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

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

                For the quarterly period ended September 30, 1999
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to _______

                         Commission file number 0-25752

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

                   MICHIGAN                         38-2869722
      (State or other jurisdiction of           (I.R.S. Employer
       incorporation or organization)          Identification No.)

                  101 East Grand River, Howell, Michigan 48843
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code: (517)546-3150

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes_X_ No___

The number of shares outstanding of each of the issuers classes of common stock,
as of the latest  practicable  date:  1,565,203  shares of the Company's  Common
Stock (no par value) were outstanding as of September 30, 1999.
<PAGE>
                                      INDEX


                                                                            Page
                                                                          Number
Part I. Financial Information (unaudited):

     Item 1.
     Interim Financial Statements:
     Consolidated Balance Sheet as of Sept. 30, 1999 and Dec. 31, 1998.........4
     Consolidated Statements of Income, three months ended
     Sept. 30, 1999 and 1998, and nine months ended  Sept. 30, 1999 and 1998...5
     Consolidated Statement of Shareholders' Equity and Comprehensive
     Income for nine months ended September 30, 1999...........................6
     Consolidated Statements of Cash Flows for nine months ended
     September 30, 1999 and 1998...............................................7
     Notes to Interim Consolidated Financial Statements........................8

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

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


Part II. Other Information

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

     Signatures...............................................................21

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION

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











                                       3
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
<TABLE>

Consolidated Balance Sheets                                                      September 30       December 31
                                                                                         1999              1998
Assets                                                                            (unaudited)       (unaudited)
<S>                                                                             <C>                <C>
Cash and due from banks                                                           $10,836,485      $ 12,304,296
Short term investments                                                              3,295,885        18,934,366
                                                                                    ---------        ----------
   Total cash and cash equivalents                                                 14,132,370        31,238,662

Investment securities held to maturity, net (fair value of $17,643,000
   at September 30, 1999 and $19,066,000 at Dec. 31, 1998)                         17,578,384        18,278,233
Investment securities available for sale, at fair value                            31,621,656        19,765,936
Mortgage-backed securities held to maturity, net (fair value of
   $454,000 at September 30, 1999 and $602,000 at Dec. 31, 1998)                      458,828           601,940
                                                                                      -------           -------
      Total investment securities                                                  49,658,868        38,646,109
Loans:
   Commercial                                                                     159,609,563       137,634,020
   Consumer                                                                        24,477,491        23,064,800
   Real estate mortgages                                                           22,751,818        24,946,777
                                                                                   ----------        ----------
      Total loans                                                                 206,838,872       185,645,597
   Less unearned income                                                               756,419           627,169
   Less allowance for loan losses                                                   4,336,701         3,958,008
                                                                                    ---------         ---------
      Net loans                                                                   201,745,752       181,060,420

Premises and equipment - net                                                        8,884,118         7,289,461
Land available for sale - net                                                       2,970,290         3,128,914
Accrued interest and other assets                                                   3,775,609         3,325,318
                                                                                    ---------      ------------
      Total assets                                                               $281,167,007      $264,688,884
                                                                                 ============      ============

Liabilities and Stockholders' Equity
Liabilities
Deposits:
   Non-interest bearing demand                                                   $ 48,494,728      $ 47,401,813
   NOW                                                                             28,324,181        29,087,082
   Savings and money market                                                        84,484,869        75,129,137
   Time                                                                            91,835,334        87,938,732
                                                                                   ----------        ----------
      Total deposits                                                              253,139,112       239,556,764

Short term borrowing                                                                1,400,000                 0
Accrued interest, taxes, and other liabilities                                      1,490,438         1,635,587
                                                                                    ---------         ---------
      Total liabilities                                                           256,029,550       241,192,351

Shareholders' Equity
Common stock, no par value.  Authorized 4,200,000 shares; 1,565,203
shares issued and outstanding at September 30, 1999 and 1,562,768
shares issued and outstanding at December 31, 1998                                  4,919,280         4,821,775
Retained earnings                                                                  20,531,991        18,728,787
Unearned management retention plan                                                  (151,608)          (66,220)
Accumulated other comprehensive income (loss), net                                  (162,206)            12,191
                                                                                    ---------            ------
      Total stockholders' equity                                                   25,137,457        23,496,533
      Total liabilities and stockholders' equity                                 $281,167,007      $264,688,884
                                                                                 ============      ============
</TABLE>
             See notes to interim consolidated financial statements

                                       4
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
<TABLE>
Consolidated Statements of Income

Unaudited                                                       Three Months Ended Sept.        Nine Months Ended Sept.
                                                                 1999           1998             1999            1998
                                                                 ----           ----             ----            ----
<S>                                                          <C>             <C>            <C>             <C>
Interest income:
   Interest and fees on loans                                $4,921,956      $4,538,914     $13,692,001      $12,807,746
   Interest and dividends on investment securities:
      U.S. Treasury and agency securities                       387,874         261,502       1,073,894        1,067,402
      Obligations of state and political subdivisions           211,479         197,138         623,979          583,267
      Other securities                                           15,890          13,210          45,661           30,032
   Interest on short term investments                            93,858         135,410         414,249          244,451
                                                                 ------         -------         -------          -------
      Total interest income                                   5,631,057       5,146,174      15,849,784       14,732,898
                                                              ---------       ---------      ----------       ----------

Interest expense:
   Interest on deposits                                       1,964,996       1,881,989       5,853,169        5,434,726
   Other interest expense                                         1,128           3,890           2,032           10,712
                                                                  -----           -----           -----           ------
      Total interest expense                                  1,966,124       1,885,879       5,855,201        5,445,438
                                                              ---------       ---------       ---------        ---------

      Net interest income                                     3,664,933       3,260,295       9,994,583        9,287,460

Provision for loan losses                                       210,000         170,000         630,000          470,000
                                                                -------         -------         -------          -------
      Net interest income after provision for loan losses     3,454,933       3,090,295       9,364,583        8,817,460
                                                              ---------       ---------       ---------        ---------

Non-interest income:
   Service charges                                              491,523         416,180       1,286,215        1,188,897
   Gain on sale of loans                                         26,479          62,909          36,541          202,383
   Trust fees                                                    35,088          21,663         103,042           52,198
   Other                                                          2,652           3,490          29,295            9,860
                                                                  -----           -----          ------            -----
      Total non-interest income                                 555,742         504,242       1,455,093        1,453,338
                                                                -------         -------       ---------        ---------

Non-interest expense:
   Salaries and employee benefits                             1,226,947       1,066,661       3,548,369        3,185,178
   Net occupancy                                                172,331         170,348         519,700          450,556
   Equipment expense                                            200,236         209,082         501,010          471,080
   Professional and service fees                                127,969         113,487         387,413          238,300
   Printing and supplies                                         92,123          65,538         235,798          172,757
   Michigan Single Business Tax                                  22,100          57,300         121,000          152,800
   Provision for real estate losses                             160,000               0         240,000                0
   Other                                                        447,568         357,778       1,394,536        1,134,601
                                                                -------         -------       ---------        ---------
      Total non-interest expense                              2,449,274       2,040,194       6,947,826        5,805,272
                                                              ---------       ---------       ---------        ---------

Income before federal income taxes                            1,561,401       1,554,343       3,871,850        4,465,526

Federal income taxes                                            469,300         494,000       1,130,200        1,352,000
                                                                -------         -------       ---------        ---------

      Net income                                             $1,092,101     $ 1,060,343      $2,741,650       $3,113,526
                                                             ==========     ===========      ==========       ==========

Per share statistics*
   Basic EPS                                                       $.70            $.68           $1.74            $1.98
   Diluted EPS                                                     $.70            $.68           $1.74            $1.98
   Cash Dividends                                                  $.20            $.20           $ .56            $ .56

*Based on 1,563,589 average shares outstanding Sept. 30,
1999 and 1,573,215 average shares outstanding Sept. 30, 1998.
</TABLE>
See notes to interim consolidated financial statements

                                       5
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
     Consolidated Statement of Stockholders' Equity and Comprehensive Income
             For the Three Months Ended September 30, 1999 and 1998
                                   (Unaudited)
<TABLE>
                                                                                          Unearned        Accumulated
                                                                                         Management          Other
                                                          Common         Retained        Retention       Comprehensive
                                                          Stock          Earnings           Plan             Income        Total
                                                          -----          --------           ----             ------        -----
<S>                                                     <C>              <C>             <C>              <C>            <C>
Balances at June 30, 1998                               $5,250,000       17,953,384                         10,200       23,213,584
Net income                                                                1,060,343                                       1,060,343
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                                                    16,740           16,740
                                                                                                                             ------
Total comprehensive income                                                                                                1,077,083
Shares purchased @ $35 per share                          (525,000)                                                        (525,000)
Shares issued for management retention plan                 82,775                       (82,775)
Shares issued for directors' compensation                    7,805                                                            7,805
Amortization of management retention plan                                                 16,555                             16,555
Cash dividends (20(cent)per share)                                        (312,473)                                        (312,473)
                                                                         ---------       -------           -------        ---------

Balances at September 30, 1998                          $4,815,580      18,701,254       (66,220)           26,940       23,477,554
                                                        ==========      ==========       =======           =======       ==========
</TABLE>
See notes to interim consolidated financial statements
<TABLE>

                                                                                          Unearned         Accumulated
                                                                                         Management           Other
                                                          Common         Retained        Retention        Comprehensive
                                                          Stock          Earnings           Plan          Income (Loss)     Total
                                                          -----          --------           ----          ------------      -----
<S>                                                     <C>             <C>              <C>              <C>            <C>
Balances at June 30, 1999                               $4,821,880      19,753,231       (66,220)         (169,962)      24,338,929
Net income                                                               1,092,101                                        1,092,101
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                                                     7,756            7,756
                                                                                                                              -----
Total comprehensive income                                                                                                1,099,857
Shares issued  for management retention plan                97,400                       (97,400)
Amortization of management retention plan                                                 12,012                             12,012
Cash dividends (20(cent)per share)                                        (313,043)                                        (313,043)
                                                        ----------       ---------       -------          --------        ---------

Balances at September 30, 1999                          $4,919,280      20,532,289      (151,608)         (162,206)      25,137,755
                                                        ==========      ==========      ========          ========       ==========
</TABLE>
See notes to interim consolidated financial statements

                                       6
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY
     Consolidated Statement of Stockholders' Equity and Comprehensive Income
              For the Nine Months Ended September 30, 1999 and 1998
                                   (Unaudited)
<TABLE>
                                                                                          Unearned         Accumulated
                                                                                         Management           Other
                                                          Common         Retained        Retention        Comprehensive
                                                          Stock          Earnings           Plan              Income        Total
                                                          -----          --------           ----              ------
<S>                                                     <C>             <C>              <C>              <C>            <C>
Balances at December 31, 1997                           $5,250,000      16,467,201                        14,824         21,732,025
Net income                                                               3,113,526                                        3,113,526
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                                                  12,116             12,116
                                                                                                                             ------
Total comprehensive income                                                                                                3,125,642
Shares purchased @ $35 per share                          (525,000)                                                        (525,000)
Shares issued for management retention plan                 82,775                       (82,775)
Shares issued for directors' compensation                    7,805                                                            7,805
Amortization of management retention plan                                                 16,555                             16,555
Cash dividends (56(cent)per share)                                        (879,473)                                        (879,473)
                                                          --------        --------        ------          ------            -------
Balances at September 30, 1998                          $4,815,580      18,701,254       (66,220)         26,940         23,477,554
                                                        ==========      ==========       =======          ======         ==========
</TABLE>
See notes to interim consolidated financial statements
<TABLE>

                                                                                          Unearned         Accumulated
                                                                                         Management           Other
                                                          Common         Retained        Retention        Comprehensive
                                                          Stock          Earnings           Plan              Income        Total
                                                          -----          --------           ----              ------        -----
<S>                                                     <C>             <C>              <C>              <C>            <C>
Balances at December 31, 1998                           $4,821,775      18,728,787       (66,220)         12,191         23,496,533
Net income                                                               2,741,650                                        2,741,650
Change in unrealized gain on debt securities
   available for sale, net of tax effect                                                                (174,397)          (174,397)
                                                                                                                         ---------
Total comprehensive income                                                                                                2,567,253
Shares issued  for management retention plan               97,400                        (97,400)
Amortization of management retention plan                                                 12,012                             12,012
Shares issued for employee awards                             105                                                               105
Cash dividends (60(cent)per share)                                        (938,446)                                        (938,446)
                                                         --------         --------       -------         -------            -------
Balances at September 30, 1999                         $4,919,280       20,531,991      (151,608)       (162,206)        25,137,457
                                                       ==========       ==========      ========        ========         ==========
</TABLE>
See notes to interim consolidated financial statements

                                       7
<PAGE>
                        FNBH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows
<TABLE>
Unaudited                                                                          Nine months ended Sept. 30
                                                                                    1999                1998
                                                                                    ----                ----
<S>                                                                             <C>                 <C>
Cash flows from operating activities:
   Net income                                                                      $2,741,650        $3,113,526

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

      Provision for loan losses                                                       630,000           470,000
      Depreciation and amortization                                                   519,707           435,618
      Net amortization on investment securities                                        65,407            26,154
      Loss on disposal of equipment                                                    18,360               725
      Gain on sale of loans                                                          (27 ,941)         (202,383)
      Proceeds from sale of loans                                                  12,461,368        14,476,034
      Origination of loans held for sale                                          (12,675,563)      (14,363,746)
      (Increase) decrease in accrued interest income and other assets                 (86,667)          545,772
      Increase (decrease) in accrued interest, taxes, and other liabilities          (246,349)         (516,911)
                                                                                    ---------         ---------
         Net cash provided by operating activities                                  3,399,972         3,984,789
                                                                                    ---------         ---------

Cash flows from investing activities:
   Purchases of available for sale securities                                     (15,164,836)       (8,044,578)
   Proceeds  from maturities and calls of available for sale securities             2,000,000        10,000,000
   Purchases of held to maturity securities                                        (2,481,596)       (2,818,408)
   Proceeds from maturities and calls of held to maturity securities                3,968,000        10,390,000
   Proceeds from held to maturity mortgage-backed securities paydowns                 335,970           374,080
   Net increase in loans                                                          (21,074,980)      (24,883,123)
   Capital expenditures                                                            (2,132,724)       (5,684,793)
                                                                                  -----------       -----------
         Net cash used in investing activities                                    (34,550,166)      (20,666,822)
                                                                                  -----------      ------------

Cash flows from financing activities:
   Net increase in deposits                                                        13,582,348        22,194,329
   Increase in borrowings                                                           1,400,000                 0
   Dividends paid                                                                    (938,446)         (879,473)
   Stock buyback                                                                            0          (525,000)
                                                                                            -        ----------
         Net cash provided by financing activities                                 14,043,902        20,789,856
                                                                                   ----------        ----------

Net decrease in cash and cash equivalents                                         (17,106,292)        4,107,823

Cash and cash equivalents at beginning of year                                     31,238,662        18,738,564
                                                                                   ----------        ----------
Cash and cash equivalents at end of period                                        $14,132,370       $22,846,387
                                                                                  ===========       ===========

Supplemental disclosures:
   Interest paid                                                                   $5,631,952       $ 5,439,063
   Federal income taxes paid                                                        1,192,000         1,430,000
   Loans transferred to other real estate                                                   0           335,713
   Loans charged off                                                                  415,960            99,014
</TABLE>
See notes to interim consolidated financial statements

                                       8
<PAGE>
Notes to Interim Consolidated Financial Statements(unaudited)
The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

1. In the opinion of management of the  Registrant,  the unaudited  consolidated
financial   statements  filed  with  this  Form  10-Q  contain  all  adjustments
(consisting of only normal recurring  accruals)  necessary to present fairly the
consolidated  financial position of the Registrant as of September 30, 1999, and
consolidated  results of  operations  for the three months and nine months ended
September  30,  1999 and 1998 and  consolidated  cash flows for the nine  months
ended September 30, 1999 and 1998.

2. The  results  of  operations  for the  three  months  and nine  months  ended
September 30, 1999 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 1998
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  $1,947,000  at  September  30, 1999 and
$1,544,000 at December 31, 1998.  (See  Management's  Discussion and Analysis of
financial condition and results of operations).

6. Basic EPS is computed by dividing net income by the weighted  average  common
shares outstanding.
<TABLE>
------------------------------------------------------------------------------------------------------------------
                                                      Third Quarter                     Year to Date
------------------------------------------------------------------------------------------------------------------
                                                        1999              1998              1999              1998
------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>               <C>               <C>
Net income                                        $1,092,101        $1,060,343        $2,741,650        $3,113,526
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Shares outstanding (basic)                         1,565,203         1,569,704         1,563,589         1,573,215
------------------------------------------------------------------------------------------------------------------
Diluted shares                                             0                 0                 0                 0
                                                --------------   ---------------   --------------    -------------
------------------------------------------------------------------------------------------------------------------
   Shares outstanding (diluted)                    1,565,203         1,569,704         1,563,589         1,573,215
------------------------------------------------------------------------------------------------------------------
Earnings per share:
------------------------------------------------------------------------------------------------------------------
   Basic EPS                                            $.70              $.68             $1.74             $1.98
------------------------------------------------------------------------------------------------------------------
   Diluted EPS                                          $.70              $.68             $1.74             $1.98
------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       9
<PAGE>
Item 2.
                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations
                          Interim Financial Statements

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

FNBH Bancorp, Inc. (the Company), a Michigan business corporation, is a one bank
holding  company,  which  owns  all of the  outstanding  capital  stock of First
National  Bank in Howell (the Bank) and all the  outstanding  stock of HB Realty
Co., a subsidiary  which owns real estate.  The following is a discussion of the
Company's  results of  operations  for the three  months and nine  months  ended
September  30,  1999 and 1998,  and also  provides  information  relating to the
Company's financial condition, focusing on its liquidity and capital resources.
<TABLE>
Earnings  (in thousands                       Third Quarter                                Year-to-Date
except per share data)                      1999         1998                            1999        1998
                                            ----         ----                            ----        ----
<S>                                        <C>          <C>                             <C>         <C>
Net Income                                 $1,092       $1,060                          $2,742      $3,114

Diluted Net Income per Share                 $.70        $ .68                           $1.74       $1.98
</TABLE>
Net income for the three months ended September 30, 1999 increased approximately
$32,000 (3%) from the amount  reported for the third  quarter of the prior year.
Contributing  to the earnings  growth were  increases in net interest  income of
$405,000  (12%) and  non-interest  income of $52,000  (10%)  while  federal  tax
expense decreased  $25,000.  However,  non-interest  expense increased  $409,000
(20%) and the loan loss provision  increased $40,000,  partially  offsetting the
effects of the  quarterly  increase  in net  interest  income  and  non-interest
income.

Net  income  for the first  nine  months of the year  decreased  $372,000  (12%)
compared to the same  period last year.  Contributing  to this  decrease  was an
increase of $1,143,000 (20%) in non-interest expense and an increase of $160,000
(34%) in the loan loss  provision,  partially  offset by an increase of $707,000
(8%) in net  interest  income and a decrease  in federal  income tax  expense of
$222,000 (16%).

                                       10
<PAGE>
<TABLE>
Net Interest Income                                     Third Quarter                         Year-to-Date
(in thousands)                                        1999          1998                   1999          1998
                                                      ----          ----                   ----          ----
<S>                                                  <C>           <C>                    <C>          <C>
Interest Income                                     $5,631         $5,146                 $15,850      $14,733
Interest Expense                                     1,966          1,886                   5,855        5,445
                                                     -----          -----                   -----         ----
Net Interest Income                                 $3,665         $3,260                 $ 9,995       $9,288
</TABLE>
The Company's 1999 third quarter net interest  income  increased  $405,000 (12%)
when compared with the same period in the prior year,  while net interest income
for the year to date was $708,000  (8%) higher than that of 1998.  The following
table  illustrates  some of the  factors  contributing  to the  increase  in net
interest income for the period and for the year to date.
<TABLE>
                                                 TABLE 1
                                 INTEREST YIELDS AND COSTS (in thousands)
                                       September 30, 1999 and 1998

                                                    ---------------Third Quarter Averages----------------
                                                        1999                                    1998
                                                        ----                                    ----
                                          Average                                  Average
                                          Balance       Interest       Rate        Balance      Interest       Rate
                                          -------       --------       ----        -------      --------       ----
<S>                                      <C>            <C>           <C>        <C>           <C>             <C>
Assets:
Short Term Investments                   $  7,282       $   93.8      5.04%      $   9,775     $    135.5      5.43%
Securities:  Taxable                       30,999          403.8      5.21%         18,413          274.6      5.97%
             Tax-exempt(1)                 17,147          294.6      6.87%         15,401          273.1      7.09%
Loans(2)(3)                               203,532        4,927.1      9.47%        182,329        4,544.1      9.75%
                                          -------       --------                  --------        -------
Total earning assets/total
interest income                           258,960       $5,719.3      8.67%        225,918       $5,227.3      9.08%
                                                        --------                                 --------
Cash & due from banks                      11,438                                   10,094
All other assets                           16,461                                   13,533
Allowance for loan loss                    (4,332)                                  (3,874)
                                          -------                                 --------
   Total assets                          $282,527                                 $245,671
                                         ========                                 ========
Liabilities and
  Shareholders' Equity
Interest bearing deposits:
Savings & NOW accounts                 $  115,432      $   770.2      2.65%      $  92,946      $   720.1      3.07%
Time                                       90,562        1,194.8      5.23%         81,476        1,161.9      5.66%
Other borrowings                               98            1.1      4.49%            244            3.9      6.22%
                                               --      ---------                  --------        -------
Total interest bearing
liabilities/total interest expense        206,092      $ 1,966.1      3.78%        174,666       $1,885.9      4.28%
                                                       ---------                                 --------
Non-interest bearing deposits              49,614                                   45,574
All other liabilities                       1,825                                    1,985
Shareholders' Equity                       24,996                                   23,446
                                           ------                                 --------
Total liabilities and
   shareholders' equity                  $282,527                                 $245,671
                                         ========                                 ========
Interest spread                                                       4.89%                                    4.80%
                                                                      =====                                    =====
Net interest income-FTE                                $ 3,753.2                                $ 3,341.4
                                                       =========                                =========
Net interest margin                                                   5.65%                                    5.77%
                                                                      =====                                    =====
</TABLE>
                                       11
<PAGE>
(1)  Average  yields in the above table have been  adjusted to a  tax-equivalent
     basis  using a 34% tax rate and  exclude  the  effect of any  market  value
     adjustments recorded under Statement of Financial Standards No. 115.
(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  $179,000 in 1999 and
     $159,000 in 1998.

<TABLE>
                                                    ----------------Year to Date Averages-----------------
                                                         1999                                  1998
                                                         ----                                  ----
                                          Average                                  Average
                                          Balance       Interest       Rate        Balance      Interest       Rate
                                          -------       --------       ----        -------      --------       ----
<S>                                     <C>             <C>           <C>       <C>             <C>            <C>
Assets:
Short term investments                  $  11,535       $  412.9      4.72%     $    5,940     $   244.6       5.43%
Securities:  Taxable                       28,971        1,119.5      5.17%         24,367       1,097.3       6.02%
             Tax-exempt(1)                 16,700          875.0      6.99%         15,112         808.7       7.14%
Loans(2)(3)                               195,186       13,742.8      9.31%        173,055      12,822.4       9.79%
                                          -------       --------                 ---------      --------

Total earning assets/total
interest income                           252,392      $16,150.2      8.47%        218,474     $14,973.0       9.07%
                                                       ---------                               ---------
Cash & due from banks                      11,640                                    9,181
All other assets                           16,198                                   11,370
Allowance for loan loss                    (4,192)                                  (3,678)
                                          -------                                  -------
   Total assets                          $276,038                               $  235,347
                                         ========                               ==========
Liabilities and
  Shareholders' Equity
Interest bearing deposits:
Savings & NOW accounts                   $109,017      $ 2,176.3      2.67%     $   88,933     $ 2,009.9       3.02%
Time                                       92,002        3,676.9      5.34%         79,873       3,424.8       5.73%
Other borrowings                               57            2.0      4.66%            239          10.7       5.90%
                                               --            ---                  --------        ------
Total interest bearing
liabilities/total interest expense        201,076      $ 5,855.2      3.89%        169,045      $5,445.4       4.31%
                                                       ---------                                --------
Non-interest bearing deposits              48,298                                   41,718
All other liabilities                       2,240                                    1,785
Shareholders' Equity                       24,424                                   22,799
                                           ------                                 --------
Total liabilities and
  shareholders' equity                   $276,038                                $ 235,347
                                         ========                                =========
Interest spread                                                       4.58%                                    4.76%
                                                                      =====                                    =====
Net interest income-FTE                               $ 10,295.0                                $9,527.6
                                                      ==========                                ========
Net interest margin                                                   5.37%                                    5.74%
                                                                      =====                                    =====
</TABLE>
(1)  Average  yields in the above table have been  adjusted to a  tax-equivalent
     basis  using a 34% tax rate and  exclude  the  effect of any  market  value
     adjustments recorded under Statement of Financial Standards No. 115.
(2)  For purposes of the computations above,  non-accruing loans are included in
     the average daily loan balances.
(3)  Interest on loans includes  origination fees totaling  $447,000 in 1999 and
     $450,000 in 1998.

                                       12
<PAGE>
Interest Earning Assets/Interest Income
On a tax equivalent basis, net interest income increased  approximately $412,000
in the third quarter of 1999 compared to that of 1998.  Interest income improved
$492,000  in  1999.  A  $21,000,000   (12%)  growth  in  average  loan  balances
contributed to the increase in loan interest  income.  Although yields decreased
by 28 basis  points,  primarily  due to a 50 basis  point  decline in the Bank's
prime  lending rate,  there were some  favorable  occurrences  that lessened the
significance  of the decline in yield.  In the third quarter,  the Bank recorded
approximately  $160,000 of interest  income  related to the payoff of two loans,
which had been on non-accrual.

In the third quarter,  tax equivalent  income on short and long term investments
increased because the average balance  increased  $12,000,000 (27%) although the
rate earned decreased 55 basis points.  The 27% increase in investment  balances
compared to the 12% growth in loans  contributed to the overall decline in rates
on earning assets as the lower yielding investment portfolio absorbed the excess
deposit growth which the loan portfolio could not utilize.

For the first  nine  months of the year,  tax  equivalent  net  interest  income
increased  $767,000.  Interest income increased  $1,177,000 in 1999.  Again, the
increase  was  primarily  attributable  to loan  growth.  Loan  interest  income
increased  $920,000,  with  average  balances  up  $22,000,000  although  yields
declined 48 basis points.  The growth in loans was  primarily in the  commercial
loans where average balances increased  approximately 19% for the year. The lack
of growth in the mortgage loan  portfolio is due to the Bank's policy of selling
fixed rate  mortgage  loans which have  original  maturities of fifteen years or
more. New nonconforming variable rate mortgages,  which are retained in the loan
portfolio,  have  not  kept up  with  mortgage  loan  run  off.  The  Bank  sold
$10,600,000  mortgage loans to the secondary market during the first nine months
of 1999.

For the first  nine  months of 1999,  income on short and long term  investments
increased $257,000 from that earned the prior year due to a $12,000,000 increase
in average balances although yields decreased 70 basis points.

Interest Bearing Liabilities/Interest Expense
In the third  quarter of 1999,  interest  expense  increased  $80,000  due to an
increase in average  balances of $31,400,000  although the rate paid declined 50
basis  points.  Savings  and NOW  interest  expense  increased  $50,000  because
balances  increased  $22,500,000  although  rates  decreased  42  basis  points.
Interest on time  deposits  increased  $33,000 in the third quarter of 1999 over
the prior year.  The increase was  entirely due to growth of  $9,000,000  as the
rate declined 43 basis points.  The deposit  growth was the result of the Bank's
marketing efforts to increase its share of Livingston  County deposits.  Deposit
rates are set based on market  studies.  Special  rates are offered from time to
time to meet rate sensitivity goals.

                                       13
<PAGE>
In the first three  quarters  of the year,  interest  expense was  approximately
$410,000  higher  than  1998  due  to  average   balances  of  interest  bearing
liabilities  increasing  $32,000,000  although the rate paid  decreased 42 basis
points.  Savings and NOW interest  expense  increased  $166,000 because balances
increased  $20,000,000  although the  interest  rate  declined 35 basis  points.
Interest on time  deposits  increased  $252,000  because  the balance  increased
$12,000,000 while the rate decreased 39 basis points.

Liquidity
Liquidity is monitored by the Bank's Asset/Liability Management Committee (ALCO)
which  meets  at least  monthly.  ALCO  developed,  and the  Board of  Directors
approved,  a  liquidity  policy  which  targets  a 15%  liquidity  ratio.  As of
September 30, 1999 the Bank's liquidity was 17.24%.

Deposits are the  principal  source of funds for the Bank.  Management  monitors
rates at other  financial  institutions  in the area to ascertain that its rates
are competitive in the market.  Management also attempts to offer a wide variety
of  products  to meet the  needs  of its  customers.  The Bank  does not deal in
brokered funds, and the makeup of its over $100,000 certificates, which amounted
to  $20,500,000  at September 30, 1999 compared to  $18,000,000  at December 31,
1998, consists of local depositors known to the Bank.

It is the  intention of the Bank's  management  to handle  unexpected  liquidity
needs  through its Federal Funds  position.  The goal is to maintain a daily Fed
Funds  balance  sufficient to cover  required cash draws.  During the first nine
months of the year,  short term  investments  averaged  nearly  $11,500,000.  In
addition,  the bank has a $16,000,000  line of credit  available at the FHLB and
the Bank has  pledged  certain  mortgage  loans  and  investment  securities  as
collateral for the borrowing.  In the event the Bank must borrow for an extended
period, management may look to "available for sale" securities in the investment
portfolio for liquidity.  Management  has decided to maintain  higher than usual
liquidity  ratios this year to meet any cash needs related to Year 2000 customer
demand.

In addition to liquidity 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 and liquidity.

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

                                       14
<PAGE>
Interest Rate Sensitivity
<TABLE>
(dollars in thousands)                               0-3           4-12          1-5             5+
                                                  Months         Months        Years          Years          Total
                                                  ------         ------        -----          -----          -----
<S>                                               <C>           <C>           <C>            <C>           <C>
Assets:
   Loans.................................        $64,163        $29,625       $100,622       $12,429       $206,839
   Securities............................          2,226         16,792         19,312        11,329         49,659
   Short term investments................          3,296                                                      3,296
   Other assets..........................                                                     21,373         21,373
                                                 -------        -------       --------        ------       --------
      Total assets.......................        $69,685        $46,417       $119,934       $45,131       $281,167

Liabilities & Shareholders' Equity:
   Demand, Savings & NOW.................        $50,138        $16,396        $61,668       $33,102       $161,304
   Time..................................         23,158         35,372         33,290            15         91,835
   Other liabilities and equity..........                                                     28,028         28,028
                                                 -------        -------        -------        ------       --------
      Total liabilities and equity.......        $73,296        $51,768        $94,958       $61,145       $281,167

Rate sensitivity gap and ratios:
   Gap for period........................         (3,611)        (5,351)        24,976       (16,014)
   Cumulative gap........................         (3,611)        (8,962)        16,014

Cumulative rate sensitive ratio..........            .95            .93           1.07          1.00
Dec. 31, 1998 rate sensitive ratio.......           1.28            .92           1.08          1.00
</TABLE>

Based on the liability  sensitive position of the Bank at September 30, 1999, if
interest  rates  increase  200 basis  points  and  management  did not  respond,
management   estimates  that  annualized  net  interest  income  would  decrease
approximately  $300,000,  while a  similar  decrease  in rates  would  cause net
interest income to increase by a like amount. In the preceding table, the entire
balance of savings,  MMDA, and NOW are not  categorized as 0-3 months,  although
they are variable rate products.  Some of these balances are core deposits which
are not considered rate sensitive based on the Bank's historical  experience and
industry practice.
<TABLE>
Provision for Loan Losses                                 Third Quarter                              Year-to-Date
-------------------------
(in thousands)                                          1999         1998                          1999        1998
                                                        ----         ----                          ----        ----
         <S>                                            <C>          <C>                           <C>         <C>
         Total                                          $210         $170                          $630        $470
</TABLE>
The  provision  for loan losses  increased  $40,000 in the third quarter of 1999
compared to the prior year.  Year to date the provision  has increased  $160,000
(34%). Because of the significant amount of loan growth the Bank has experienced
in the last year,  principally in the commercial loan portfolio,  an increase in
the provision was deemed  appropriate.  As of September 30, 1999,  the allowance
for loan loss as a percent of loans was 2.10%,

                                       15
<PAGE>
compared to 2.16% a year  earlier.  For the first nine months of 1999,  the Bank
had net charge offs of $251,000,  compared  with net  recoveries of $77,000 last
year.  Non-accrual,  past due 90 days, and renegotiated loans were .94% and .40%
of total loans  outstanding at September 30, 1999 and 1998 respectively and .83%
of total loans at December 31, 1998.

Impaired  loans, as defined by Statement of Financial  Accounting  Standards No.
114,  Accounting by Creditors for  Impairment of a Loan,  totaled  approximately
$4,500,000  at September  30, 1999,  compared to $4,300,000 at December 31, 1998
and included non-accrual, and past due 90 days other than homogenous residential
and consumer loans,  and, at September 30, 1999,  $3,000,000 of commercial loans
separately  identified  as impaired.  A loan is  considered  impaired when it is
probable  that all or part of amounts du according to the  contractual  terms of
the  loan  agreement  will be  uncollectible.  Approximately  $3,400,000  of the
impaired balance relates to two borrowers. One of the loans, for $2,400,000,  is
current  and  making  regular  payments  but  was put on the  watch  list in its
construction  phase.  The cash generated solely by the business is currently not
adequate to cover debt service. The other loan has reached its redemption period
subsequent  to quarter  end and is now in Other Real  Estate.  Included in loans
charged off this year is $100,000 related to this loan.

Management  assessment  of  the  allowance  for  loan  losses  is  based  on the
composition of the loan portfolio, an evaluation of specific credits, historical
loss  experience,  the level of  nonperforming  loans  and loans  that have been
identified as impaired. Externally, the local economy and events or trends which
might negatively impact the loan portfolio are also considered. Certain impaired
loans  with  a  balance  of  $4,500,000  had  specific  reserves  calculated  in
accordance with SFAS No. 114 of $1,000,000 at September 30, 1999.

Nonperforming  assets  are  loans for which the  accrual  of  interest  has been
discontinued,  accruing  loans 90 days or more past due in  payments,  and other
real estate which has been acquired primarily through foreclosure and is waiting
disposition. The following table describes nonperforming assets at September 30,
1999 compared to December 31, 1998.
<TABLE>
Nonperforming Assets
---------------------
(in thousands)                                                        Sept. 30, 1999        December 31, 1998
                                                                      --------------        -----------------
<S>                                                                       <C>                    <C>
Non-accrual loans                                                         $1,863                 $1,519
90 days or more past due and still accruing                                   84                     25
                                                                              --                     --
         Total nonperforming loans                                         1,947                  1,544
Other real estate                                                              0                      0
                                                                               -                      -
         Total nonperforming assets                                       $1,947                 $1,544

Nonperforming loans as a percent of total loans                            .94 %                  .83 %
Nonperforming assets as a percent of total loans                           .94 %                  .83 %
Loan loss reserve to nonperforming loans                                    223%                   256%
</TABLE>
                                       16
<PAGE>
The following  table sets forth loan balances and  summarizes the changes in the
allowance for loan losses for the first nine months of 1999 and 1998.
<TABLE>
                                                                       Year to date           Year to date
Loans:   (dollars in thousands)                                       Sept. 30, 1999         Sept. 30, 1998
                                                                      --------------         --------------
<S>                                                                       <C>                    <C>
   Average daily balance of loans for the year to date                    195,186                 173,055
   Amount of loans (gross) outstanding at end of the
   Quarter                                                                206,083                 183,488
Allowance for loan losses:
   Balance at beginning of year                                             3,958                   3,424
   Loans charged off:
      Real estate                                                               0                       0
      Commercial                                                              268                      20
      Consumer                                                                148                      79
                                                                            -----                      --
         Total charge-offs                                                    416                      99
   Recoveries of loans previously charged off:
      Real estate                                                              35                       0
      Commercial                                                               78                     132
      Consumer                                                                 52                      44
                                                                               --                      --
         Total recoveries                                                     165                     176
Net loans charged off (recoveries)                                            251                     (77)
Additions to allowance charged to operations                                  630                     470
                                                                              ---                     ---
         Balance at end of quarter                                         $4,337                  $3,971

Ratios:
    Net loans charged off (annualized) to average
    loans outstanding                                                        .17%                   (.06%)
   Allowance for loan losses to loans outstanding                           2.10%                   2.16%
</TABLE>

Loans are generally  placed on a nonaccrual  basis when principal or interest is
past due 90 days or more and when, in the opinion of management, full collection
of principal and interest is unlikely.
<TABLE>
Non-interest Income                                       Third Quarter                            Year-to-Date
-------------------
(in thousands)                                          1999          1998                        1999          1998
                                                        ----          ----                        ----          ----
<S>                                                     <C>           <C>                        <C>           <C>
Total                                                   $556          $504                       $1,455        $1,453
</TABLE>
Non-interest  income,  which includes service charges on deposit accounts,  loan
and customer  service fees, other operating  income,  and gain on sale of assets
increased  by $52,000  (10%) in the third  quarter of 1999  compared to the same
period in the previous  year.  Service  charges on loans and deposits  increased
$75,000  primarily due to growth in those areas.  Trust income increased $13,000
due to seasoning in the Trust  Department  which has now been  operating for two
years. Partly offsetting these increase was a

                                       17
<PAGE>
decrease of $36,000 in income related to loan sales.  This decrease was a result
of reduced loan volume and rising mortgage interest rates.

For the year,  non-interest  income increased $2,000.  Service charges increased
$97,000 over the prior year,  trust income increased  $51,000,  and other income
increased $20,000 due to a gain on the sale of repossessed property.  Offsetting
these increases was a decrease in income related to loan sales of $166,000.
<TABLE>
Non-interest Expense                                      Third Quarter                          Year-to-Date
--------------------
(in thousands)                                          1999          1998                       1999
                                                        ----          ----                       ----          ----
<S>                                                     <C>           <C>                       <C>           <C>
Total                                                   $2,449        $2,040                    $6,948        $5,805
</TABLE>
Non-interest  expense  increased  $409,000  (20%) in the third  quarter  of 1999
compared to the same  period last year.  Contributing  to this  increase  was an
increase of $160,000 in salaries  and  benefits  expense due to hiring staff for
the new  branch  as well as  normal  salary  increases.  Printing  and  supplies
increased $27,000 largely due to ordering supplies for the new branch as well as
extra printing costs related to informing  customers  about Year 2000 readiness.
The $160,000  provision for real estate losses was the result of a re-evaluation
by management of property held for sale. Other  non-interest  expense  increased
$90,000  primarily as a result of expenses related to the outsourcing of various
services.

