randolph E. Rudisill
         Barbara Draper Martin
| | --------------------------------------------------------------------------------

Votes were cast as follows for  Adoption of the FNBH  Bancorp,  Inc.  Amended and  Restated  Compensation  Plan for
Nonemployee Directors:

| | For
Against
Abstain | 723,284
183,397
  11,435 | 
| | ------------------- | ------------------------ | 

Item 6.  Exhibits and Reports on Form 8-K

(a)  The following exhibits (listed by number corresponding to the Exhibit Table as
Item 601 in Regulation S-K) are filed with this report:

| | 99.1     Certificate of the Chief Executive Officer of FNBH Bancorp, Inc. pursuant to Section 906 of the
     Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | 99.2     Certificate of the Chief Financial Officer of FNBH Bancorp, Inc. pursuant to Section 906 of the
     Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

(b)  Reports on Form 8-K:

| | There were no reports on Form 8-K filed during the second quarter of 2002.
| | --------------------------------------------------------------------------

24

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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, 2002 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 13, 2002

25

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EXHIBIT 99.1
                                                Certificate of the
                                            Chief Executive Officer of
                                                FNBH BANCORP, INC.

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):

I, Barbara D. Martin, Chief Executive Officer of FNBH Bancorp, Inc., certify, to the best of my
knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:

(1)        The quarterly report on Form 10-Q for the quarterly period ended June 30, 2002, which this
statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and;

(2)        The information contained in this quarterly report on Form 10-Q for the quarterly period ended
June 30, 2002, fairly presents, in all material respects, the financial condition and results of operations of
FNBH Bancorp, Inc.

|                       | FNBH BANCORP, INC.
|---------------------- | ------------------
|Date:  August 13, 2002 | By:               
|                       | Its:              



---

EXHIBIT 99.2
                                                Certificate of the
                                            Chief FINANCIAL Officer of
                                                FNBH BANCORP, INC.

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):

I, Barbara J. Nelson, Chief Financial Officer of FNBH Bancorp, Inc., certify, to the best of my
knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:

(1)        The quarterly report on Form 10-Q for the quarterly period ended June 30, 2002, which this
statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and;

(2)        The information contained in this quarterly report on Form 10-Q for the quarterly period ended
June 30, 2002, fairly presents, in all material respects, the financial condition and results of operations of
FNBH Bancorp, Inc.

|                       | FNBH BANCORP, INC.
|---------------------- | ------------------
|Date:  August 13, 2002 | By:               
|                       | Its: