FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ----------------


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

                   For the fiscal year ended December 31, 2000

                                       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 0-22461

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

             Michigan                                  38-3088340
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
   Incorporation or organization)
                                                         49221
       135 East Maumee Street                          (Zip Code)
           Adrian, Michigan
(Address of principal executive offices)


                                  517-265-5144
                               517-265-3926 (FAX)
              (Registrant's telephone number, including area code)


        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
                                   -----------

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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K. _X_


Documents Incorporated by Reference:
Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
to be held April 18, 2001 are incorporated by reference into Parts II and III of
this report.
<PAGE>
Item 1.  Business.

     Lenawee  Bancorp,   Inc.  (the  Company),   a  bank  holding  company,  was
incorporated in Michigan in 1993. On April 15, 1993, the Company acquired all of
the stock of the Bank of Lenawee  (the  Bank),  a Michigan  banking  corporation
chartered in 1869.

     The business of the Company is concentrated  primarily in a single industry
segment - commercial banking. The Bank provides a full range of banking services
to individuals,  agricultural  businesses,  commercial businesses and industries
located in its service area.  The Bank maintains a diversified  loan  portfolio,
including  loans to individuals  for home  mortgages,  automobiles  and personal
expenditures,  and loans to  business  enterprises  for current  operations  and
expansion.  The Bank offers a variety of deposit products,  including  checking,
savings,  money  market,  individual  retirement  accounts and  certificates  of
deposit.

     The  principal   markets  for  financial   services  are  the  mid-Michigan
communities in which the Bank is located and the areas  immediately  surrounding
these  communities.  The Bank serves these markets  through nine locations in or
near these communities.  The Bank of Lenawee owns Lenawee Financial Services,  a
wholly owned  subsidiary  to provide  local  consumers  brokerage  and insurance
products.  At the beginning of 2001, the Bank of Lenawee mortgage department was
reestablished as an independent company, Pavilion Mortgage Company, to provide a
broader  array of product for  expanding  market  needs.  On January 8, 2001 the
Company chartered a new community bank, the Bank of Washtenaw,  and assigned the
customer  relationships  from its Saline,  Michigan  office to the new bank. The
Bank does not have any material foreign assets or income.

     The principal source of revenue for the Bank is interest and fees on loans.
On a consolidated  basis,  interest and fees on loans accounted for 84% of total
revenue in 2000, 79% in 1999, and 75% in 1998. Interest on investment securities
accounted for 6% of total revenue in 2000, 9% in 1999, and 10% in 1998.

     The Bank has nine  offices in addition to a mobile bank.  See  "Properties"
below  for more  detail  on these  facilities.  Within  these  communities,  its
principal  competitors are United Bank & Trust, Key Bank, Mid-Am Bank,  Standard
Federal  Bank,  and  TLC  Community  Credit  Union.   Each  of  these  financial
institutions,  which have  headquarters in larger  metropolitan  areas, with the
exception  of  United  Bank  &  Trust  and  TLC  Community  Credit  Union,  have
significantly greater assets and financial resources than the Company.  Based on
deposit  information as of December 31, 2000, the Bank holds an estimated 18% of
the  deposits  in Lenawee  County.  Information  as to asset size of  competitor
financial  institutions is derived from publicly  available reports filed by and
with regulatory agencies.


                           SUPERVISION AND REGULATION

     The following is a summary of certain  statutes and  regulations  affecting
the Company and the Bank.  This  summary is  qualified  in its  entirety by such
statutes and regulations.  A change in applicable laws or regulations may have a
material effect on the Company, the Bank and the business of the Company and the
Bank.

General

     Financial   institutions  and  their  holding   companies  are  extensively
regulated  under  federal and state law.  Consequently,  the growth and earnings
performance  of the Company and the Bank can be affected not only by  management
decisions and general economic conditions, but also by the statutes administered
by,  and the  regulations  and  policies  of,  various  governmental  regulatory
authorities.  Those  authorities  include,  but are not limited to, the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), the FDIC,
the  Commissioner  of the Michigan  Office of Financial and  Insurance  Services
("Commissioner"),  the Internal Revenue Service,  and state taxing  authorities.
The effect of such statutes,  regulations and policies can be  significant,  and
cannot be predicted with a high degree of certainty.

     Federal and state laws and  regulations  generally  applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments,  reserves against deposits, capital levels relative to
operations,   lending  activities  and  practices,  the  nature  and  amount  of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends.  The system of supervision  and regulation  applicable to the Company
and

                                      -2-
<PAGE>
the Bank establishes a comprehensive  framework for their respective  operations
and is intended  primarily for the  protection of the FDIC's  deposit  insurance
funds, the depositors of the Bank, and the public,  rather than  shareholders of
the Bank or the Company.

     Federal law and regulations  establish  supervisory standards applicable to
the  lending  activities  of  the  Bank,  including  internal  controls,  credit
underwriting,  loan documentation and loan-to-value  ratios for loans secured by
real property.

Recent Legislation

     The  enactment  of the  Gramm-Leach-Bliley  Act of  1999  (the  "GLB  Act")
represents a pivotal  point in the history of the financial  services  industry.
The GLB Act modifies many of the principal federal laws which regulate financial
institutions and sweeps away large parts of a regulatory  framework that had its
origins in the Depression Era of the 1930s.

     Effective March 11, 2000, new  opportunities  became  available for banking
organizations, other depository institutions, insurance companies and securities
firms to enter  into  combinations  that  permit  a  single  financial  services
organization to offer customers a more complete array of financial  products and
services.  Specifically,  the GLB Act provides two new vehicles  through which a
banking  organization can engage in a variety of activities which,  prior to the
Act,  were  not  permitted.  First,  a  bank  holding  company  meeting  certain
requirements may elect to become a financial  holding company ("FHC").  FHCs are
generally authorized to engage in all "financial  activities" and, under certain
circumstances,  to make equity  investments in other companies  (i.e.,  merchant
banking).  In order to be  eligible  to elect to  become a FHC,  a bank  holding
company and all of its  depositary  financial  institutions  must:  (1) be "well
capitalized";  (2) be "well managed"; and (3) have a rating of "satisfactory" or
better in their most recent Community  Reinvestment  Act  examination.  Both the
bank holding company and all of its depositary financial  institutions must also
continue to satisfy these  requirements after the bank holding company elects to
become  a FHC or else the FHC  will be  subject  to  various  restrictions.  The
Federal  Reserve Board will be the umbrella  regulator of FHCs,  but  functional
regulation of a FHC's  separately  regulated  subsidiaries  will be conducted by
their primary functional regulator.

     Second,  the GLB Act also  provides that a national bank (and a state bank,
so long as otherwise  allowable under its state's law), which satisfies  certain
requirements,  may own a new type of  subsidiary  called a financial  subsidiary
("FS").  The GLB Act  authorizes  FSs to  engage  in many  (but  not all) of the
activities that FHCs are authorized to engage in. In order to be eligible to own
a FS, a bank must  satisfy the three  requirements  noted  above,  plus  several
additional requirements.

     The GLB Act also  imposes  several  rules that are  designed to protect the
privacy of the  customers of financial  institutions.  For example,  the GLB Act
requires  financial  institutions  to annually  adopt and  disseminate a privacy
policy and prohibits  financial  institutions  from disclosing  certain customer
information  to  "non-affiliated  third parties" for certain uses. All financial
institutions,  regardless  of whether  they elect to  utilize  FHCs or FSs,  are
subject to the GLB Act's privacy  provisions.  The Company and the Bank are also
subject  to  certain  state  laws  that deal  with the use and  distribution  of
non-public personal information.  In addition to its privacy provisions, the GLB
Act also contains various other provisions that apply to banking  organizations,
regardless of whether they elect to utilize FHCs or FSs.

     The  Company  believes  that  the  GLB  Act  could  significantly  increase
competition  in its business and is evaluating the  desirability  of electing to
become a FHC. The Company  believes that it is qualified to elect FHC status but
has not yet decided to do so.

The Company

     General.  The Company is a bank holding company and, as such, is registered
with,  and subject to  regulation  by, the Federal  Reserve Board under the Bank
Holding  Company Act, as amended (the  "BHCA").  Under the BHCA,  the Company is
subject to periodic examination by the Federal Reserve Board, and is required to
file with the Federal Reserve Board periodic  reports of its operations and such
additional information as the Federal Reserve Board may require.

                                      -3-
<PAGE>
     In accordance with Federal Reserve Board policy, the Company is expected to
act as a source of  financial  strength to the Bank and to commit  resources  to
support the Bank in circumstances  where the Company might not do so absent such
policy.  In  addition,  if the  Commissioner  deems  the  Bank's  capital  to be
impaired,  the  Commissioner  may  require  the Bank to restore its capital by a
special  assessment  upon the  Company as the Bank's  sole  shareholder.  If the
Company were to fail to pay any such assessment, the directors of the Bank would
be required, under Michigan law, to sell the shares of the Bank's stock owned by
the Company to the highest bidder at either a public or private  auction and use
the proceeds of the sale to restore the Bank's capital.

     Investments and Activities.  In general, any direct or indirect acquisition
by the  Company  of any  voting  shares of any bank  which  would  result in the
Company's  direct or indirect  ownership or control of more than 5% of any class
of voting shares of such bank,  and any merger or  consolidation  of the Company
with  another  bank  company,  will  require the prior  written  approval of the
Federal  Reserve  Board  under the BHCA.  In  acting on such  applications,  the
Federal Reserve Board must consider various statutory  factors,  including among
others,  the effect of the  proposed  transaction  on  competition  in  relevant
geographic and product markets, and each party's financial condition, managerial
resources,  and record of  performance  under the  Community  Reinvestment  Act.
Effective  September 29, 1995, bank holding  companies may acquire banks located
in any state in the United States without regard to geographic  restrictions  or
reciprocity   requirements   imposed  by  state  law,  but  subject  to  certain
conditions,  including  limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured  depository  institution
affiliates.

     The merger or  consolidation  of an existing bank subsidiary of the Company
with another bank, or the  acquisition by such a subsidiary of assets of another
bank, or the assumption of liability by such a subsidiary to pay any deposits in
another bank, will require the prior written approval of the responsible Federal
depository institution regulatory agency under the Bank Merger Act, based upon a
consideration of statutory  factors similar to those outlined above with respect
to the BHCA. In addition, in certain such cases an application to, and the prior
approval of, the Federal  Reserve  Board under the BHCA and/or the  Commissioner
under the Michigan Banking Code, may be required.

     With certain limited  exceptions,  the BHCA prohibits any bank company from
engaging,  either directly or indirectly  through a subsidiary,  in any activity
other  than  managing  or  controlling  banks  unless the  proposed  non-banking
activity is one that the Federal  Reserve Board has  determined to be so closely
related to banking or managing or controlling  banks as to be a proper  incident
thereto.  Under current  Federal  Reserve Board  regulations,  such  permissible
non-banking  activities  include  such  things as  mortgage  banking,  equipment
leasing,  securities  brokerage,  and consumer and  commercial  finance  company
operations.  As a result of recent amendments to the BHCA,  well-capitalized and
well-managed  bank  holding  companies  may engage de novo in  certain  types of
non-banking  activities  without  prior  notice to, or approval  of, the Federal
Reserve Board,  provided that written notice of the new activity is given to the
Federal  Reserve  Board within 10 business days after the activity is commenced.
If a bank  company  wishes to engage in a  non-banking  activity by  acquiring a
going concern,  prior notice and/or prior  approval will be required,  depending
upon the activities in which the company to be acquired is engaged,  the size of
the company to be acquired and the  financial  and  managerial  condition of the
acquiring bank company.

     In  evaluating  a  proposal  to  engage  (either  de  novo or  through  the
acquisition of a going concern) in a non-banking  activity,  the Federal Reserve
Board will consider  various  factors,  including among others the financial and
managerial  resources of the bank company,  and the relative public benefits and
adverse  effects  which may be expected to result  from the  performance  of the
activity by an  affiliate of the bank  company.  The Federal  Reserve  Board may
apply  different  standards to  activities  proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.

     Capital  Requirements.  The Federal  Reserve  Board uses  capital  adequacy
guidelines  in its  examination  and  regulation of bank holding  companies.  If
capital falls below minimum guidelines,  a bank company may, among other things,
be  denied  approval  to  acquire  or  establish  additional  banks or  non-bank
businesses.

                                      -4-
<PAGE>
     The Federal  Reserve  Board's  capital  guidelines  establish the following
minimum  regulatory  capital  requirements  for bank  holding  companies:  (i) a
leverage capital requirement  expressed as a percentage of total average assets,
and  (ii)  a  risk-based   requirement   expressed  as  a  percentage  of  total
risk-weighted  assets.  The leverage capital  requirement  consists of a minimum
ratio of Tier 1 capital (which consists principally of shareholders'  equity) to
total  average  assets of 3% for the most highly rated  companies,  with minimum
requirements of 4% to 5% for all others. The risk-based  requirement consists of
a minimum ratio of total capital to total  risk-weighted  assets of 8%, of which
at least one-half must be Tier 1 capital.

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum  requirements,  and higher  capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations.  For example,  Federal  Reserve  Board  regulations  provide that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk and the risks  posed by  concentrations  of credit,
nontraditional activities or securities trading activities. Further, any banking
organization  experiencing or anticipating  significant growth would be expected
to maintain capital ratios,  including  tangible capital positions (i.e., Tier 1
capital less all intangible assets),  well above the minimum levels. The Federal
Reserve Board has not advised the Company of any specific minimum Tier 1 Capital
leverage ratio applicable to it.

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank. Most of the Company's revenues are received by it in the form of dividends
paid  by  the  Bank.  Thus,  the  Company's  ability  to  pay  dividends  to its
shareholders  is  indirectly  limited by  statutory  restrictions  on the Bank's
ability  to  pay  dividends.  See  "SUPERVISION  AND  REGULATION  - The  Bank  -
Dividends."  Further, the Federal Reserve Board has issued a policy statement on
the  payment  of  cash  dividends  by  bank  holding  companies.  In the  policy
statement,  the Federal  Reserve  Board  expressed  its view that a bank company
experiencing earnings weaknesses should not pay cash dividends exceeding its net
income or which can only be funded  in ways  that  weakened  the bank  company's
financial health, such as by borrowing.  Additionally, the Federal Reserve Board
possesses  enforcement  powers over bank holding  companies  and their  non-bank
subsidiaries  to  prevent or remedy  actions  that  represent  unsafe or unsound
practices or  violations  of applicable  statutes and  regulations.  Among these
powers is the ability to  proscribe  the payment of  dividends by banks and bank
holding companies. Similar enforcement powers over the Bank are possessed by the
FDIC. The "prompt  corrective  action"  provisions of federal law and regulation
authorizes the Federal Reserve Board to restrict the payment of dividends by the
Company for an insured bank which fails to meet specified capital levels.

     In addition to the restrictions on dividends imposed by the Federal Reserve
Board,  the Michigan  Business  Corporation  Act provides that  dividends may be
legally declared or paid only if after the  distribution a corporation,  such as
the Company,  can pay its debts as they come due in the usual course of business
and its total assets equal or exceed the sum of its liabilities  plus the amount
that would be needed to satisfy the preferential  rights upon dissolution of any
holders of  preferred  stock  whose  preferential  rights are  superior to those
receiving the  distribution.  The  Company's  Articles of  Incorporation  do not
authorize the issuance of preferred stock and there are no current plans to seek
such authorization.

The Bank

     General.  The  Bank is a  Michigan  banking  corporation  and  its  deposit
accounts are insured by the Bank  Insurance  Fund (the "BIF") of the FDIC.  As a
BIF-insured  Michigan  chartered  bank, the Bank is subject to the  examination,
supervision,  reporting and enforcement requirements of the Commissioner, as the
chartering  authority for Michigan banks,  and the FDIC, as administrator of the
BIF.  These  agencies and the federal and state laws  applicable to the Bank and
its operations,  extensively  regulate  various aspects of the banking  business
including,   among  other  things,  permissible  types  and  amounts  of  loans,
investments and other activities, capital adequacy, branching, interest rates on
loans and on deposits,  the  maintenance  of  non-interest  bearing  reserves on
deposit accounts, and the safety and soundness of banking practices.

     Deposit Insurance. As an FDIC-insured institution,  the Bank is required to
pay deposit  insurance  premium  assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance  premiums,  based upon
their  respective  levels of  capital  and  results of  supervisory  evaluation.
Institutions classified as well-capitalized (as defined by the

                                      -5-
<PAGE>
FDIC) and considered  healthy pay the lowest premium while institutions that are
less than  adequately  capitalized  (as defined by the FDIC) and  considered  of
substantial  supervisory concern pay the highest premium. Risk classification of
all insured  institutions  is made by the FDIC for each  semi-annual  assessment
period.

     The Federal Deposit  Insurance Act ("FDIA")  requires the FDIC to establish
assessment  rates at levels which will maintain the Deposit  Insurance Fund at a
mandated  reserve  ratio of not less than 1.25% of estimated  insured  deposits.
Accordingly,  the FDIC established the schedule of BIF insurance assessments for
the first semi-annual assessment period of 2000, ranging from 0% of deposits for
institutions in the lowest risk category to .27% of deposits for institutions in
the highest risk  category.  For 2000,  the Bank paid  $40,303 in BIF  insurance
assessments, representing a premium of .01%.

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound  practices,  or have
violated any applicable  law,  regulation,  order,  or any condition  imposed in
writing by, or written  agreement with, the FDIC, or if the institution is in an
unsafe or unsound  condition to continue  operations.  The FDIC may also suspend
deposit  insurance  temporarily  during  the  hearing  process  for a  permanent
termination of insurance if the institution has no tangible capital.

     Commissioner  Assessments.  Michigan banks are required to pay  supervisory
fees to the Commissioner to fund the operations of the Commissioner.  The amount
of  supervisory  fees paid by a bank is based upon the bank's total  assets,  as
reported to the Commissioner.

     FICO  Assessments.  Pursuant to federal  legislation  enacted September 30,
1996,  the Bank, as a member of the BIF, is subject to  assessments to cover the
payments on outstanding  obligations of the Financing Corporation ("FICO"). FICO
was created in 1987 to finance the  recapitalization  of the Federal Savings and
Loan Insurance  Corporation,  the predecessor to the FDIC's Savings  Association
Insurance  Fund (the "SAIF") which insures the deposits of thrift  institutions.
Prior to January 1, 2000,  the FICO  assessments  made against BIF members could
not exceed 20% of the amount of FICO assessments made against SAIF members. Last
year, SAIF members paid FICO assessments at a rate equal to approximately 0.063%
of  deposits  while  BIF  members  paid  FICO  assessments  at a rate  equal  to
approximately  0.012% of deposits.  Between  January 1, 2000 and the maturity of
the  outstanding  FICO  obligations  in 2019,  BIF members and SAIF members will
share the cost of the  interest  on the FICO  bonds on a pro rata  basis.  It is
estimated that FICO  assessments  during this period will be less than 0.025% of
deposits.

     Capital  Requirements.  The  FDIC has  established  the  following  minimum
capital standards for  state-chartered,  FDIC-insured  non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total  average  assets of 3% for the most  highly-rated  banks  with  minimum
requirements of 4% to 5% for all others,  and a risk-based  capital  requirement
consisting of a minimum ratio of total capital to total risk-weighted  assets of
8%, at least one-half of which must be Tier 1 capital.  Tier 1 capital  consists
principally of  shareholders'  equity.  These capital  requirements  are minimum
requirements.  Higher  capital  levels  will be  required  if  warranted  by the
particular  circumstances  or risk  profiles  of  individual  institutions.  For
example,  FDIC  regulations  provide that higher capital may be required to take
adequate account of, among other things,  interest rate risk and the risks posed
by concentrations  of credit,  nontraditional  activities or securities  trading
activities.

     Federal law provides  the federal  banking  regulators  with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."  Federal  regulations  define  these  capital  categories  as
follows:
<TABLE>
                                            Total                Tier 1
                                            Risk-Based           Risk-Based
                                            Capital Ratio        Capital Ratio         Leverage Ratio
                                            -------------        -------------         --------------
<S>                                         <C>                  <C>                   <C>
Well capitalized                            10% or above         6% or above           5% or above
Adequately capitalized                       8% or above         4% or above           4% or above
Undercapitalized                            Less than 8%         Less than 4%          Less than 4%
Significantly undercapitalized              Less than 6%         Less than 3%          Less than 3%
Critically undercapitalized                           --                   --          A ratio of tangible
                                                                                       equity to total assets
                                                                                       of 2% or less
</TABLE>
                                      -6-
<PAGE>
     As of  December  31,  2000,  each of the  Bank's  ratios  exceeded  minimum
requirements for the well capitalized category.

     Depending  upon the capital  category to which an  institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring  the  institution  to  issue   additional   capital  stock  (including
additional  voting  stock)  or to be  acquired;  restricting  transactions  with
affiliates;  restricting  the interest rate the institution may pay on deposits;
ordering a new election of directors of the  institution;  requiring that senior
executive  officers or directors be dismissed;  prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain  subsidiaries;  prohibiting  the  payment of  principal  or  interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

     In  general,  a  depository  institution  may be  reclassified  to a  lower
category  than is indicated  by its capital  levels if the  appropriate  federal
depository  institution  regulatory  agency  determines  the  institution  to be
otherwise  in an unsafe or  unsound  condition  or to be engaged in an unsafe or
unsound  practice.  This could include a failure by the  institution,  following
receipt  of a  less-than-satisfactory  rating  on its  most  recent  examination
report, to correct the deficiency.

     Dividends.  Under  Michigan  law, the Bank is  restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend  unless the bank will have
a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare or pay any  dividend  until an amount  equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual  dividends) has been  transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of  shareholders  owning 2/3 of the stock  eligible  to vote  increase  its
capital  stock by a  declaration  of a stock  dividend,  provided that after the
increase  the  bank's  surplus  equals at least  20% of its  capital  stock,  as
increased.  The Bank may not declare or pay any  dividend  until the  cumulative
dividends on preferred  stock (should any such stock be issued and  outstanding)
have been paid in full. The Bank's  Articles of  Incorporation  do not authorize
the  issuance  of  preferred  stock and there are no current  plans to seek such
authorization.

     Federal law generally  prohibits a depository  institution  from making any
capital distribution  (including payment of a dividend) or paying any management
fee  to  its  company  if  the  depository   institution   would  thereafter  be
undercapitalized.  The FDIC may prevent an insured bank from paying dividends if
the  bank is in  default  of  payment  of any  assessment  due to the  FDIC.  In
addition,  the FDIC may prohibit  the payment of dividends by the Bank,  if such
payment is determined,  by reason of the financial  condition of the Bank, to be
an unsafe and unsound banking practice.

     Insider  Transactions.  The Bank is subject to certain restrictions imposed
by the  Federal  Reserve Act on any  extensions  of credit to the Company or its
subsidiaries,  on investments in the stock or other securities of the Company or
its  subsidiaries  and the  acceptance  of the stock or other  securities of the
Company or its  subsidiaries  as collateral for loans.  Certain  limitations and
reporting  requirements  are also placed on  extensions of credit by the Bank to
its  directors  and  officers,  to directors and officers of the Company and its
subsidiaries,  to  principal  shareholders  of  the  Company,  and  to  "related
interests" of such directors,  officers and principal shareholders. In addition,
federal law and  regulations may affect the terms upon which any person becoming
a director or officer of the Company or one of its  subsidiaries  or a principal
shareholder  of the  Company  may obtain  credit  from banks with which the Bank
maintains a correspondent relationship.

     Safety and Soundness  Standards.  The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally  insured  depository
institutions.  These  guidelines  establish  standards  for  internal  controls,
information  systems,   internal  audit  systems,  loan  documentation,   credit
underwriting,  interest  rate  exposure,  asset growth,  compensation,  fees and
benefits,  asset quality and earnings.  In general, the guidelines prescribe the
goals to be achieved in each area, and each  institution will be responsible for
establishing its own procedures to achieve those goals. If an institution  fails
to  comply  with  any  of  the  standards  set  forth  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose  failure to meet one or more of the  standards is of such severity that it
could  threaten  the safe and sound  operation  of the  institution.  Failure to
submit an

                                      -7-
<PAGE>
acceptable  compliance  plan, or failure to adhere to a compliance plan that has
been accepted by the appropriate regulator, would constitute grounds for further
enforcement action.

     State Bank Activities. Under federal law and FDIC regulations, FDIC-insured
state  banks are  prohibited,  subject to  certain  exceptions,  from  making or
retaining  equity  investments  of a  type,  or  in  an  amount,  that  are  not
permissible   for  a  national  bank.   Federal  law,  as  implemented  by  FDIC
regulations,  also prohibits  FDIC-insured  state banks and their  subsidiaries,
subject to certain  exceptions,  from engaging as principal in any activity that
is not permitted for a national bank or its subsidiary, respectively, unless the
bank meets, and continues to meet, its minimum regulatory  capital  requirements
and the FDIC  determines the activity  would not pose a significant  risk to the
deposit insurance fund of which the bank is a member.  Impermissible investments
and activities must be divested or  discontinued  within certain time frames set
by the FDIC in accordance with federal law. These restrictions are not currently
expected to have a material impact on the operations of the Bank.

     Consumer  Protection Laws. The Bank's business includes making a variety of
types of loans to  individuals.  In making these  loans,  the Bank is subject to
State usury and regulatory  laws and to various  federal  statutes,  such as the
Equal  Credit  Opportunity  Act,  the Fair Credit  Reporting  Act,  the Truth in
Lending Act, the Real Estate  Settlement  Procedures  Act, and the Home Mortgage
Disclosure  Act, and the  regulations  promulgated  thereunder,  which  prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and
settlement  costs,  and regulate the mortgage loan  servicing  activities of the
Bank,  including  the  maintenance  and  operation  of escrow  accounts  and the
transfer of mortgage loan servicing.  In receiving deposits, the Bank is subject
to extensive  regulation under State and federal law and regulations,  including
the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy
Act, the Electronic  Funds Transfer Act, and the Federal Deposit  Insurance Act.
Violation of these laws could result in the  imposition of  significant  damages
and fines upon the Bank and its directors and officers.

     Branching  Authority.  Michigan banks, such as the Bank, have the authority
under  Michigan  law to  establish  branches  anywhere in the State of Michigan,
subject to receipt of all required regulatory  approvals (including the approval
of the Commissioner and the FDIC).

     The  Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994
(the  "IBBEA")  allows banks to establish  interstate  branch  networks  through
acquisitions of other banks,  subject to certain  conditions,  including certain
limitations  on the  aggregate  amount  of  deposits  that  may be  held  by the
surviving bank and all of its insured  depository  institution  affiliates.  The
establishment  of de novo  interstate  branches or the acquisition of individual
branches  of a  bank  in  another  state  (rather  than  the  acquisition  of an
out-of-state  bank in its  entirety)  is allowed  by IBBEA only if  specifically
authorized by state law. The legislation  allowed individual states to "opt-out"
of interstate branching authority by enacting  appropriate  legislation prior to
June 1, 1997.

     Michigan  did not opt out of IBBEA,  and now permits both U.S. and non-U.S.
banks to  establish  branch  offices in  Michigan.  The  Michigan  Banking  Code
permits, in appropriate circumstances and with the approval of the Commissioner,
(i)  the  acquisition  of  all  or   substantially   all  of  the  assets  of  a
Michigan-chartered  bank by an FDIC-insured  bank,  savings bank, or savings and
loan  association   located  in  another  state,   (ii)  the  acquisition  by  a
Michigan-chartered  bank  of  all or  substantially  all  of  the  assets  of an
FDIC-insured  bank,  savings  bank or savings  and loan  association  located in
another state, (iii) the consolidation of one or more  Michigan-chartered  banks
and FDIC-insured banks,  savings banks or savings and loan associations  located
in other states having laws  permitting such  consolidation,  with the resulting
organization  chartered by Michigan,  (iv) the  establishment by a foreign bank,
which has not previously  designated any other state as its home state under the
International Banking Act of 1978, of branches located in Michigan,  and (v) the
establishment  or  acquisition  of branches in  Michigan by  FDIC-insured  banks
located in other  states,  the  District  of  Columbia  or U.S.  territories  or
protectorates  having  laws  permitting  Michigan-chartered  banks to  establish
branches in such jurisdiction.  Further, the Michigan Banking Code permits, upon
written notice to the Commissioner,  (i) the acquisition by a Michigan-chartered
bank of one or more branches (not  comprising  all or  substantially  all of the
assets) of an FDIC-insured  bank,  savings bank or savings and loan  association
located in another  state,  the  District of  Columbia,  or a U.S.  territory or
protectorate,  (ii) the  establishment by  Michigan-chartered  banks of branches
located in other  states,  the  District of  Columbia,  or U.S.  territories  or
protectorates,  and (iii) the  consolidation  of one or more  Michigan-chartered
banks and  FDIC-insured  banks,  savings banks or savings and loan  associations
located in other  states,  with the resulting  organization  chartered by one of
such other states.

                                      -8-
<PAGE>
Item 2.  Properties.

     The Bank of  Lenawee's  main  office is located in Adrian.  During  2000 it
served  other  communities  with  branch  offices  in Hudson,  Morenci,  Saline,
Tecumseh and Waldron. In January 2001, the Company established the Saline office
as a separate de novo bank, "Bank of Washtenaw," and that new bank also opened a
branch office in Ann Arbor.  The Banks' offices are located  throughout  Lenawee
County,  in the  southeastern  portion of  Hillsdale  County,  and the  southern
portion of Washtenaw  County.  The area in which the Banks' offices are located,
which  is  basically  southeastern  Michigan,  has  historically  been  rural in
character but now has a growing urban population as residents choose the area to
live in while commuting to Ann Arbor,  Detroit,  and Toledo.  The populations of
the cities in which the Banks' offices are located are approximately as follows:
Adrian--22,000;  Hudson--2,500; Morenci--2,300;  Saline--7,600; Tecumseh--8,700;
Waldron--600;  and Ann  Arbor--110,000.  The main office of Bank of Lenawee is a
three story 40,768 square foot building  constructed  in 1906. The other offices
of the Banks range in size from 1,200  square  feet to 4,000  square  feet.  The
majority  of the  offices  of Bank of  Lenawee  are  owned  and those of Bank of
Washtenaw are leased.

Item 3.  Legal Proceedings.

     During 1999 an  extraordinary  large  anticipated  loan loss was recognized
stemming from the Bank of Lenawee's  purchase of $3.0 million  participation out
of a $5.3 million credit package  originated by another bank ("Lead Bank").  The
Lead  Bank  retained   responsibility  for  overall  credit  administration  and
monitoring and maintained exclusive contact with the borrower after the loan was
made. The borrower, a manufacturer located in Big Rapids, Michigan ("Borrower"),
unbeknownst to the Bank of Lenawee,  began to experience financial  difficulties
almost immediately and may have provided misleading information to both the Bank
of Lenawee  and the Lead Bank.  The  credit is now  deemed to be  impaired  as a
consequence of the inability of the Borrower to continue as a going concern, and
insufficiency  of collateral  to cover the current  amount  outstanding  and the
inability  of the  individual  guarantors  to  honor  their  personal  guarantee
obligations.  Over the course of 2000,  Bank of  Lenawee  charged  $2.3  million
against  its  allowance  for loan losses with  respect to this  credit.  Bank of
Lenawee  has  also  instituted  legal  action  against  the Lead  Bank  claiming
negligence in its  administration of the credit and seeking recovery of the loss
incurred  as a result  of  participation  in the  credit.  That  litigation  may
continue  for some  time,  and as in all  similar  situations,  the  outcome  is
uncertain.

     Neither the Company nor the Bank is involved in any other legal proceedings
excepting routine litigation  incidental to the ordinary conduct of the business
of the Bank,  none of which would result in a material  impact on the Company or
the Bank, individually or in the aggregate, in the event of an adverse outcome.

Item 4.  Submission of Matters to Vote of Security Holders.

     No matters  were  submitted  to a vote of the  Company's  security  holders
during the fourth quarter of 2000.

Additional Item:  Executive Officers of Registrant

     The following information  concerning executive officers of the Company has
been omitted from the Registrant's  proxy statement pursuant to Instruction 3 to
Regulation SK, Item 401(b).

     Officers of the Company are appointed annually by the Board of Directors of
the Company and serve at the  pleasure  of the Board of  Directors.  Information
concerning these executive officers is given below:

     Patrick K. Gill (age 49) is the  President and Chief  Executive  officer of
the Company  and Bank of Lenawee.  He began his career at the Bank of Lenawee in
1992 as  Executive  Vice  President.  In July of 1994 Mr.  Gill was  promoted to
President and Chief Operating  Officer of Bank of Lenawee and the Company and in
January of 1997 he was promoted to President and Chief Executive Officer of Bank
of Lenawee and the Company.

     Pamela S. Fisher  (age 51) is the  Corporate  Secretary  of the Company and
Senior Vice President of Administrative  Services. Ms. Fisher joined the Bank of
Lenawee in 1979 and has served the bank in various  capacities.  She was elected
as Senior Vice President of Bank of Lenawee in 2000 and was elected Secretary of
the Company in 1995.

                                      -9-
<PAGE>
     Loren V. Happel (age 45) is the Company's  Treasurer,  First Vice President
and Chief Financial  Officer.  Mr. Happel joined the Company and Bank of Lenawee
in December of 1994. At that time he was appointed  Treasurer of the Company and
First Vice President and Chief Financial Officer of Bank of Lenawee.

     Douglas  L.  Kapnick  (age 57) was  elected  Chairman  of the  Board of the
Company in  September  of 2000 and has been a director of Bank of Lenawee  since
1982 and has been a director of the holding company since it was formed in 1993.
Mr.  Kapnick is President of Kapnick & Company a full service  insurance  broker
with  offices in Adrian and  Southfield  employing a total of  approximately  85
persons.


                                     PART II

Item 5.  Market For Registrant's Common Equity and Related Stockholder Matters.

     The information under the caption "COMMON STOCK  INFORMATION" at page 43 of
the  Company's  2000 Annual  Report to  shareholders,  is here  incorporated  by
reference to Exhibit 13.

Item 6.  Selected Financial Data.

     The information  under the caption  "SELECTED  FINANCIAL DATA" at page 2 of
the  Company's  2000 Annual  Report to  shareholders,  is here  incorporated  by
reference to Exhibit 13.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

     The information under the captions "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL  CONDITION  AND  RESULTS OF  OPERATIONS"  at pages 3 through 16 of the
Company's 2000 Annual Report to shareholders,  is here incorporated by reference
to Exhibit 13.

Item 7A:  Quantitative and Qualitative Disclosures About Market Risk

     The information under the captions "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL  CONDITION  AND RESULTS OF  OPERATIONS"  at pages 12 through 15 of the
Company's 2000 Annual Report to shareholders,  is here incorporated by reference
to Exhibit 13.

Item 8.  Financial Statements and Supplementary Data.

     The financial statements, notes and report of independent auditors included
in the Company's 2000 Annual Report to  shareholders,  is here  incorporated  by
reference to Exhibit 13.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

     None


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

     Information with respect to the Company's Executive Officers is included in
this report in Part I. The information with respect to Directors of the Company,
set forth under the caption  "Information About Directors and Nominees" on pages
7 through 9 of the  Company's  definitive  proxy  statement,  as filed  with the
Commission  and dated  March 19,  2001,  relating  to the April 18,  2001 Annual
Meeting of Shareholders, is incorporated herein by reference.

                                      -10-
<PAGE>
Item 11.  Executive Compensation.

     The  information  set forth under the caption  "Compensation  of  Executive
Officers" on page 11 through 13 of the Company's definitive proxy statement,  as
filed with the  Commission  and dated March 19, 2001,  relating to the April 18,
2001 Annual Meeting of Shareholders, is incorporated herein by reference.


Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     The  information  set  forth  under  the  caption  "VOTING  SECURITIES  AND
BENEFICIAL  OWNERSHIP  OF  MANAGEMENT  AND  OTHERS"  on page 6 of the  Company's
definitive  proxy  statement,  as filed with the  Commission and dated March 19,
2001,  relating  to the  April 18,  2001  Annual  Meeting  of  Shareholders,  is
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

     The  information  set forth under the caption  "CERTAIN  RELATIONSHIPS  AND
RELATED TRANSACTIONS" on page 12 of the Company's definitive proxy statement, as
filed with the  Commission  and dated March 19, 2001,  relating to the April 18,
2001 Annual Meeting of Shareholders, is incorporated herein by reference.


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Report on Form 8-K.

(a)  1.   Financial Statements
          The  following  consolidated  financial  statements of the Company and
          Report of Crowe  Chizek and Company  LLP,  Independent  Auditors,  are
          incorporated  by  reference  under Item 8  "Financial  Statements  and
          Supplementary Data" of this document:
               Consolidated Balance Sheets
               Consolidated Statements of Income
               Consolidated Statements of Changes in Shareholders' Equity
               Consolidated Statements of Cash Flows
               Notes to Consolidated Financial Statements
               Report of Crowe Chizek and Company LLP, Independent Accountants

     2.   Financial Statement Schedules
          Not applicable

     3.   Exhibits (Numbered in accordance with Item 601 of Regulation S-K)
          The Exhibit Index is located on the final page of this report on
          Form 10-K.

(b)  Reports on Form 8-K

     No  reports on Form 8-K were  filed  during the fourth  quarter of the year
     ended December 31, 2000.

                                      -11-
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, dated March 9, 2000.

                               LENAWEE BANCORP, INC.


                               //s// Patrick K. Gill
                               Patrick K. Gill
                               President and Chief Executive officer
                               (Principal Executive Officer)


                               //s// Loren V. Happel
                               Loren V. Happel
                               First Vice President and Chief Financial Officer)
                               (Chief Financial Officer)


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report has been signed by the following  persons on behalf of the Registrant and
in the capacities and on the dates  indicated.  Each director of the Registrant,
whose  signature  appears below,  hereby  appoints  Patrick K. Gill and Loren V.
Happel, and each of them severally,  as his or her attorney-in-fact,  to sign in
his or her name and on his or her behalf,  as a director of the Registrant,  and
to file with the Commission any and all Amendments to this Report on Form 10-K.

    Signature                                                     Date


//s// Allan F. Brittain                                            March 9, 2001
Allan F. Brittain

//s// Fred R. Duncan                                               March 9, 2001
Fred R. Duncan

//s// Edward J. Engle, Jr.                                         March 9, 2001
Edward J. Engle, Jr.

//s// William R. Gentner                                           March 9, 2001
William R. Gentner

//s// Patrick K. Gill                                              March 9, 2001
Patrick K. Gill

//s// Douglas L. Kapnick                                           March 9, 2001
Douglas L. Kapnick

//s// J. Paul Rupert                                               March 9, 2001
J. Paul Rupert

//s// Emory M. Schmidt                                             March 9, 2001
Emory M. Schmidt

//s// J. David Stutzman                                            March 9, 2001
J. David Stutzman


                                      -12-
<PAGE>
                                  EXHIBIT INDEX

     The  following  exhibits  are  filed  herewith,  indexed  according  to the
applicable assigned number:

Exhibit
Number

13        Rule 14a-3 Annual Report to Security Holders

21        Subsidiaries of Registrant


     The  following  exhibits,  indexed  according  to the  applicable  assigned
number,  were  previously  filed  by the  Registrant  and  are  incorporated  by
reference in this Form 10-K Annual Report.

Exhibit
Number

3.1       Articles  of  Incorporation  of the  Registrant  are  incorporated  by
          reference to Exhibit 3.1 of the Registrant's Registration Statement on
          Form 10, as amended.

3.2       Bylaws of the Registrant are  incorporated by reference to Exhibit 3.2
          of the Registrant's Registration Statement on Form 10, as amended.

4         Form of Registrant's Stock Certificate is incorporated by reference to
          Exhibit 4 of the  Registrant's  Registration  Statement on Form 10, as
          amended.

10        2001 Stock Option Plan, incorporated by reference to Appendix A to the
          Registrant's  Definitive  Proxy  Statement  filed with  respect to its
          April 18, 2001 annual meeting of shareholders.

10.1      1996 Stock Option Plan,  incorporated  by reference to Exhibit 10.1 to
          the Registrant's Registration Statement filed on Form 10, as amended.

10.2      Employment Agreement dated February 22, 1999, and amended February 22,
          2000,  between  Bank of Lenawee and Patrick K. Gill,  incorporated  by
          reference to Exhibit 10.2 of the Registrant's  Registration  Statement
          on Form 10, as amended.

10.3      Supplemental  Executive  Retirement Agreement dated December 19, 1997,
          between  Bank of  Lenawee  and  Allan  W.  Brittain,  incorporated  by
          reference to the  Registrant's  Registration  Statement on Form 10, as
          amended.

10.4      Consulting  Agreement  dated January 1, 1998,  between Bank of Lenawee
          and Allan W.  Brittain,  incorporated  by  reference  to  Registrant's
          Registration Statement on Form 10, as amended.


                                      -13-
<PAGE>
            Exhibit 13 - Rule 14a-3 Annual Report to Security Holders





                              Lenawee Bancorp, Inc.

                                      2000
                                  Annual Report







This 2000 Annual Report  contains  audited  financial  statements and a detailed
financial review.  This is Lenawee Bancorp's 2000 annual report to shareholders.
Although  attached to our proxy statement,  this report is not part of our proxy
statement,  is not  deemed to be  soliciting  material,  and is not deemed to be
filed with the  Securities  and Exchange  Commission  (the "SEC")  except to the
extent that it is expressly  incorporated  by reference in a document filed with
the SEC.

The 2000 Summary Annual Report to Shareholders accompanies this proxy statement.
That report presents  information  concerning the business and financial results
of Lenawee Bancorp in a format and level of detail that we believe  shareholders
will find useful and  informative.  Shareholder  who would like to receive  even
more  detailed  information  than that  contained in this 2000 Annual Report are
invited to request our Annual Report on Form 10-K.

Lenawee  Bancorp,  Inc.'s Form 10-K Annual Report to the Securities and Exchange
Commission  will be  provided to any  shareholder  without  charge upon  written
request.  Requests  should be addressed  to Lenawee  Bancorp,  Inc.,  Attention:
Pamela S. Fisher, 135 East Maumee Street, Adrian, Michigan 49221.
<PAGE>
                              LENAWEE BANCORP, INC.

                               2000 Annual Report



                                    CONTENTS



SELECTED FINANCIAL DATA....................................................    2

MANAGEMENT'S DISCUSSION AND ANALYSIS.......................................    3

REPORT OF INDEPENDENT AUDITORS.............................................   18


CONSOLIDATED FINANCIAL STATEMENTS

     CONSOLIDATED BALANCE SHEETS...........................................   19

     CONSOLIDATED STATEMENTS OF INCOME.....................................   20

     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY............   21

     CONSOLIDATED STATEMENTS OF CASH FLOWS.................................   22

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................   23


COMMON STOCK INFORMATION...................................................   43
<PAGE>
                             SELECTED FINANCIAL DATA
                      (In thousands, except per share data)
<TABLE>

                                                            2000        1999        1998        1997        1996
                                                            ----        ----        ----        ----        ----
<S>                                                       <C>         <C>         <C>         <C>         <C>
For the Year:
Total interest income                                     $ 20,851    $ 17,923    $ 17,517    $  16,929   $  15,281
Total interest expense                                       8,710       6,312       7,205        7,586       6,934
Net interest income                                         12,141      11,611      10,312        9,343       8,347
Provision for loan losses                                       30       2,560         239          245         253
Noninterest income                                           2,064       2,237       2,850        1,769       1,459
Noninterest expense                                          9,414       8,994       8,913        7,632       6,803
Income before income taxes                                   4,761       2,294       4,010        3,235       2,750
Net income                                                   3,205       1,563       2,660        2,132       1,865

Per Share Data:
Basic earnings per share                                  $   3.75    $   1.83    $   3.13    $    2.51   $    2.19
Diluted earnings per share                                    3.71        1.83        3.12         2.51        2.19
Cash dividends declared per share                              .94         .75         .67          .60         .58
Shareholders' equity and net ESOP obligation per share       29.91       26.72       26.26        23.71       21.61
Shareholders' equity per share                               23.90       21.64       21.92        20.24       18.46

At Year-End:
Total assets                                              $259,747    $239,904    $220,414    $ 212,920   $ 201,971
Loans receivable                                           214,512     197,308     158,487      163,039     151,021
Allowance for loan losses                                    2,287       4,646       2,182        1,964       1,761
Deposits                                                   224,143     199,206     185,891      174,973     159,324
Borrowed funds                                               7,936      16,177      10,626       16,346      22,935
Shareholders' equity and net ESOP obligations               25,467      22,775      22,345       20,074      18,397
Shareholders' equity                                        20,353      18,449      18,648       17,137      15,721

Financial:
Net interest income to average earning assets                5.26%       5.66%       5.07%        4.72%       4.75%
Return on average shareholders' equity and
  net ESOP obligation                                        13.29        6.65       12.46        10.99       10.47
Return on average shareholders' equity                       16.59        8.02       14.76        12.84       12.27
Return on average assets                                      1.28         .70        1.21         1.00         .97
Tier 1 leverage ratio                                         9.90        9.90        9.90         9.30        9.30
Dividend payout ratio                                        25.07       40.98       21.41        23.86       26.48
Average shareholders' equity and net ESOP
  obligation to average total assets                          9.60       10.52        9.72         9.11        9.26
Average shareholders' equity to average total assets          7.72        8.72        8.21         7.79        7.90
</TABLE>

All per  share  data has  been  adjusted  to  reflect  stock  splits  and  stock
dividends.
                                                                               2
<PAGE>
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

INTRODUCTION

The following  discussion provides information about the financial condition and
results of operations of Lenawee Bancorp, Inc.. It should be read in conjunction
with the consolidated  financial  statements  included  elsewhere in this Annual
Report.

BUSINESS OF LENAWEE BANCORP, INC.

Lenawee Bancorp, Inc. (the Company), a bank holding company, was incorporated in
Michigan in 1993.  On April 15, 1993,  the Company  acquired all of the stock of
the Bank of Lenawee  (the Bank),  a Michigan  banking  corporation  chartered in
1869.

The  business  of the Company is  concentrated  primarily  in a single  industry
segment - commercial banking. The Bank provides a full range of banking services
to individuals,  agricultural  businesses,  commercial businesses and industries
located in its service area.  The Bank maintains a diversified  loan  portfolio,
including  loans to individuals  for home  mortgages,  automobiles  and personal
expenditures,  and loans to  business  enterprises  for current  operations  and
expansion.  The Bank offers a variety of deposit products,  including  checking,
savings,  money  market,  individual  retirement  accounts and  certificates  of
deposit.

The principal markets for financial services are the mid-Michigan communities in
which  the  Bank  is  located  and  the  areas  immediately   surrounding  these
communities.  The Bank serves these  markets  through nine  locations in or near
these communities. The Bank of Lenawee owns Lenawee Financial Services, a wholly
owned subsidiary to provide local consumers brokerage and insurance products. At
the beginning of 2001, the Bank of Lenawee mortgage department was reestablished
as an independent company, Pavilion Mortgage Company, to provide a broader array
of product for expanding market needs. On January 8, 2001 the company  chartered
a new  community  bank,  the  Bank  of  Washtenaw,  and  assigned  the  customer
relationships  from its Saline,  Michigan  office to the new bank. The Bank does
not have any material foreign assets or income.

The principal source of revenue for the Bank is interest and fees on loans. On a
consolidated  basis,  interest  and  fees on  loans  accounted  for 84% of total
revenue in 2000, 79% in 1999, and 75% in 1998. Interest on investment securities
accounted for 6% of total revenue in 2000, 9% in 1999, and 10% in 1998.

2000 HIGHLIGHTS

Net income for 2000 was  $3,204,933,  resulting  in earnings per share of $3.75.
This compares with net income for 1999 of  $1,562,778,  or $1.83 per share.  Net
income for 1999 was  unfavorably  impacted by a one-time  pre-tax  adjustment to
earnings of  $2,400,000  which was used to  supplement  the  allowance  for loan
losses in anticipation of a loss associated with a loan  participation.  Without
the one-time  adjustment,  1999 net income would have been $3,080,777,  or $3.61
per share. Net income and earnings per share for 2000 represent  improvements of
4.03% and  3.88%,  respectively,  over the 1999  performance  exclusive  of this
one-time  matter.  Return on  average  assets  for 2000 was 1.28% and  return on
average shareholders' equity was 13.29%.

Total assets  increased to $259.7  million in 2000 from $239.9  million in 1999.
This  represents a $19.8 million or 8.25%  increase.  Net loans  increased $19.6
million  while the  majority of other  asset  categories  decreased  or remained
substantially unchanged from the prior year.
                                                                               3
<PAGE>
<TABLE>
Average Balance Sheet and Analysis of Net Interest Income
                                                                Years ended December 31,
                           ----------------2000-----------   -------------1999--------------   -------------1998--------------
                                         Average                Yield/     Average               Yield/   Average             Yield/
                                         Balance     Interest    Rate      Balance    Interest    Rate    Balance   Interest   Rate
                                         -------     --------    ----      -------    --------    ----    -------   --------   ----
                                                                             (Dollars in thousands)
Interest-earning assets:
<S>                                      <C>          <C>        <C>       <C>         <C>        <C>    <C>        <C>        <C>
  Loans receivable                       $  203,698   $ 19,268   9.46%     $ 171,276  $ 16,025    9.36%  $ 163,916  $ 15,292   9.33%
  Securities available for sale (1)          21,264      1,168   5.49         28,456     1,555    5.46      28,894     1,594   5.52
  Federal funds sold                          2,708        167   6.17          2,319       118    5.09       5,205       277   5.32
  Federal Home Loan Bank Stock                2,504        200   7.99          2,504       200    7.99       2,504       200   7.99
  Interest-bearing balances with other          782         48   6.14            517        25    4.84       3,027       154   5.09
    financial institutions               ----------   --------             ---------    ------             -------   -------
      Total interest-earning assets         230,956     20,851   9.03        205,072    17,923    8.74     203,546    17,517   8.61
Noninterest-earning assets:
  Cash and due from financial
    institutions                              8,369                            7,807                         6,000
  Premises and equipment, net                 6,333                            6,556                         6,533
  Other assets                                5,466                            3,893                         3,403
                                         ----------                        ---------                     ---------
      Total assets                       $  251,124                        $ 223,328                     $ 219,482
                                         ==========                        =========                     =========

Interest-bearing liabilities:
  Interest-bearing demand deposits       $   53,156    $ 1,821   3.43%      $ 48,636    $1,337    2.75%   $ 45,655     $1,301  2.85%
  Savings deposits                           23,756        358   1.51         24,293       379    1.56      23,730        468  1.97
  Time deposits                              97,827      5,675   5.80         79,088     3,977    5.03      80,794      4,492  5.56
  Repurchase agreements and other
    borrowings                                3,955        191   4.83          3,942       155    3.93       3,335        143  4.29
  FHLB advances                              10,637        665   6.25          7,812       464    5.94      13,194        801  6.07
                                          ---------  ---------             ---------    ------           ---------  ---------
      Total interest-bearing                189,331      8,710   4.60        163,771     6,312    3.85     166,708      7,205  4.32
         liabilities
Noninterest-bearing liabilities:
  Demand deposits                            35,839                           34,634                        29,907
  Other liabilities                           1,846                            1,430                         1,527
                                          ---------                        ---------                      --------
      Total liabilities                     227,016                          199,835                       198,142
  Common stock subject to
      repurchase obligation in ESOP           4,720                            4,012                         3,317
  Shareholders' equity                       19,388                           19,481                        18,023
      Total liabilities and
         shareholders' equity             $ 251,124                        $ 223,328                     $ 219,482
                                          =========                        =========                     =========

Net interest income/interest rate
  spread                                              $ 12,141   4.43%                $ 11,611    4.89%              $ 10,312  4.29%
                                                      ========   =====                ========    =====              ========  =====

Net interest margin (2)                                          5.26%                            5.66%                        5.07%
                                                                 =====                            =====                        =====
Average interest-earning assets to
average interest-bearing liabilities                            121.9%                          125.22%                      122.10%
                                                                ======                          =======                      =======
</TABLE>
(1)  Interest income on tax-exempt securities has not been adjusted to a taxable
     equivalent basis.
(2)  Net interest earnings divided by average interest-earning assets.

NET INTEREST INCOME

The largest component of the Bank's operating income is net interest income. Net
interest  income is the difference  between  interest and fees earned on earning
assets and the  interest  paid on  deposits  and other  borrowings.  A number of
factors influence net interest income. These factors include:  changes in volume
and mix of interest-earning assets and interest-bearing liabilities,  government
monetary  and fiscal  policies,  national and local  market  interest  rates and
customer preference.
                                                                               4
<PAGE>
Net interest  income was  $12,141,000 in 2000, an increase of $530,000 or 4.56%.
Net interest income increased $1,299,000 or 12.60% in 1999 compared to 1998. The
Bank's  2000  increase in net  interest  income was  primarily  the result of an
increase in earning assets.

Net interest  margin is net interest  income divided by average  earning assets.
Net interest  margin  declined to 5.26% in 2000 from 5.66% in 1999 and was 5.07%
in 1998.  During 1999,  the Federal  Reserve  increased  the discount rate by 75
basis points.  In addition,  the Federal Reserve increased the discount rate 100
basis points during the first six months of 2000. As a result,  the Bank's prime
lending  rate  increased  from 8.5% at December 31, 1999 to 9.5% at December 31,
2000. The Bank manages  pricing of the sources of interest  income with its cost
of funding  such that  changes  in the  national  interest  rates have a minimal
impact on net income.

The cost  associated  with  sustaining and attracting  additional  local deposit
funding  has also  increased;  however,  the  interest  rates  required  for the
maintenance of local deposits appear to be less sensitive to a general  increase
in market rates and more responsive to quality of service.

The following  table  analyzes the effect of volume and rate changes on interest
income and expense for the periods indicated.
<TABLE>
                                       ---------2000 Compared to 1999-------  --------1999 Compared to 1998---------
                                         Amount        Amount         Net       Amount       Amount         Net
                                         Due to        Due to      Increase     Due to       Due to      Increase
                                         Volume         Rate      (Decrease)    Volume        Rate      (Decrease)
                                         ------         ----      ----------    ------        ----      ----------
                                                                      (In thousands)
<S>                                     <C>          <C>          <C>           <C>          <C>          <C>
Interest income
   Loans receivable                     $   3,065    $     178    $   3,243     $    688     $     45     $     733
   Securities available for sale             (395)           8         (387)         (24)         (15)          (39)
   Federal funds sold                          22           27           49         (147)         (12)         (159)
   Interest-bearing balances with
     financial institutions                    15            8           23         (122)          (7)         (129)
                                        ---------    ---------    ---------     --------     --------     ---------
     Total interest income                  2,707          221        2,928          395           11           406

Interest expense
   Interest-bearing deposits
     Demand                                   133          351          484           83          (47)           36
     Savings                                   (8)         (13)         (21)          11         (100)          (89)
     Time                                   1,030          668        1,698          (93)        (422)         (515)
   Repurchase agreements and
     other borrowings                           1           35           36           25          (13)           12
   FHLB advances                              175           26          201         (320)         (17)         (337)
                                        ---------    ---------    ---------     --------     --------     ---------
     Total interest expense                 1,331        1,067        2,398         (294)        (599)         (893)
                                        ---------    ---------    ---------     --------     --------     ---------

Net interest income                     $   1,376    $    (846)   $     530     $    689     $    610     $   1,299
                                        =========    =========    =========     ========     ========     =========
</TABLE>
The Bank  experiences an immediate and  short-term  benefit from the increase in
the prime lending rate. A large portion of the Bank's variable rate business and
consumer loan  portfolios  are tied to the prime lending rate.  The Bank manages
pricing of the  sources  of  interest  income and its cost of funding  such that
changes in the  national  interest  rates are expected to have minimal long term
impact on net income.
                                                                               5
<PAGE>
PROVISION FOR LOAN LOSSES

The  provision  for loan losses is the amount  added to the  allowance  for loan
losses to absorb losses that are currently anticipated.  The loan loss provision
is based on  historical  loss  experience  and such  other  factors,  which,  in
management's  judgment,  deserve current  recognition in maintaining an adequate
allowance for loan losses.

The  provision  for loan losses was  $30,000 in 2000,  $2,560,000  in 1999,  and
$239,000  in  1998.   The  provision  was  higher  during  1999  because  of  an
extraordinary  large  anticipated  loan loss stemming from the Bank of Lenawee's
purchase of $3.0  million  participation  out of a $5.3 million  credit  package
originated by another bank ("Lead Bank"). The Lead Bank retained  responsibility
for overall  credit  administration  and  monitoring  and  maintained  exclusive
contact with the borrower after the loan was made. The borrower,  a manufacturer
located  in Big  Rapids,  Michigan  ("Borrower"),  unbeknownst  to the  Bank  of
Lenawee,  began to experience financial  difficulties almost immediately and may
have provided  misleading  information  to both the Bank of Lenawee and the Lead
Bank.  The credit is now deemed to be impaired as a consequence of the inability
of the Borrower to continue as a going concern,  and insufficiency of collateral
to cover the current  amount  outstanding  and the  inability of the  individual
guarantors to honor their  personal  guarantee  obligations.  Over the course of
2000, Bank of Lenawee charged $2.3 million against its allowance for loan losses
with respect to this credit.  Bank of Lenawee has also  instituted  legal action
against the Lead Bank claiming  negligence in its  administration  of the credit
and seeking  recovery of the loss incurred as a result of  participation  in the
credit.  That  litigation  may  continue  for some time,  and as in all  similar
situations, the outcome is uncertain.

The allowance for loan losses to total loan ratio was 1.08%, 2.41% and 1.40% for
2000, 1999 and 1998.

NONINTEREST INCOME

Noninterest  income  was  $2,064,000  for the year  ended  December  31,  2000 a
$173,000 or 7.73% decrease compared to the year ended December 31, 1999.

The largest contributing factor to the 2000 decrease in noninterest income was a
$380,000 reduction in net gains on mortgage loan sales. The increase in interest
rates  during  2000  slowed  the  pace  of the  mortgage  loan  origination  and
refinancing business.

Noninterest  income was $2,237,000  for the year ended  December 31, 1999.  This
represented a $613,000 or 21.5% decrease over 1998.

The low interest rate  environment  experienced  in 1998  contributed to a heavy
volume of mortgage loan origination and  refinancing.  Net gain on mortgage loan
sales decreased $962,000 or 48.24% compared to 1999.

NONINTEREST EXPENSE

Noninterest  expense  increased  $420,000 or 4.67%  compared to 1999.  Through a
combination  of increased net interest  income and cost control,  the Bank's non
interest  expense to revenue  efficiency ratio only changed slightly from 64.95%
in 1999 to 66.26% in 2000.

Salary  expense  decreased  $16,000 or .32%  compared to 1999.  The decrease was
attributable  to reduced  employee  incentive  payments.  Full time  equivalents
(FTE's) increased to 127 at December 31, 2000 compared to 123 in 1999 and 117 in
1998.
                                                                               6
<PAGE>
Other taxes,  consisting primarily of Michigan Single Business Tax, decreased in
1999 as a result of decreased state taxable revenues.

Professional  fees  increased  $183,000 or 87.56%  during 2000  primarily due to
increased  outsourcing  and  utilization  of legal,  accounting  and loan review
services.

Noninterest  expense in 1999  increased  $81,000 or .91%  compared to 1998.  The
modest  increase is reflective of a combination  of cost control  management and
enhanced utilization of existing resources.


INCOME TAX EXPENSE

The Bank's  income tax expense was  $1,556,000  in 2000  compared to $731,000 in
1999 and  $1,350,000  in 1998.  The increase from 1999 to 2000 was primarily the
result of a return to  routine  operations  after  recognizing  a  $782,000  tax
benefit  associated  with  the  participation  loan  loss  as  discussed  in the
introduction

The  statutory  federal tax rate during 2000,  1999 and 1998 was 34%. The Bank's
effective  tax rate  was  lower  than the  statutory  rate in all  three  years,
primarily due to tax-exempt  interest income. The reduction in tax-exempt income
in relation to taxable  income  increased the effective tax rate to 33% in 2000,
from 32% in 1999 which was slightly lower than the 34% rate in 1998.

                                                                               7
<PAGE>
SECURITIES PORTFOLIO

The following table shows securities by  classification  as of December 31, 2000
and the amounts and weighted-average  yields by maturity period.  Securities not
due at a single maturity date,  primarily  mortgage-backed  securities,  are not
shown.
<TABLE>
                          --------------------------------------------MATURING----------------------------------------------------
                                 Within          After One But       After Five But           After
                                   One            Within Five          Within Ten              Ten
                                  Year               Years                Years               Years                Total
                                                            (Dollars in thousands)
                          Amount     Yield    Amount    Yield      Amount      Yield     Amount    Yield     Amount       Yield
                          ------     -----    ------    -----      ------      -----     ------    -----     ------       -----
<S>                       <C>        <C>      <C>        <C>       <C>         <C>       <C>       <C>       <C>          <C>
Available For Sale
U.S. Treasuries
and government
  agencies                $     -             $  7,283     5.33%   $      -               $    -             $  7,283     5.33%
State and municipal (1)     1,675     6.01%      3,047     6.77       1,454      6.27%       735     7.0%       6,911     6.51%
Other securities              551     5.61           -                    -                    -                  551     5.61%
                          -------             --------             --------               ------             --------
   Total                  $ 2,226             $ 10,330             $  1,454               $  735             $ 14,745
                          =======             ========             ========               ======             ========
</TABLE>
(1) Yields on tax-exempt securities are computed on a fully taxable-equivalent
basis.

The Bank's  Asset/Liability  Management Committee (Committee) is responsible for
developing  investment  guidelines and strategies.  The Committee  relies on the
expertise of an investment  advisor to select  appropriate  investments  for the
portfolio.  Decisions to purchase  securities and the maturity date selected are
coordinated with an overall plan to manage liquidity and interest rate exposure.

The  Committee  does not  invest  in  derivative  securities.  The Bank  held no
impaired securities at December 31, 2000. As of December 31, 2000, the aggregate
book value of investment  securities issued by the State of Michigan and all its
political  subdivisions  totaled $5.1 million with an aggregate  market value of
$5.2 million.

The U.S. Treasury and government  agency securities  identified as available for
sale are  laddered to mature over five years with a 2.5 year average  life.  The
goal is to reduce the  volatility in the  securities  portfolio  yield and still
provide a predictable source of liquidity.

The Company had no held to maturity securities as of December 31, 2000, 1999 and
1998.  The  book  value  of  securities  available  for  sale,  as of the  dates
indicated, are summarized as follows:
<TABLE>
                                                                   -----------December 31,-------------
                                                                      2000        1999         1998
                                                                      ----        ----         ----
                                                                             (In thousands)
   <S>                                                            <C>           <C>          <C>
   U.S. Treasuries and government  agencies                       $   7,283     $  7,169     $ 12,774
   State and municipal                                                6,911        9,376        9,232
   Other securities                                                   5,127        6,479        7,413
                                                                  ---------     --------     --------

                                                                  $  19,321     $ 23,024     $ 29,419
                                                                  =========     ========     ========
</TABLE>
                                                                               8
<PAGE>
LOAN PORTFOLIO

Lending efforts are concentrated  primarily in the Michigan communities in which
the Bank's offices are located. The Bank has no foreign loans.

Total  loans  increased  $17.2  million  or 8.7%  from  year-end  1999 to  2000.
Commercial,  agricultural,  real  estate-construction  and  consumer  loans  all
increased  during  2000 as a result of strong  demand  and a  relatively  stable
economy. Commercial, financial and agricultural loans increased $13.7 million or
10.1%,  real  estate-construction  loans  increased  $3.5  million  or 35.4% and
consumer loans increased $3 million or 8.6%.  However,  the increase in interest
rates has significantly  reduced the mortgage refinance business during 2000 and
1999. Accordingly, real estate-mortgage loans decreased $3 million or 17.4% from
2000 to 1999.  The Bank  offers a variety  of  non-conforming  residential  real
estate products that have been well received by individuals seeking to finance a
residential purchase.

The following table presents the gross amount of loans outstanding by loan type:
<TABLE>
                                                    --------------------------December 31,-------------------------
                                                        2000         1999         1998         1997         1996
                                                        ----         ----         ----         ----         ----
                                                                             (In thousands)
<S>                                                 <C>          <C>          <C>           <C>          <C>
Commercial, financial and agricultural              $  149,058   $  135,324   $  112,451    $ 106,494    $   97,869
Real estate - construction                              13,383        9,934            -            -             -
Real estate - mortgage                                  14,225       17,203       17,010       27,835        27,592
Consumer                                                37,846       34,847       29,026       28,710        25,560
                                                    ----------   ----------   ----------    ---------    ----------

                                                    $  214,512   $  197,308   $  158,487    $ 163,039    $  151,021
                                                    ==========   ==========   ==========    =========    ==========
</TABLE>
The following  table shows the maturity of loans  outstanding  (in thousands) at
December 31, 2000.  Also provided are the amounts due after one, year classified
according to their sensitivity to changes in interest rates.
<TABLE>
                                                                             Due
                                                              Due         After One          Due
                                                            Within       But Within         After
                                                           One Year      Five Years      Five Years        Total
<S>                                                       <C>            <C>            <C>             <C>
Commercial, financial and agricultural                    $    53,801    $    72,536    $    22,721     $   149,058
Real estate-construction                                          477            147         12,759          13,383
Real estate-mortgage                                            3,709          8,906          1,610          14,225
Consumer                                                       10,426         19,504          7,916          37,846
                                                          -----------    -----------    -----------     -----------

                                                          $    68,413    $   101,093    $    45,006     $   214,512
                                                          ===========    ===========    ===========     ===========
</TABLE>
<TABLE>
<S>                                       <C>
Loans due after one year:
   Fixed rate                             $    94,945
   Floating or adjustable rate                 51,154
                                          -----------
                                          $   146,099
</TABLE>
                                                                               9
<PAGE>
ASSET QUALITY

Management believes that a conservative credit culture is critical to successful
performance.  Through Officer and Director Loan Committees,  management  reviews
and monitors the quality of the various loan  portfolios.  Loan  performance  is
also reviewed regularly by internal and external loan review personnel. The Bank
continues to use independent  loan review  services.  A stable regional  economy
continues to contribute to a healthy lending environment.

Loans are placed on non-accrual status when principal or interest is past due 90
days or more, the loan is not  well-secured  and is in the process of collection
or when  reasonable  doubt  exists  concerning  collectibility  of  interest  or
principal.  Any  interest  previously  accrued  in the  current  period  but not
collected is reversed and charged against current earnings.

At December 31,  2000,  the Bank had no loans for which  payments are  presently
current,  but the  borrowers  are  experiencing  financial  difficulties.  As of
December 31, 2000 there were no  concentrations  of loans exceeding 10% of total
loans.

The following  table  summarizes  non-accrual  and past due loans and other real
estate owned:
<TABLE>
                                                    --------------------------December 31,-------------------------
                                                        2000         1999         1998         1997         1996
                                                        ----         ----         ----         ----         ----
                                                                             (In thousands)
   <S>                                               <C>          <C>           <C>          <C>          <C>
   Non-accruing loans                                $     113    $   3,071     $    121     $     78     $      24
   Loans past due 90 days or more                          523          275          275          367           369
                                                     ---------    ---------     --------     --------     ---------
     Total nonperforming loans                             636        3,346          396          445           393
   Other real estate                                       294          255          341          232           415
                                                     ---------    ---------     --------     --------     ---------

     Total nonperforming assets                      $     930    $   3,601     $    737     $    677     $     808
                                                     =========    =========     ========     ========     =========

   Nonperforming loans as a percent of
     total loans                                          .30%         1.73%         .25%         .27%         .26%
   Nonperforming assets as a percent of
     total loans                                          .43%         1.87%         .47%         .42%         .54%
   Nonperforming loans as a percent of the
     loan loss reserve                                  27.81%        77.50%       18.15%       22.66%       22.32%
</TABLE>
                                                                              10
<PAGE>
ALLOWANCE FOR LOAN LOSSES

The following table summarizes changes in the allowance for loan losses.
<TABLE>
                                                    --------------------Years ended December 31,-------------------
                                                                             (in thousands)
                                                        2000         1999         1998         1997         1996
                                                        ----         ----         ----         ----         ----
<S>                                                  <C>          <C>           <C>          <C>          <C>
Loans:
   Average daily balance of loans for the year, net  $ 203,698    $ 171,276     $163,916     $158,603     $ 141,422
   Amount of loans outstanding at end of year, net   $ 212,317    $ 192,721     $156,272     $161,102     $ 149,373

Allowance for loan losses:
   Balance at beginning of year                      $   4,646    $   2,182     $  1,964     $  1,761     $   1,651
   Loans charged off:
     Real estate - mortgage                                  -           34           13            -             -
     Real estate - construction                             18            -            -            -             -
     Commercial and agricultural                         2,339           28           14           15             8
     Consumer                                              120           96           26           61           166
                                                     ---------    ---------     --------     --------     ---------
                                                         2,477          158           53           76           174
                                                     ---------    ---------     --------     --------     ---------
   Recoveries of loans previously charged-off:
     Real estate-mortgage                                    2           15            -            -             -
     Commercial and agricultural                            36            6           10           14            14
     Consumer                                               50           41           22           20            17
                                                     ---------    ---------     --------     --------     ---------
                                                            88           62           32           34            31
                                                     ---------    ---------     --------     --------     ---------

   Net loans charged-off (recoveries)                    2,389           96           21           42           143
   Additions to allowance charged to operations             30        2,560          239          245           253
                                                     ---------    ---------     --------     --------     ---------
     Balance at end of year                          $   2,287    $   4,646     $  2,182     $  1,964     $   1,761
                                                     =========    =========     ========     ========     =========
Ratios:
   Net loans charged off to average net loans
     outstanding                                          1.17%         .06%         .01%         .03%         .10%
   Allowance for loan losses to net loans
     outstanding                                          1.08%        2.41%        1.40%        1.22%        1.18%
</TABLE>
The allowance for loan losses has been allocated  according to the amount deemed
to be  reasonably  necessary  to provide  for the  probability  of losses  being
incurred as follows:
<TABLE>
                      ------------------------------------------------December 31,----------------------------------------
                           2000                    1999                   1998                   1997                   1996
                           ----                    ----                   ----                   ----                   ----
                                 Percent                Percent               Percent               Percent               Percent
                                of Loans               of Loans              of Loans              of Loans              of Loans
                                to Total               to Total              to Total              to Total              to Total
                     Allowance   Loans     Allowance    Loans    Allowance    Loans    Allowance    Loans    Allowance    Loans
                     ------------------------------------------------------------------------------------------------------------
                                                                    (In thousands)
<S>                  <C>        <C>        <C>          <C>      <C>         <C>       <C>          <C>      <C>         <C>
Commercial, financial
  and agricultural   $ 1,774      69.49%    $ 4,010     68.59%   $ 1,680      70.95%   $ 1,556      65.32%   $ 1,564      64.80%
Real estate -
    mortgage               1       6.63          33      8.72         18      10.73          2      17.07          1      18.27
Real estate -
    construction         134       6.23          99      5.03         74          -         49          -         38          -
Consumer                 119      17.65         135     17.66        130      18.32         27      17.61          2      16.93
Unallocated              259          -         369         -        280          -        330          -        156          -
                   ---------     ------    --------    ------    -------     ------    -------     ------    -------     ------
                   $   2,287     100.00%   $  4,646    100.00%   $ 2,182     100.00%   $ 1,964     100.00%   $ 1,761     100.00%
                   =========               ========              =======               =======               =======
</TABLE>
                                                                              11
<PAGE>
LIQUIDITY

Liquidity  is  generally  defined  as the  ability  to meet cash  flow  needs of
customers  for loans and deposit  withdrawals.  To meet cash flow  requirements,
sufficient  sources of liquid funds must be  available.  These  sources  include
short-term  investments,  repayments of loans,  maturing and called  securities,
sales of assets, growth in deposits and other liabilities and profits.

At December 31, 2000,  the Bank had $5.2 million in federal funds sold. The Bank
also has $13.1 million of additional borrowing capacity at the Federal Home Loan
Bank and $4 million of borrowing capacity with correspondent banks.

During  2000,  the Bank also  generated  $10.5  million  in cash from  operating
activities.  The Bank's local community customer deposit base is its most stable
and ongoing  source of funding.  All of these sources are available to meet cash
flow needs of loan and deposit customers.

The Company also needs cash to pay  dividends to its  shareholders.  The primary
source of cash is the  dividends  paid to the  parent  by the  Bank.  Management
believes  that cash from  operations  is sufficient to supply the cash needed to
continue paying a reasonable dividend.


CAPITAL RESOURCES

At December 31, 2000, equity capital totaled $20.4 million.  Management monitors
the capital levels of the Company and the Bank to provide for current and future
business  opportunities and to meet regulatory guidelines for "well capitalized"
institutions.  "Well  capitalized"  institutions  are  eligible for reduced FDIC
premiums, and also enjoy other reduced regulatory restrictions.

At December 31, 2000, the Company and the Bank exceeded all  regulatory  minimum
capital requirements and are considered to be "well capitalized."


ASSET LIABILITY MANAGEMENT

Asset liability  management  involves  developing,  implementing  and monitoring
strategies to maintain  sufficient  liquidity,  maximize net interest income and
minimize the impact that significant fluctuations in market interest rates would
have on  earnings.  The Bank's  Asset/Liability  Committee  is  responsible  for
managing this process.

Quantitative and Qualitative Disclosures about Market Risk
The Bank's  primary  market risk exposure is interest rate risk and, to a lesser
extent,  liquidity risk. The Bank's transactions are denominated in U.S. dollars
with no  significant  foreign  exchange  exposure.  Also, the Bank has a limited
exposure to commodity  prices related to  agricultural  loans.  Any impacts that
changes in foreign  exchange  rate and  commodity  prices would have on interest
rates are assumed to be insignificant.

Interest rate risk (IRR) is the exposure of a banking  organization's  financial
condition to adverse movements in interest rates.  Accepting this risk can be an
important  source of profitability  and stockholder  value;  however,  excessive
levels  of  IRR  could  pose a  significant  threat  to  earnings  and  capital.
Accordingly,  effective risk  management that maintains IRR at prudent levels is
essential to the Bank's safety and soundness.
                                                                              12
<PAGE>
Evaluating  exposure to changes in interest  rates  includes  assessing both the
adequacy of  management's  process  used to control  IRR and the  organization's
quantitative level of exposure.  When assessing the IRR management process,  the
Bank  seeks  to  ensure  that  appropriate  policies,   procedures,   management
information  systems  and  internal  controls  are in place to  maintain  IRR at
prudent levels with  consistency  and  continuity.  Evaluating the  quantitative
level of IRR exposure  requires the assessment of existing and potential  future
effects of changes in interest rates on its  consolidated  financial  condition,
including capital adequacy, earnings,  liquidity, and, where appropriate,  asset
quality.

The Federal  Reserve Board,  together with the Office of the  Comptroller of the
Currency and the Federal Deposit Insurance  Corporation,  adopted a Joint Agency
Policy Statement on IRR effective June 26, 1996. The policy  statement  provides
guidance to examiners and bankers on sound  practices  for managing  IRR,  which
will form the basis for ongoing  evaluation of the adequacy of IRR management at
supervised institutions. The policy statement also outlines fundamental elements
of sound  management that have been identified in prior Federal Reserve guidance
and discusses the  importance of these  elements in the context of managing IRR.
Specifically,  the guidance emphasizes the need for active board of director and
senior  management  oversight and a comprehensive  risk management  process that
effectively identifies, measures and controls IRR.

The Bank  derives  the  majority  of its  income  from the  excess  of  interest
collected  over interest  paid.  The rates of interest  earned on its assets and
owed on its liabilities generally are established  contractually for a period of
time. Since market interest rates change over time, the Bank is exposed to lower
profit  margins (or losses) if it cannot  adapt to interest  rate  changes.  For
example,  assume that an  institution's  assets carry  intermediate or long-term
fixed rates and that those  assets are funded with  short-term  liabilities.  If
market  interest  rates  rise by the time  the  short-term  liabilities  must be
refinanced,   the  increase  in  the  institution's   interest  expense  on  its
liabilities  may not be  sufficiently  offset if assets  continue to earn at the
long-term  fixed rates.  Accordingly,  an  institution's  profits could decrease
because the institution  will either have lower net interest income or possibly,
net interest expense. Similar risks exist when assets are subject to contractual
interest rate  ceilings,  or rate  sensitive  assets are funded by  longer-term,
fixed-rate liabilities in a decreasing rate environment.

Various  techniques  might be used by an  institution  to minimize IRR. The Bank
periodically  analyzes  assets and  liabilities  and makes future  financing and
investment  decisions  based on payment  streams,  interest  rates,  contractual
maturities,  and estimated  sensitivity to actual or potential changes in market
interest   rates.   Such   activities   fall  under  the  broad   definition  of
asset/liability management.

Several ways an institution can manage IRR include:  selling  existing assets or
repaying  certain  liabilities;  matching  repricing  periods for new assets and
liabilities,  for example,  by shortening  terms of new loans or investments and
hedging  existing  assets,   liabilities,   or  anticipated   transactions.   An
institution might also invest in more complex financial  instruments intended to
hedge or otherwise change IRR. Interest rate swaps,  futures contracts,  options
on futures, and other such derivative  financial  instruments are often used for
this purpose.  Because these instruments are sensitive to interest rate changes,
they require management's expertise to be effective.  The Bank has not purchased
derivative  financial  instruments in the past and does not presently  intend to
purchase such instruments.

The Bank is also  subject  to  repayment  risk when  interest  rates  fall.  For
example, mortgage loans and other financial assets may be prepaid by a debtor so
that the debtor may refinance their obligations at new, lower rates. Prepayments
of assets  carrying  higher  rates  reduces  interest  income and overall  asset
yields.

Certain  portions of an  institution's  liabilities  may be short-term or due on
demand,  while  most  of its  assets  may be  invested  in  long-term  loans  or
investments.  Accordingly,  the Bank  seeks to have in place  sources of cash to
meet short-term  demands.  These funds can be obtained by increasing deposits or
selling assets. Also, Federal Home Loan Bank advances and short-term  borrowings
provide additional sources of liquidity.
                                                                              13
<PAGE>
The following tables provide information about the Bank's financial  instruments
that are  sensitive  to changes in interest  rates as of  December  31, 2000 and
1999. The Bank had no derivative financial instruments, or trading portfolio, as
of  that  date.  The  expected   maturity  date  values  for  loans  receivable,
mortgage-backed  securities and investment  securities were  calculated  without
adjusting  the  instrument's  contractual  maturity  date  for  expectations  of
prepayments.  Expected maturity date values for  interest-bearing  core deposits
were not based upon  estimates  of the period over which the  deposits  would be
outstanding, but rather the opportunity for repricing.

Principal/notional amount as of December 31, 2000 maturing in:
<TABLE>
                                                                                                                Fair
                                  2001       2002       2003       2004       2005     Thereafter    Total     Value
                                  ----       ----       ----       ----       ----     ----------    -----     -----
                                                                 (In thousands)
<S>                              <C>         <C>        <C>        <C>        <C>        <C>        <C>       <C>
Rate Sensitive Assets
Federal funds sold               $  5,150    $    -     $     -    $     -    $     -    $     -    $ 5,150   $   5,150
   Average interest rate            6.50%         -                      -                     -      6.50%
Fixed interest rate securities      1,657      8,073      1,500      1,621        675        410     13,936      13,817
   Average interest rate            5.73%      5.29%      6.02%      5.60%      5.78%      5.85%      5.50%
Tax-exempt fixed rate securities      485        225        945        660        770      2,352      5,437       5,504
   Average interest rate            4.71%      5.29%      4.36%      5.90%      4.49%      5.42%      5.09%
FHLB stock                          2,504          -          -          -          -          -      2,504       2,504
   Average interest rate            8.00%          -          -          -          -          -      8.00%
FRB stock                             360          -          -          -          -          -        360         360
   Average interest rate            6.00%          -          -          -          -          -      6.00%
Fixed interest rate loans          12,203      6,891     10,733     21,661     11,384     44,276    107,148     106,779
   Average interest rate            8.90%      9.13%      9.22%      8.94%      8.87%      7.54%      8.39%
Variable interest rate loans       56,210     17,259     17,910     13,119      2,136        730    107,364     107,323
   Average interest rate           10.08%      8.65%      9.13%      9.06%      9.00%      8.99%      9.54%

Rate Sensitive Liabilities
Interest-bearing demand          $ 55,611    $     -    $     -    $     -    $     -    $     -    $55,611   $  55,611
   Average interest rate             .86%          -          -          -          -          -       .86%
Savings                            23,075          -          -          -          -          -     23,075      23,075
   Average interest rate            1.50%          -          -          -          -          -      1.50%
Time deposits                      69,861     19,270     14,967      3,740        523          -    108,361     109,317
   Average interest rate            6.08%      5.86%      6.15%      6.69%      6.66%          -      6.07%
Securities sold under  agreements
   to repurchase                    2,083          -          -          -          -          -      2,083       2,083
   Average interest rate            3.60%          -          -          -          -          -      3.60%
Fixed interest rate FHLB advances     348        376        407        441        477      3,804      5,853       5,788
   Average interest rate            6.04%      6.04%      6.04%      6.04%      6.04%      6.04%      6.04%
</TABLE>
                                                                              14
<PAGE>
Principal/notional amount as of December 31, 1999 maturing in:
<TABLE>
                                                                                                               Fair
                                  2000       2001       2002       2003       2004     Thereafter   Total     Value
                                  ----       ----       ----       ----       ----     ----------   -----     -----
                                                                 (In thousands)
<S>                              <C>         <C>        <C>        <C>        <C>        <C>        <C>        <C>
Rate Sensitive Assets
Federal funds sold               $  2,200    $     -    $     -    $     -    $     -    $     -    $ 2,200    $ 2,200
   Average interest rate            1.75%          -          -          -          -          -      1.75%
Fixed interest rate securities        525      3,628      5,404          -          -      6,515     16,072     15,660
   Average interest rate            5.79%      5.85%      6.20%          -          -      5.75%      5.92%
Tax-exempt fixed rate securities    2,192        800        628      1,299        376      2,164      7,459      7,364
   Average interest rate            3.70%      4.01%      4.88%      4.03%      3.39%      4.65%      4.15%
FHLB stock                          2,504          -          -          -          -          -      2,504      2,504
   Average interest rate            8.00%          -          -          -          -          -      8.00%
FRB stock                             360          -          -          -          -          -        360        360
   Average interest rate            6.00%          -          -          -          -          -      6.00%
Fixed interest rate loans          24,213     10,346      8,443     11,677     21,611     35,902    112,192    111,815
   Average interest rate            8.30%      8.95%      9.10%      8.86%      8.45%      8.40%      8.54%
Variable interest rate loans       45,520     12,279     17,941      3.074      5,900        402     85,116     85,116
   Average interest rate            9.04%      8.57%      8.50%      8.54%      8.58%      8.10%      8.80%

Rate Sensitive Liabilities
Interest-bearing demand          $ 52,829    $     -    $     -    $     -    $     -    $     -    $52,829    $52,829
   Average interest rate             .81%          -          -          -          -          -       .81%
Savings                            23,029          -          -          -          -          -     23,029     23,029
   Average interest rate            1.50%          -          -          -          -          -      1.50%
Time deposits                      32,328     19,353     10,617     15,324      9,039          -     86,661     87,189
   Average interest rate            5.22%      5.06%      5.75%      5.84%      5.76%          -      5.42%
 Securities sold under  agreements
   to repurchase                    2,002          -          -          -          -          -      2,002      2,002
   Average interest rate            4.61%          -                     -          -          -      4.61%
Fixed interest rate FHLB advances   8,322        348        376        407        440      4,281     14,174     14,181
   Average interest rate            5.96%      6.04%      6.04%      6.04%      6.04%      6.04%      5.99%
</TABLE>

FORWARD-LOOKING STATEMENTS

This  discussion  and analysis of financial  condition and results of operations
and other sections of this Annual Report contain forward looking statements that
are based on management's beliefs, assumptions, current expectations,  estimates
and projections about the financial services industry, the economy and about the
Company itself. Words such as "anticipates", "believes", "estimates", "expects",
"forecasts",  "foresee", "intends", "is likely", "plans", "product", "projects",
variations of such words and similar  expressions  are intended to identify such
forward-looking  statements.  These  statements  are not  guarantees  of  future
performance and involve certain risks,  uncertainties  and assumptions  ("Future
Factors")  that  are  difficult  to  predict  with  regard  to  timing,  extent,
likelihood and degree of occurrence.  Therefore, actual results and outcomes may
materially   differ  from  what  may  be   expressed  or   forecasted   in  such
forward-looking statements.
                                                                              15
<PAGE>
Furthermore,  the Company  undertakes no obligation to update,  amend or clarify
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise. Future Factors include:

o      changes in  interest rates and interest  rate  relationships;  demand for
       products and services;
o      the degree of competition by traditional and non-traditional competitors;
o      changes in banking regulations;
o      changes in tax laws;
o      changes in prices, levies and assessments;
o      the impact of technology, governmental and regulatory policy changes;
o      the outcome of pending and future litigation and contingencies;
o      trends in customer behavior as well as their ability to repay loans; and
o      changes in the national and local economies.

These are  representative  of the Future  Factors  that could cause a difference
between an actual outcome and a forward-looking statement.

                                                                              16
<PAGE>
              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS



Management is responsible  for the  preparation of the Lenawee  Bancorp,  Inc.'s
consolidated  financial  statements  and related  information  appearing in this
Annual Report.  Management believes that the consolidated  financial  statements
fairly reflect the form and substance of  transactions  and  reasonably  present
Lenawee Bancorp's financial position and results of operations and were prepared
in conformity with generally accepted accounting principles. Management also has
included  in the  Company's  financial  statements,  amounts  that are  based on
estimates   and   judgments   which  it  believes  are   reasonable   under  the
circumstances.

Lenawee  Bancorp,  Inc.  maintains  a system of  internal  controls  designed to
provide  reasonable  assurance  that all assets are  safeguarded  and  financial
records are reliable for preparing the consolidated  financial  statements.  The
Company  complies  with laws and  regulations  relating to safety and  soundness
which are designated by the FDIC and other appropriate federal banking agencies.
The selection  and training of qualified  personnel  and the  establishment  and
communication  of accounting  and  administrative  policies and  procedures  are
elements of this  control  system.  The  effectiveness  of internal  controls is
monitored by a program of internal audit. Management recognizes that the cost of
a system of internal  controls  should not exceed the benefits  derived and that
there are inherent  limitations to be considered in the potential  effectiveness
of any system.  Management  believes that Lenawee  Bancorp's system provides the
appropriate balance between costs of controls and the related benefits.

The  independent  auditors  have audited the  Company's  consolidated  financial
statements in accordance with generally  accepted auditing standards and provide
an  objective,  independent  review of the  fairness of the  reported  operating
results and financial position. The Board of Directors of Lenawee Bancorp has an
Audit Committee composed of five non-management  Directors.  The Committee meets
periodically with the internal auditors and the independent auditors.




Patrick K. Gill                               Loren V. Happel
President and Chief Executive Officer         Vice President and Chief Financial
                                              Officer

                                                                              17
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
Lenawee Bancorp, Inc.
Adrian, Michigan


We have audited the accompanying consolidated balance sheets of Lenawee Bancorp,
Inc. as of December 31, 2000 and 1999, and the related  consolidated  statements
of income,  changes in shareholders' equity and cash flows for each of the years
ended  December 31, 2000,  1999 and 1998.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Lenawee Bancorp,
Inc. as of December 31, 2000 and 1999, and the results of its operations and its
cash  flows for each of the years  ended  December  31,  2000,  1999 and 1998 in
conformity with generally accepted accounting principles.





                                             Crowe, Chizek and Company LLP

South Bend, Indiana
February 9, 2001
                                                                              18
<PAGE>
                              LENAWEE BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
<TABLE>
                                                                                    2000                 1999
                                                                                    ----                 ----
ASSETS
<S>                                                                             <C>                  <C>
Cash and due from banks                                                         $    7,842,516       $    7,309,898
Federal funds sold                                                                   5,150,000            2,200,000
                                                                                --------------       --------------
     Total cash and cash equivalents                                                12,992,516            9,509,898

Securities available for sale                                                       19,321,007           23,024,175
Federal Home Loan Bank stock, at cost                                                2,503,700            2,503,700
Federal Reserve Bank stock, at cost                                                    360,000              360,000

Loans held for sale                                                                    803,040              758,651
Loans receivable, net of allowance for loan losses:
  $2,287,438 - 2000, $4,646,484 - 1999                                             212,317,017          192,720,533
Premises and equipment, net                                                          5,988,602            6,521,024
Accrued interest receivable                                                          1,898,947            1,576,279
Mortgage servicing asset                                                             1,515,924            1,335,419
Other assets                                                                         2,046,702            1,593,829
                                                                                --------------       --------------

         Total assets                                                           $  259,747,455       $  239,903,508
                                                                                ==============       ==============
LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
     Noninterest bearing                                                        $   37,095,649       $   36,686,950
     Interest bearing                                                              187,047,006          162,519,459
                                                                                --------------       --------------
         Total deposits                                                            224,142,655          199,206,409

Borrowed funds                                                                       7,936,150           16,176,754
Accrued interest payable                                                               945,791              643,831
Other liabilities                                                                    1,256,111            1,101,253
                                                                                --------------       --------------
     Total liabilities                                                             234,280,707          217,128,247

Common stock subject to repurchase obligation in ESOP                                5,113,770            4,326,300

Shareholders' equity
     Common stock and paid-in capital, no par
       value:  3,000,000 shares authorized; shares
       issued and outstanding:  851,551 - 2000; 852,410 - 1999                       9,631,958           10,430,303
     Retained earnings                                                              10,755,423            8,352,940
     Accumulated other comprehensive loss,
       net of tax                                                                      (34,403)            (334,282)
                                                                                --------------       --------------
         Total shareholders' equity                                                 20,352,978           18,448,961
                                                                                --------------       --------------

              Total liabilities and shareholders' equity                        $  259,747,455       $  239,903,508
                                                                                ==============       ==============
</TABLE>
See  accompanying  notes to  financial  statements  and  report  of  independent
accountants.
                                                                              19
<PAGE>
                             LENAWEE BANCORP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2000, 1999 and 1998
<TABLE>
                                                                 2000                1999                1998
                                                                 ----                ----                ----
<S>                                                         <C>                 <C>                <C>
Interest and dividend income
     Loans receivable, including fees                       $    19,267,973     $    16,025,062    $     15,291,800
     Taxable securities                                             850,100           1,222,553           1,290,115
     Nontaxable securities                                          289,436             309,750             281,254
     Federal funds sold                                             166,828             118,244             277,178
     Dividend income                                                229,023             221,937             222,597
     Other                                                           47,993              25,184             154,327
                                                            ---------------     ---------------    ----------------
         Total interest and dividend income                      20,851,353          17,922,730          17,517,271

Interest expense
     Deposits                                                     7,853,587           5,693,930           6,262,000
     Borrowed funds                                                 856,797             618,291             943,615
                                                            ---------------     ---------------    ----------------
         Total interest expense                                   8,710,384           6,312,221           7,205,615
                                                            ---------------     ---------------    ----------------

Net interest income                                              12,140,969          11,610,509          10,311,656
     Provision for loan losses                                       30,000           2,560,000             239,000
                                                            ---------------     ---------------    ----------------

Net interest income after provision for
  loan losses                                                    12,110,969           9,050,509          10,072,656

Noninterest income
     Service charges and fees                                       980,745             778,625             616,119
     Net gains on loan sales                                        651,733           1,032,371           1,994,470
     Loan servicing fees, net of amortization                       107,109             113,222            (144,808)
     Other                                                          324,282             313,044             384,707
                                                            ---------------     ---------------    ----------------
                                                                  2,063,869           2,237,262           2,850,488

Noninterest expense
     Salaries and employee benefits                               5,018,659           5,034,569           5,090,788
     Occupancy and equipment                                      1,588,555           1,677,784           1,585,721
     Insurance                                                      141,445              63,851             118,223
     Printing, postage  and supplies                                312,674             327,807             333,148
     Professional and outside services                              391,617             208,566             362,345
     State and other taxes                                          163,313             169,032             172,052
     Mobile banking costs                                           341,658             236,246             224,325
     Receivable financing services                                  296,733             282,372             187,126
     Other                                                        1,158,875             994,229             838,942
                                                            ---------------     ---------------    ----------------
                                                                  9,413,529           8,994,456           8,912,670
                                                            ---------------     ---------------    ----------------

Income before income taxes                                        4,761,309           2,293,315           4,010,474
     Income tax expense                                           1,556,376             730,537           1,350,000
                                                            ---------------     ---------------    ----------------

Net income                                                  $     3,204,933     $     1,562,778    $      2,660,474
                                                            ===============     ===============    ================

Basic earnings per share                                    $          3.75     $          1.83    $           3.13
                                                            ===============     ===============    ================

Diluted earnings per share                                  $          3.71     $          1.83    $           3.12
                                                            ===============     ===============    ================
</TABLE>
See  accompanying  notes to  financial  statements  and  report  of  independent
accountants.
                                                                              20
<PAGE>
                              LENAWEE BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 2000, 1999 and 1998

<TABLE>
                                                       Common                               Accumulated
                                                      Stock and                                Other               Total
                                                       Paid-In           Retained          Comprehensive       Shareholders'
                                                       Capital           Earnings          Income (Loss)          Equity
<S>                                                <C>                 <C>                <C>                 <C>
Balance January 1, 1998                            $  11,668,371       $   5,333,690      $      135,347      $    17,137,408

Comprehensive income:
    Net income                                                             2,660,474                                2,660,474
    Unrealized gains (losses) on securities                                                      132,738
    Tax effect                                                                                   (45,131)
                                                                                          --------------      ---------------
       Total other comprehensive income                                                           87,607               87,607
                                                                                          --------------      ---------------
          Total comprehensive income                                                                                2,748,081
                                                                                                              ---------------
Change in common stock subject to repurchase            (761,300)                                                    (761,300)

Retirement of stock - 1,088 shares                       (27,200)                                                     (27,200)

Stock options exercised-issuance of
  1,920 common shares                                     41,138                                                       41,138

Proceeds from sale of stock - 3,148 shares                78,700                                                       78,700

Cash dividends - $.67 per share                                             (569,227)                                (569,227)
                                                   -------------       -------------      --------------      ---------------
Balance December 31, 1998                             10,999,709           7,424,937             222,954           18,647,600

Comprehensive income:
    Net income                                                             1,562,778                                1,562,778
    Unrealized gains (losses) on securities                                                     (848,818)
    Reclassifications for realized gains (losses)                                                  4,520
    Tax effect                                                                                   287,062
                                                                                          --------------      ---------------
       Total other comprehensive income                                                         (557,236)            (557,236)
                                                                                          --------------      ---------------
          Total comprehensive income                                                                                1,005,542
                                                                                                              ---------------
Change in common stock subject to repurchase            (628,500)                                                    (628,500)

Retirement of stock - 1,026 shares                       (36,936)                                                     (36,936)

Proceeds from sale of stock - 2,656 shares                96,030                                                       96,030

Cash dividends - $.75 per share                                             (634,775)                                (634,775)
                                                   -------------       -------------      --------------      ---------------
Balance December 31, 1999                             10,430,303           8,352,940            (334,282)          18,448,961

Comprehensive income:
    Net income                                                             3,204,933                                3,204,933
    Unrealized gains (losses) on securities                                                      454,418
    Tax effect                                                                                  (154,539)
                                                                                          --------------      ---------------
       Total other comprehensive income                                                          299,879              299,879
                                                                                          --------------      ---------------
          Total comprehensive income                                                                                3,504,812
                                                                                                              ---------------
Change in common stock subject to repurchase            (787,470)                                                    (787,470)

Retirement of stock - 3,441 shares                      (151,405)                                                    (151,405)

Proceeds from sale of stock - 2,582 shares               117,065                                                      117,065

Issuance of stock options below market value              23,465                                                       23,465

Cash dividends - $.94 per share                                             (802,450)                                (802,450)
                                                   -------------       --------------     --------------      ---------------
Balance December 31, 2000                          $   9,631,958       $  10,755,423      $      (34,403)     $    20,352,978
                                                   =============       =============      ==============      ===============
</TABLE>
                See accompanying notes to financial statements.
                                                                              21
<PAGE>
                              LENAWEE BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2000, 1999 and 1998
<TABLE>
                                                                 2000                1999                1998
                                                                 ----                ----                ----
<S>                                                            <C>                <C>               <C>
Cash flows from operating activities
     Net income                                             $     3,204,933     $     1,562,778    $      2,660,474
     Adjustments to reconcile net income to
       net cash from operating activities
         Depreciation                                               690,753             709,035             749,603
         Provision for loan losses                                   30,000           2,560,000             239,000
         Net amortization and accretion on securities
          available for sale                                         69,728             116,787              72,446
         Amortization of mortgage servicing rights                  314,534             257,597             397,391
         Loans originated for sale                              (37,696,914)        (47,554,219)       (102,921,516)
         Proceeds from sales of mortgage loans                   44,954,185          49,491,958         103,889,773
         Net gains on sales of mortgage loans                      (651,733)         (1,032,371)         (1,994,470)
     Net change in:
         Deferred loan origination fees                             (33,877)            (92,717)             60,964
         Accrued interest receivable                               (322,668)            117,856             (43,629)
         Other assets                                              (481,094)           (235,246)            353,691
         Accrued interest payable                                   301,960              87,333            (117,783)
         Other liabilities                                          154,858             106,052             142,391
                                                            ---------------     ---------------    ----------------

              Net cash from operating activities                 10,534,665           6,094,843           3,488,335

Cash flows from investing activities Proceeds from:
         Maturities, calls and principal payments on
           securities available for sale                          4,087,858           9,699,134          11,684,767
         Sales of securities available for sale                           -           7,674,558                   -
         Sales of portfolio loans                                         -           1,483,725          10,424,013
     Purchases of:
         Securities available for sale                                    -         (11,945,000)        (17,164,219)
         Premises and equipment, net                               (158,331)           (634,714)         (1,028,051)
     Net increase in loans                                      (26,951,438)        (39,916,902)         (8,113,718)
     Recoveries on loans charged-off                                 87,547              61,823              37,259
                                                            ---------------     ---------------    ----------------

              Net cash from investing activities                (22,934,364)        (33,577,376)         (4,159,949)

Cash flows from financing activities
     Net change in deposits                                 $    24,936,246     $    13,315,458    $     10,917,507
     Net change in short term borrowings                             80,917          (2,151,706)          1,554,733
     Proceeds from FHLB advances                                 10,000,000          14,000,000                   -
     Repayment of FHLB advances                                 (18,321,521)         (6,297,154)         (7,274,634)
     Repurchase of common stock                                    (151,405)            (36,936)            (27,200)
     Issuance of common stock                                       117,065              96,030              78,700
     Exercise of stock options                                            -                   -              41,138
     Issuance of stock options below market
       value                                                         23,465                   -                   -
     Dividends paid and fractional shares                          (802,450)           (634,775)           (569,227)
                                                            ---------------     ---------------    ----------------
              Net cash from financing activities                 15,882,317          18,290,917           4,721,017
                                                            ---------------     ---------------    ----------------

Net change in cash and cash equivalents                           3,482,618          (9,191,616)          4,049,403

Cash and cash equivalents at beginning of year                    9,509,898          18,701,514          14,652,111
                                                            ---------------     ---------------    ----------------

Cash and cash equivalents at end of year                    $    12,992,516     $     9,509,898    $     18,701,514
                                                            ===============     ===============    ================

Supplemental schedule of noncash activities Transfer from:
         Loans to foreclosed real estate                    $       126,318     $       160,811    $        239,144
         Portfolio loans to loans held for sale                   9,592,343                   -           2,065,245
         Loans held for sale to portfolio loans                   2,447,377             679,146                   -

     Cash paid for:
         Interest                                           $     8,408,424     $     6,521,024    $      7,323,398
         Income taxes                                             1,147,000           1,215,000           1,602,000
</TABLE>
                                  (Continued)
                                                                              22
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

The accounting and reporting policies of Lenawee Bancorp, Inc. (the Company) and
its wholly-owned  subsidiary,  Bank of Lenawee (the Bank),  conform to generally
accepted  accounting  principles  and to general  practice  within  the  banking
industry.  The following  describes  the  significant  accounting  and reporting
policies  which are employed in the  preparation of the  consolidated  financial
statements.

Principles of Consolidation:  The consolidated  financial statements include the
accounts  of the  Company,  the Bank and its  wholly-owned  subsidiary,  Lenawee
Financial Services. All significant  intercompany balances and transactions have
been eliminated in consolidation.

Nature of Operations,  Industry Segments and  Concentrations of Credit Risk: The
Company  is  a  one-bank   holding  company  which  conducts   limited  business
activities. The Bank performs the majority of business activities.

The Bank provides a full range of banking services to individuals,  agricultural
businesses,  commercial  businesses and light industries  located in its service
area. It maintains a diversified loan portfolio,  including loans to individuals
for home mortgages, automobiles and personal expenditures, and loans to business
enterprises for current  operations and expansion.  The Bank offers a variety of
deposit  products,   including  checking,   savings,  money  market,  individual
retirement  accounts and  certificates  of deposit.  While the  Company's  chief
decision  maker  monitors  the revenue  stream of various  Company  products and
services,  operations  are managed and financial  performance  is evaluated on a
Company  wide  basis.  Accordingly,  all of  Company's  banking  operations  are
considered by management to be aggregated into one operating segment.

The  principal  market  for the  Bank's  financial  services  are  the  Michigan
communities in which the Bank is located and the areas  immediately  surrounding
these communities. The Bank serves these markets through nine offices located in
Lenawee, Hillsdale and Washtenaw Counties in Michigan.

Use of Estimates:  To prepare financial  statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available  information.  These estimates and  assumptions  affect the amounts
reported in the financial  statements and the disclosures  provided,  and future
results  could  differ.  The  allowance  for  loan  losses  and fair  values  of
securities and other financial instruments are particularly subject to change.

Cash Flow  Reporting:  Cash and cash  equivalents  include cash on hand,  demand
deposits with other  financial  institutions,  federal funds sold and commercial
paper with original maturities of 90 days or less. Cash flows are reported, net,
for customer loan and deposit transactions, and securities sold under agreements
to repurchase with original maturities of 90 days or less.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with unrealized holding gains and losses reported in other comprehensive  income
and shareholders'  equity, net of tax. Trading securities are bought principally
for sale in the near term, and are reported at fair value, with unrealized gains
and losses included in earnings.  Securities are written down to fair value when
a decline in fair value is not temporary.  Other securities such as Federal Home
Loan Bank and Federal Reserve Bank stock are carried at cost.

                                  (Continued)
                                                                              23
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)

Gains and  losses  on sales  are  determined  using  the  amortized  cost of the
specific security sold.  Interest and dividend income,  adjusted by amortization
of purchase  premiums and  discounts,  is included in earnings.  Securities  are
written down to fair value when a decline in fair value is not temporary.

Loans Held for Sale:  Loans held for sale are  reported  at the lower of cost or
market value in  aggregate.  Net  unrealized  losses are recorded in a valuation
allowance by charges to income.

Loans  Receivable:  Loans that management has the intent and the ability to hold
for the  foreseeable  future or until  maturity  or payoff are  reported  at the
principal balance outstanding,  net of unearned interest, deferred loan fees and
costs,  and an  allowance  for loan losses.  Interest  income is reported on the
interest  method and includes  amortization  of net deferred loan fees and costs
over the loan term.

Interest income is not reported when full loan repayment is in doubt,  typically
when  payments  are past due over 90 days,  unless the loan is both well secured
and in the process of collection.  Payments  received on such loans are reported
as principal reductions.

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. Management estimates the allowance
balance using past loan loss experience, the nature and volume of the portfolio,
information about specific borrower situations and estimated  collateral values,
economic conditions, and other factors. Allocations of the allowance may be made
for specific loans,  but the entire allowance is available for any loan that, in
management's  judgment,  should be charged-off.  Loan losses are charged against
the allowance when management believes the uncollectibility of a loan balance is
confirmed.

A loan is  impaired  when full  payment  under the loan  terms is not  expected.
Impairment  is evaluated in total for  smaller-balance  loans of similar  nature
such as residential  mortgage and consumer loans and on an individual loan basis
for other loans. If a loan is impaired,  a portion of the allowance is allocated
so that the loan is reported, net, of the present value of estimated future cash
flows  using the  loan's  existing  rate or at the fair value of  collateral  if
repayment is expected solely from the collateral.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is  computed  using a  combination  of
straight-line  and  accelerated  methods with useful lives ranging from 10 to 40
years  for  buildings  and  improvements,  and 3 to 10 years for  furniture  and
equipment.  These assets are reviewed for impairment  when events indicate their
carrying  amount may not be  recoverable  from future  undiscounted  cash flows.
Maintenance,  repairs and minor alterations are charged to current operations as
expenditures occur. Major improvements are capitalized.

Servicing  Rights:  Servicing  rights  represent both  purchased  rights and the
allocated value of servicing rights retained on loans sold. Servicing rights are
expensed  in  proportion  to, and over the period of,  estimated  net  servicing
revenues.

Impairment is evaluated  based on the fair value of the rights,  using groupings
of the  underlying  loans as to  interest  rates  and then,  secondarily,  as to
geographic  and  prepayment  characteristics.  Any  impairment  of a grouping is
reported as a valuation allowance.

                                  (Continued)
                                                                              24
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)

Other Real Estate Owned: Real estate properties acquired in collection of a loan
receivable  are  recorded at fair value at  acquisition.  Any  reduction to fair
value from the carrying  value of the related  loan is  accounted  for as a loan
loss. After  acquisition,  a valuation  allowance reduces the reported amount to
the lower of the  initial  amount or fair value  less  costs to sell.  Expenses,
gains and losses on  disposition,  and changes in the  valuation  allowance  are
reported in other  expense.  Other real  estate  owned  amounts to $294,000  and
$255,000 at December 31, 2000 and 1999.

Repurchase  Agreements:   Substantially  all  repurchase  agreement  liabilities
represent amounts advanced by various customers. Securities are pledged to cover
these liabilities, which are not covered by federal deposit insurance.

Benefit  Plans:  A  defined  benefit  pension  plan  covers   substantially  all
employees,  with benefits  based on years of service and  compensation  prior to
retirement.  Pension expense is the net of service and interest cost,  return on
plan assets,  and  amortization of gains and losses not immediately  recognized.
Profit-sharing  and 401(k) plan expense is the amount  contributed as determined
by Board decision.

Expense for employee  compensation  under stock option plans is reported only if
options are granted below market price at grant date.  Proforma  disclosures  of
net income and earnings per share are provided as if the option's fair value had
been recorded using an option pricing model.

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences  between  carrying  amounts and tax bases of assets and liabilities,
computed  using enacted tax rates.  A valuation  allowance,  if needed,  reduces
deferred tax assets to the amount expected to be realized.

Earnings and  Dividends Per Share:  Basic  earnings per common share is based on
net income divided by the weighted  average number of common shares  outstanding
during the period.  Diluted  earnings per common share shows the dilutive effect
of any additional  potential  common  shares.  Earnings and dividends per common
share are  restated  for all stock  splits and stock  dividends,  including  the
two-for-one split declared in 1999.

Stock  Dividends:  Dividends  issued in stock are reported by  transferring  the
market  value of the stock  issued from  retained  earnings to common  stock and
additional  paid-in  capital.  Fractional  shares are paid in cash for all stock
dividends.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive  income.  Other  comprehensive  income  includes the net change in
unrealized appreciation  (depreciation) on securities available for sale, net of
tax, which is also recognized as a separate component of shareholders' equity.

Financial Instruments with Off-Balance-Sheet Risk: Financial instruments include
off-balance  sheet credit  instruments,  such as  commitments  to make loans and
standby letters of credit issued to meet customer's  needs.  The face amount for
these  items  represents  the  exposure  to  loss  before  considering  customer
collateral or ability to repay.  Such  financial  instruments  are recorded when
they are funded.
                                  (Continued)
                                                                              25
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)

Fair Values of Financial  Instruments:  Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately.  Fair value estimates involve uncertainties and matters of
significant  judgment regarding interest rates,  credit risk,  prepayments,  and
other factors,  especially in the absence of broad markets for particular items.
Changes in assumptions or in market  conditions could  significantly  affect the
estimates.  The  fair  value  estimates  of  existing  on-and  off-balance-sheet
financial  instruments does not include the value of anticipated future business
or values of assets and liabilities not considered financial instruments.