For the nine months of 1999  non-interest  expense was nearly  $1,143,000  (20%)
higher than 1998.  Salaries  and  benefits  were up $363,000  for the year,  and
occupancy was $69,000 higher, primarily due to opening the new branch. Equipment
expense  increased  $31,000 due to increased  depreciation  costs related to the
purchase of computer  equipment and  programs.  Fees  increased  $149,000 due to
costs related to converting paper records to CDs, hiring outside help to conduct
Year 2000 testing, and hiring a computer specialist to update the Bank's systems
for processing  mortgage loans.  Printing and supplies  increased $63,000 due to
new  forms  and  media  required  for the  computer  network  as  well as  costs
associated with opening the new branch.  Other  non-interest  expense  increased
$260,000 due to  approximately  $20,000 in costs  associated with educating bank
personnel  on the use of the  new  computer  system,  approximately  $50,000  in
increased  telephone  costs  related  to  the  computer  network,  approximately
$130,000 in cost related to  outsourcing  various  services,  and  approximately
$30,000 in  increased  postage  costs due to extra  mailings  as a result of the
computer conversion.
<TABLE>
Income Tax Expense                                     Third Quarter                          Year-to-Date
------------------
(in thousands)                                            1999         1998                         1999        1998
                                                          ----         ----                         ----        ----
         <S>                                              <C>          <C>                          <C>         <C>
         Total                                            $469         $494                         $1,130      $1,352
</TABLE>
Fluctuations  in income taxes  resulted  primarily  from changes in the level of
profitability and in variations in the amount of tax-exempt income.

                                       18
<PAGE>
<TABLE>
Capital                                          September 30, 1999                     December 31, 1998
-------                                          ------------------                     -----------------
(in thousands)
<S>                                                   <C>                                    <C>
Shareholders' Equity*                                 $25,300                                $23,484
Ratio of Equity to Total Assets                         9.00%                                  8.87%
</TABLE>

*Amounts exclude securities  valuation  adjustments  recorded under Statement of
Financial  Accounting Standards No. 115 amounting to ($162,000) at September 30,
1999 and $12,000 at December 31, 1998.

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 $1,816,000 (7%) during the first nine
months of the year.  This  increase  was the result of net income  earned by the
company reduced by dividends paid of $938,000.  In addition,  the Company issued
2,438 shares for $97,505,  of which 2,435 were issued to certain employees under
the Company's long term incentive plan.

The Federal  Reserve Board provides  guidelines  for the  measurement of capital
adequacy. The Bank's capital, as adjusted under these guidelines, is referred to
as risk-based  capital.  The Bank's Tier 1 risk-based capital ratio at September
30, 1999 was 10.05%,  and total risk-based  capital was 11.30%. At September 30,
1998 these ratios were 10.46% and 11.71% respectively. Minimum regulatory Tier 1
risk-based and total  risk-based  capital ratios under the Federal Reserve Board
guidelines are 4% and 8% respectively and well capitalized ratios are 6% and 10%
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 7.72% at September 30, 1999 and 7.78% in 1998. The minimum standard leverage
ratio is 3% and well  capitalized  banks must  maintain  a leverage  ratio of at
least 5%. All of the Bank's capital ratios meet the well capitalized standards.

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.  Land valued at  approximately
$800,000  was sold to the Bank for the new  branch.  The  Company  is  currently
marketing  the  remaining  acreage  which  is not  needed  for  the  branch.  In
conjunction with marketing the land, management periodically assesses its market
value,  the cost of necessary  improvements,  and holding costs.  As a result of
these assessments, management has written down the value approximately $300,000.
Management will continue to monitor the carrying value of the property.

Additionally, the Bank has purchased land in Howell for another branch at a cost
of  approximately  $250,000.  Building  of this  branch  will be  financed  from
internally generated funds, probably within the next two years.

                                       19
<PAGE>
Year 2000
Year 2000 issues are an important focus of management's  attention.  The Company
is highly  dependent on  technology  and most bank products are dependent on the
software's ability to make the transition to the Year 2000.  Preparation for the
Year 2000  problem  began three years ago when a  technology  plan was  drafted.
Although the plan identified ten major technology initiatives to be completed in
two to three years,  the Year 2000 project was given first  priority and efforts
began  immediately.  A national ban consulting firm was hired to help prepare an
action plan. The engagement included management  education,  an inventory of all
systems, risk assessment, an action plan, and a project schedule.

A  steering  committee,   comprised  of  ten  key  employees   representing  all
departments of the bank,  worked on the action plan. The objective was to ensure
that any system used by the company that relies on dates will not be affected by
the Year 2000  problem,  not only  computers  but power  systems,  vault timers,
elevators,  etc.  The plan  consisted  of five  phases:  awareness,  assessment,
renovation,  validation,  and  implementation.  All phases are  complete and the
Company's computer systems are deemed to be Year 2000 compliant.

The Company  spent  approximately  $1,500,000  on hardware and software in 1998.
During the first quarter of 1999, the Company spent  approximately  $100,000 for
Year 2000 testing.  However, in spite of thorough testing,  the Company can give
no guarantee that the systems of other service  providers,  on which the Company
relies, will be fully compliant. The Company has developed a contingency plan to
address Year 2000 issues.

The committee also  recognizes that the Company has  relationships  with vendors
and customers which are important to the smooth functioning of its business.  As
a result, the Company has analyzed  significant vendors and customers' Year 2000
readiness and has determined that any failures they may have are not expected to
have a material effect on the Company.

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

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<PAGE>
In  June  1999,  the  FASB  issued  SFAS  No.  137,  Accounting  for  Derivative
Instruments and Hedging  Activities - Deferral of the Effective Date of FASB No.
133.  Statement 137 extends the effective date to fiscal years  beginning  after
June 15, 2000.

Item 3.  Quantitative and Qualitative  Disclosures About Market Risk No material
changes in the market risk faced by the Company has occurred  since December 31,
1998.


                          PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits
       There are none applicable.
(b) Reports on Form 8-K:
       There were no reports on Form 8-K filed during the third quarter of 1999.


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly caused this  Quarterly  Report on Form 10-Q for the quarter
ended September 30, 1999 to be signed on its behalf by the undersigned  hereunto
duly authorized.


                       FNBH BANCORP, INC.


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


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

DATE: November 9, 1999

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