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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, 2003
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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No      

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes      No   X  

The number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 3,165,740 shares of the Company’s Common Stock (no par value) were outstanding as of November 5, 2003.



INDEX

Page
Number
Part I Financial Information (unaudited):
 
Item 1.
Interim Financial Statements:
Consolidated Balance Sheet as of September 30, 2003 and December 31, 2002 4
Consolidated Statements of Income, three months ended
September 30, 2003 and 2002, and nine months ended
September 30, 2003 and 2002 5
Consolidated Statement of Stockholders' Equity and Comprehensive
Income for three months ended September 30, 2003 and 2002 6
Consolidated Statement of Stockholders' Equity and Comprehensive
Income for nine months ended September 30, 2003 and 2002 7
Consolidated Statements of Cash Flows for nine months ended
September 30, 2003 and 2002 8
 
Notes to Interim Consolidated Financial Statements 9
 
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk 23
 
Item 4.
Controls and Procedures 23
 
Part II. Other Information
 
Item 6 24
 
Signatures 25

2


PART I — FINANCIAL INFORMATION

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






3


FNBH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (unaudited)   September 30   December 31  
  2003   2002  
Assets
Cash and due from banks  $   14,233,810   $   13,389,226  
Short term investments  16,748,255   19,649,178  
    Total cash and cash equivalents  30,982,065   33,038,404  
 
Certificates of deposit  2,522,000   3,880,000  
Investment and securities held to maturity, net (fair value of $16,426,000 
    at Sept. 30, 2003 and $18,011,000 at Dec. 31, 2002)  15,353,839   16,863,210  
Investment securities available for sale, at fair value  24,474,194   16,753,001  
Mortgage-backed securities held to maturity, net (fair value of 
    $26,000 at Dec. 31, 2002)  -   26,033  
Mortgage-backed securitities available for sale, at fair value  8,596,719   9,924,802  
FHLBI and FRB stock, at cost  1,057,450   1,044,250  
    Total investment securities  49,482,202   44,611,296  
 
Loans: 
    Commercial  279,834,366   263,002,466  
    Consumer  34,494,106   33,666,705  
    Real estate mortgages  33,603,369   31,291,141  
        Total loans  347,931,841   327,960,312  
    Less unearned income  905,197   843,052  
    Less allowance for loan losses  6,014,940   5,794,399  
        Net loans  341,011,704   321,322,861  
 
    Premises and equipment - net  10,983,445   10,256,828  
    Land and facilities available for sale - net  1,500,765   1,530,290  
    Other real estate owned, held for sale  65,000   738,206  
    Accrued interest and other assets  5,389,990   5,308,124  
        Total assets  441,937,171   420,686,009  
 
Liabilities and Stock holders' Equity 
Liabilities 
Deposits: 
    Non-interest bearing demand  69,516,585   62,231,909  
    NOW  50,500,433   41,423,298  
    Savings and money market  129,465,883   138,961,869  
    Time  137,061,424   131,455,135  
    Brokered certificates of deposit  5,968,458   -  
        Total deposits  392,512,783   374,072,211  
Other borrowings  5,327,708   5,569,255  
Accrued interest, taxes, and other liabilities  3,669,069   3,464,929  
        Total liabilities  401,509,560   383,106,395  
Stockholders' Equity 
Common stock, no par value. Authorized 4,200,000 shares; 3,165,524 
shares issued and outstanding at September 30, 2003 and 3,157,798 shares 
issued and outstanding at Dec. 31, 2002  5,641,655   5,465,089  
Retained earnings  34,589,768   31,685,849  
Unearned management retention plan  (207,597 ) (247,282 )
Accumulated other comprehensive income, net  403,785   675,958  
        Total stockholders' equity  40,427,611   37,579,614  
        Total liabilities and stockholders' equity  441,937,171   420,686,009  

See notes to interim consolidated financial statements.


4


FNBH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income   Three months ended September 30 Nine months ended September 30
Unaudited   2003   2002   2003   2002  
Interest and dividend income: 
    Interest and fees on loans  $5,738,193   $5,797,668   $17,061,171   $ 17,237,662  
    Interest and dividends on investment securities: 
      U.S. Treasury and agency securities  226,378   283,918   677,073   940,183  
      Obligations of state and political subdivisions  190,008   204,750   586,036   632,075  
      Corporates  47,244   81,485   141,716   314,918  
      Other securities  97   15,753   15,033   44,340  
    Interest on certificates and other bank deposits  53,886   50,386   175,381   180,757  
      Total interest and dividend income  6,255,806   6,433,960   18,656,410   19,349,935  
 
Interest expense: 
    Interest on deposits  1,353,180   1,833,354   4,430,233   5,676,764  
    Interest on other borrowings  115,627   151,094   311,968   466,334  
      Total interest expense  1,468,807   1,984,448   4,742,201   6,143,098  
 
      Net interest income  4,786,999   4,449,512   13,914,209   13,206,837  
 
Provision for loan losses  200,000   325,000   800,000   325,000  
      Net interest income after provision for loan losses  4,586,999   4,124,512   13,114,209   12,881,837  
 
Non-interest income: 
    Service charges  885,911   747,364   2,309,107   2,131,808  
    Gain on sale of loans  120,603   96,645   358,736   251,533  
    Gain on sale/call of investments  -   32,476   3,823   38,745  
    Trust fees  100,071   45,958   224,503   154,780  
    Other  2,115   2,601   65,551   (4,408 )
      Total non-interest income  1,108,700   925,044   2,961,720   2,572,458  
 
Non-interest expense: 
    Salaries and employee benefits  1,657,018   1,586,229   5,236,658   4,852,057  
    Net occupancy  241,521   230,603   721,304   668,265  
    Equipment expense  217,191   207,550   789,666   630,603  
    Professional and service fees  275,553   272,447   868,107   893,042  
    Printing and supplies  39,756   69,481   199,273   228,774  
    Advertising  74,282   73,717   246,017   227,696  
    Other  476,949   410,108   1,501,438   1,196,854  
      Total non-interest expense  2,982,270   2,850,135   9,562,463   8,697,291  
 
Income before federal income taxes  2,713,429   2,199,421   6,513,466   6,757,004  
Federal income taxes  841,700   662,100   1,996,675   2,055,000  
    Net income  $1,871,729   $1,537,321   $  4,516,791   $   4,702,004  
 
Per share statistics* 
    Basic EPS  $         0.59   $         0.49   $           1.43   $            1.49  
    Diluted EPS  $         0.59   $         0.49   $           1.43   $            1.49  
    Dividends  $         0.17   $         0.17   $           0.51   $          0.458  

*Based on average shares outstanding.
See notes to interim consolidated financial statements.


5


FNBH BANCORP, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity and Comprehensive Income
 For the Three Months Ended September 30, 2003 and 2002 (Unaudited)

Common Stock Retained Earnings Unearned Management Retention Plan Accumulated Other Comprehensive Income Total
Balances at June 30, 2002   $ 5,435,499   29,620,051   (300,374 ) 302,364   35,057,540  
Amortization of management retention plan  26,546   26,546  
Issued 498 shares for employee purchase plan  9,297   9,297  
Issued 234 shares for current directors fees  4,603   4,603  
Comprehensive income: 
    Net income  1,537,321   1,537,321  
    Change in unrealized gain on debt securities 
    available for sale, net of tax effect  323,017   323,017  
      Total comprehensive income  1,860,338  
Cash dividends (.17¢ per share)  (536,613 ) (536,613 )
Balance at September 30, 2002  $ 5,449,399   30,620,759   (273,828 ) 625,381   36,421,711  
 
Common Stock Retained Earnings Unearned Management Retention Plan Accumulated Other Comprehensive Income (loss) Total
Balances at June 30, 2003  $ 5,622,202   33,256,070   (228,649 ) 627,068   39,276,691  
Amortization of management retention plan  21,052   21,052  
Issued 636 shares for employee purchase plan  13,642   13,642  
Issued 241 shares for current directors fees  5,811   5,811  
Comprehensive income: 
    Net income  1,871,729   1,871,729  
    Change in unrealized gain (loss) on debt securities 
    available for sale, net of tax effect  (223,283 ) (223,283 )
      Total comprehensive income  1,648,446  
Cash dividends (17.0¢ per share)  (538,031 ) (538,031 )
Balances at September 30, 2003  $ 5,641,655   34,589,768   (207,597 ) 403,785   40,427,611  

See notes to interim consolidated financial statements.


6


FNBH BANCORP, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity and Comprehensive Income
 For the Nine Months Ended September 30, 2003 and 2002 (Unaudited)

Common Stock Retained Earnings Unearned Management Retention Plan Accumulated Other Comprehensive Income 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  67,114   67,114  
Issued 3,468 shares for employee purchase plan  59,877   59,877  
Issued 452 shares for current directors fees  9,344   9,344  
Issued 1,128 shares for directors' variable fee plan  23,609   23,609  
Net income  4,702,004   4,702,004  
Change in unrealized gain on debt securities  -  
    available for sale, net of tax effect  598,420   598,420  
Total comprehensive income  5,300,424  
Cash dividends (45.75¢ per share)  (1,442,460 ) (1,442,460 )
Balances at September 30, 2002  $ 5,449,399   30,620,759   (273,828 ) 625,381   36,421,711  
 
Common Stock Retained Earnings Unearned Management Retention Plan Accumulated Other Comprehensive Income (loss) Total
Balances at December 31, 2002  5,465,089   31,685,849   (247,282 ) 675,958   37,579,614  
Issued 3,036 shares for management retention plan  72,454   (72,454 ) -  
Amortization of management retention plan  112,139   112,139  
Issued 2,310 shares for employee stock purchase plan  47,612   47,612  
Issued 691 shares for current stock directors fees  16,504   16,504  
Issued 1,689 shares for directors' variable fee plan  39,996   39,996  
Comprehensive income: 
Net income  4,516,791   4,516,791  
Change in unrealized gain (loss) on debt securities 
    available for sale, net of tax effect  (272,173 ) (272,173 )
      Total comprehensive income  4,244,618  
Cash dividends (.51¢ per share)  -   (1,612,872 ) -   -   (1,612,872 )
Balances at September 30, 2003  5,641,655   34,589,768   (207,597 ) 403,785   40,427,611  

See notes to interim consolidated financial statements.


7


FNBH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows      
Unaudited  Nine months ended September 30
   2003   2002  
Cash flows from operating activies: 
Net income  $   4,516,791   $   4,702,004  
Adjustments to reconcile net income to net cash provided by operating activities: 
Provision for loan losses  800,000   325,000  
Depreciation and amortization  776,587   657,913  
Net amortization on investment securities  105,092   189,448  
Earned portion of management retention plan  112,139   67,114  
Loss on disposal of equipment  8,958   68  
Gain on sale of investments  (3,823 ) (38,745 )
Gain on sale of loans  (358,736 ) (251,533 )
Gain on sale of other real estate owned  (22,710 ) -  
Proceeds from sale of loans  22,327,086   22,093,781  
Origination of loans held for sale  (22,551,120 ) (23,080,013 )
Proceeds from sale of other real estate owned, held for sale  760,916   -  
(Increase) in accrued interest income and other assets  (117,341 ) (1,349,413 )
Increase in accrued interest, taxes, and other liabilities  344,440   23,735  
    Net cash provided by operating activities  6,698,279   3,339,359