Reclassifications:  Some items in the prior year financial  statements have been
reclassified to conform with the current year presentation.

New  Accounting  Pronouncements:  Beginning  January 1, 2001,  a new  accounting
standard  will  require all  derivatives  to be  recorded a fair  value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains or losses on the hedges and on the hedged item, even if the
fair  value of the  hedged  item is not  otherwise  recorded.  Adoption  of this
standard  on  January 1, 2001 did not have a  material  effect on the  Company's
financial condition or results of operations.


NOTE 2 - SECURITIES

Year-end securities available for sale were as follows:
<TABLE>
                                                                     Gross             Gross
                                                 Amortized        Unrealized        Unrealized            Fair
2000                                               Cost              Gains            Losses              Value
----                                               ----              -----            ------              -----
<S>                                          <C>                <C>               <C>               <C>
     U. S. Treasury and
        government agencies                  $     7,351,837    $           -     $      (68,538)   $     7,283,299
     Obligations of states and
        political subdivisions                     6,843,588           87,370            (20,420)         6,910,538
     Corporate notes                                 554,682                -             (3,589)           551,093
     Mortgage-backed securities                    4,622,971                -            (46,894)         4,576,077
                                             ---------------    -------------     --------------    ---------------
                                             $    19,373,078    $      87,370     $     (139,441)   $    19,321,007
                                             ===============    =============     ==============    ===============

1999
----
     U. S. Treasury and
        government agencies                  $     7,400,712    $           -     $     (231,465)   $     7,169,247
     Obligations of states and
        political subdivisions                     9,473,289           24,091           (120,895)         9,376,485
     Corporate notes                                 559,139                -            (12,920)           546,219
     Mortgage-backed securities                    6,097,524                -           (165,300)         5,932,224
                                             ---------------    -------------     --------------    ---------------
                                             $    23,530,664    $      24,091     $     (530,580)   $    23,024,175
                                             ===============    =============     ==============    ===============
</TABLE>
                                  (Continued)
                                                                              26
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 2 - SECURITIES (Continued)

Contractual  maturities  of debt  securities  at year-end  2000 were as follows.
Securities  not  due  at  a  single  maturity  date,  primarily  mortgage-backed
securities, are shown separately.
<TABLE>
                                                                             Amortized             Fair
                                                                               Cost                Value
     <S>                                                                 <C>                  <C>
     Due in one year or less                                             $      2,228,931     $      2,225,951
     Due from one to five years                                                10,365,485           10,329,768
     Due from five to ten years                                                 1,455,691            1,454,449
     Due after ten years                                                          700,000              734,762
                                                                         ----------------     ----------------
                                                                               14,750,107           14,744,930
     Mortgage-backed securities                                                 4,622,971            4,576,077
                                                                         ----------------     ----------------
                                                                         $     19,373,078     $     19,321,007
                                                                         ================     ================
</TABLE>
Sales of securities available for sale were:
<TABLE>
                                                            2000               1999                1998
                                                            ----               ----                ----
     <S>                                                 <C>               <C>                  <C>
     Proceeds from sales                                 $          -      $    7,674,558       $         -
     Gross gains from sales                                         -               5,785                 -
     Gross losses from sales                                        -             (10,305)                -
</TABLE>
In  addition  to  Federal  Home Loan Bank  (FHLB)  stock,  securities  having an
amortized cost of approximately  $4,695,000 and $13,107,000 at year-end 2000 and
1999 were pledged to secure FHLB  advances,  public  deposits,  securities  sold
under  agreements  to  repurchase  and U.S.  Treasury  demand  notes.  Except as
indicated,   total   securities  of  any  state  (including  all  its  political
subdivisions)  were less than 10% of shareholders'  equity. At year-end 2000 and
1999, the amortized  cost of securities  issued by the state of Michigan and all
its political  subdivisions  totaled $5,104,000 and $7,210,000 with an estimated
market value of $5,185,000 and $7,174,000.

NOTE 3 - LOANS RECEIVABLE

Year-end loans receivable are as follows:
<TABLE>
                                                                               2000                1999
                                                                               ----                ----
     <S>                                                                 <C>                  <C>
     Commercial                                                          $    116,105,167     $    103,569,923
     Agricultural                                                              32,952,291           31,754,542
     Real Estate Mortgage                                                      14,225,036           17,203,006
     Real Estate Construction                                                  13,383,023            9,934,302
     Consumer                                                                  37,846,196           34,846,379
                                                                         ----------------     ----------------

       Gross loans receivable                                                 214,511,713          197,308,152

     Deferred loan origination fees/costs, net                                     92,742               58,865
     Allowance for loan losses                                                 (2,287,438)          (4,646,484)
                                                                         ----------------     ----------------

       Net loans receivable                                              $    212,317,017     $    192,720,533
                                                                         ================     ================
</TABLE>
                                  (Continued)
                                                                              27
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 3 - LOANS RECEIVABLE (Continued)

Certain directors and executive officers of the Company, including associates of
such  persons,  were loan  customers  of the Company  during  2000. A summary of
aggregate related party loan activity for loans  aggregating  $60,000 or more to
any related party is as follows:
<TABLE>
                                                                                2000               1999
                                                                                ----               ----
     <S>                                                                 <C>                  <C>
     Balance at January 1                                                $      2,645,486     $      2,413,784
     New loans                                                                  2,480,776            3,759,932
     Repayments                                                                (2,684,637)          (3,528,230)
                                                                         ----------------     ----------------
     Balance at December 31                                              $      2,441,625     $      2,645,486
                                                                         ================     ================
</TABLE>

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

Activity in the allowance for loan losses was as follows:
<TABLE>
                                                             2000                 1999                1998
                                                             ----                 ----                ----
     <S>                                               <C>                  <C>                  <C>
     Beginning balance                                 $      4,646,484    $       2,181,749    $      1,964,473
     Loan charge-offs                                        (2,476,593)            (157,088)            (58,983)
     Loan recoveries                                             87,547               61,823              37,259
                                                       ----------------    -----------------    ----------------
         Net loan charge-offs                                (2,389,046)             (95,265)            (21,724)
                                                       ----------------    -----------------    ----------------
     Provision for loan losses                                   30,000            2,560,000             239,000
                                                       ----------------    -----------------    ----------------

     Ending balance                                    $      2,287,438    $       4,646,484    $      2,181,749
                                                       ================    =================    ================
Impaired loans were as follows:

                                                             2000                 1999                1998
                                                             ----                 ----                ----
     Year-end loans with no allowance for
       loan losses allocated                           $              -    $          95,000    $         19,000
     Year-end loans with allowance for loan
       losses allocated                                         325,000            2,979,000              52,000
                                                       ----------------    -----------------    ----------------

     Total impaired loans                              $        325,000    $       4,074,000    $         71,000
                                                       ================    =================    ================

     Amount of the allowance allocated                 $        106,000    $       2,352,000    $         52,000

     Average of impaired loans during the year                1,946,000              155,000             118,000

     Interest income recognized during
       impairment                                                49,000               13,000              14,000

     Cash-basis interest income recognized                       14,000                    -                   -
</TABLE>
                                  (Continued)
                                                                              28
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 4 - ALLOWANCE FOR LOAN LOSSES (Continued)

Subsequent to December 31, 1999, the Company became aware of circumstances which
occurred  in 1999,  involving  loans to a single  borrower in which the Bank had
purchased a  participating  interest from another  financial  institution.  As a
result of these  circumstances,  management  concluded  that a loss was probable
and,  accordingly,  recorded  an  additional  provision  for loan losses of $2.3
million for 1999 on loans outstanding of approximately $2.9 million. These loans
were  considered  to be impaired at December  31, 1999.  During  2000,  the Bank
charged-off $2.3 million of the total loans outstanding to this borrower.


NOTE 5 - LOAN SERVICING

Loans  serviced  for others are not  reported  as assets.  These  loans  totaled
$213,449,000 and $181,102,000 at year-end 2000 and 1999. Related escrow balances
were $343,000 and $285,000 at year-end 2000 and 1999.

Activity for capitalized mortgage servicing rights was as follows:
<TABLE>
                                                              2000                1999               1998
                                                              ----                ----               ----
     <S>                                                <C>                 <C>                 <C>
     Servicing rights:
         Beginning of year                              $      1,335,419    $      1,098,116    $      518,945
         Additions                                               495,039             494,900           976,562
         Amortization                                           (314,534)           (257,597)         (397,391)
                                                        ----------------    ----------------    --------------
         End of year                                    $      1,515,924    $      1,335,419    $    1,098,116
                                                        ================    ================    ==============
</TABLE>

NOTE 6 - PREMISES AND EQUIPMENT

Year-end premises and equipment consist of:
<TABLE>
                                                                                  2000               1999
                                                                                  ----               ----
     <S>                                                                    <C>                 <C>
     Land                                                                   $        504,279    $      499,668
     Buildings and improvements                                                    6,826,540         6,986,070
     Furniture and equipment                                                       5,552,616         5,281,617
                                                                            ----------------    --------------
         Total cost                                                               12,883,435        12,767,355
     Accumulated depreciation                                                     (6,894,833)       (6,246,331)
                                                                            ----------------    --------------

                                                                            $      5,988,602    $    6,521,024
                                                                            ================    ==============
</TABLE>
Depreciation expense was $690,753, $709,035 and $749,603 in 2000, 1999 and 1998,
respectively.

                                  (Continued)
                                                                              29
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 7 - DEPOSITS

At year-end 2000,  stated  maturities of time deposits were as follows,  for the
years ending December 31:
<TABLE>
                  <S>                                                      <C>
                  2001                                                     $      69,860,662
                  2002                                                            19,270,022
                  2003                                                            14,967,024
                  2004                                                             3,739,880
                  2005                                                               523,000
                                                                           -----------------
                                                                           $     108,360,588
                                                                           =================
</TABLE>

Time deposits exceeding $100,000 were approximately  $49,766,000 and $30,059,000
at year-end 2000 and 1999.

At year-end 2000, stated maturities of time deposits  exceeding $100,000 were as
follows:
<TABLE>
                  <S>                                                         <C>
                  In 3 months or less                                         $     24,601,492
                  Over 3 through 6 months                                           10,310,455
                  Over 6 through 12 months                                           3,433,122
                  Over 12 months                                                    11,420,613
                                                                              ----------------
                                                                              $     49,765,682
                                                                              ================
</TABLE>
Related party deposits were $1,942,000 and $1,806,000 at year-end 2000 and 1999.


NOTE 8 - BORROWED FUNDS

Securities Sold Under Agreements to Repurchase

Information  concerning  securities  sold  under  agreements  to  repurchase  is
summarized as follows:
<TABLE>
                                                                                    2000              1999
                                                                                    ----              ----
<S>                                                                          <C>                <C>
Amount outstanding at year-end                                               $     2,083,280    $    2,002,363
Weighted average interest rate at year-end                                             3.60%              4.61%
Average daily balance during the year                                        $     3,652,025    $    3,444,358
Weighted average interest rate during the year                                         4.65%              3.71%
Maximum month-end balance during the year                                    $     6,380,931    $    5,143,802
</TABLE>
                                  (Continued)
                                                                              30
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 8 - BORROWED FUNDS (Continued)

Federal Home Loan Bank Advances

Federal Home Loan Bank (FHLB)  advances  totaled  $5,852,870 and  $14,174,391 at
year-end 2000 and 1999. At year-end 2000 the balance consisted of one fixed rate
advance with an interest rate of 6.04%. At December 31, 1999, advances had fixed
interest rates ranging from 5.88% to 6.04%.

Pursuant to collateral  agreements  with the Federal Home Loan Bank, in addition
to  Federal  Home  Loan  stock,  advances  are  secured  under  a  blanket  lien
arrangement by qualified 1-to-4 family mortgage loans and U.S. Government agency
securities with a carrying value of approximately $21,734,000 and $38,465,000 at
year-end 2000 and 1999.

At year-end 2000 and 1999, scheduled principal reductions on these advances were
as follows for the years ending December 31:
<TABLE>
                                                                               2000               1999
                                                                               ----               ----
                  <S>                                                    <C>                 <C>
                  2000                                                   $             -     $     8,321,521
                  2001                                                           347,886             347,886
                  2002                                                           376,412             376,412
                  2003                                                           407,278             407,278
                  2004                                                           440,675             440,675
                  2005                                                           476,810             476,810
                  Thereafter                                                   3,803,809           3,803,809
                                                                         ---------------     ---------------

                  Total FHLB advances                                    $     5,852,870     $    14,174,391
                                                                         ===============     ===============
</TABLE>

NOTE 9 - INCOME TAXES

Income tax expense consists of:
<TABLE>
                                                            2000               1999             1998
                                                            ----               ----             ----
     <S>                                              <C>                <C>                <C>
     Current                                          $       753,556    $    1,464,775     $    1,260,805
     Deferred                                                 802,820          (734,238)            89,195
                                                      ---------------    --------------     --------------
         Total                                        $     1,556,376    $      730,537     $    1,350,000
                                                      ===============    ==============     ==============
</TABLE>
                                  (Continued)
                                                                              31
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 9 - INCOME TAXES (Continued)

Income tax expense  calculated at the statutory  federal  income tax rate of 34%
differs from actual income tax expense as follows:
<TABLE>
                                                            2000              1999               1998
                                                            ----              ----               ----
     <S>                                              <C>                <C>                <C>
     Statutory rates                                  $     1,618,845    $      779,727     $    1,363,561
     Increase (decrease) from:
         Tax-exempt securities income                        (105,095)         (106,804)           (97,848)
         Non-deductible interest expense                       15,615             7,070              8,614
         Other, net                                            27,011            50,544             75,673
                                                      ---------------    --------------     --------------
                                                      $     1,556,376    $      730,537     $    1,350,000
                                                      ===============    ==============     ==============
</TABLE>
Year-end deferred tax assets and liabilities consist of:
<TABLE>
                                                                              2000               1999
                                                                              ----               ----
     <S>                                                                 <C>                <C>
     Deferred tax assets
         Allowance for loan losses                                       $      578,903     $    1,381,031
         Net deferred loan fees                                                 211,552            200,584
         Net unrealized losses on
           securities available for sale                                         17,704            172,205
         Other                                                                   71,483             37,173
                                                                         --------------     --------------
              Total deferred tax assets                                         879,642          1,790,993
                                                                         --------------     --------------
     Deferred tax liabilities
         Depreciation                                                          (307,447)          (322,849)
         Mortgage servicing rights                                             (515,414)          (454,042)
                                                                         --------------     --------------
              Total deferred tax liabilities                                   (822,861)          (776,891)
                                                                         --------------     --------------
     Net deferred tax asset                                              $       56,781     $    1,014,102
                                                                         ==============     ==============
</TABLE>

NOTE 10 - EARNINGS PER SHARE

A  reconciliation  of the numerators and  denominators of the basic earnings per
share and  diluted  earnings  per  share  computations  for the  years  ended is
presented below:
<TABLE>
Basic earnings per share                                        2000              1999               1998
                                                                ----              ----               ----
     <S>                                                   <C>               <C>                <C>
     Net income available to common
       shareholders                                        $    3,204,933    $     1,562,778    $    2,660,474
                                                           ==============    ===============    ==============

     Weighted average common shares
       outstanding                                                853,910            852,509           850,118
                                                           ==============    ===============    ==============

         Basic earnings per share                              $    3.75          $  1.83           $   3.13
                                                               =========          =======           ========
</TABLE>
                                  (Continued)
                                                                              32
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 10 - EARNINGS PER SHARE (Continued)
<TABLE>
                                                                2000              1999               1998
                                                                ----              ----               ----
<S>                                                        <C>               <C>                 <C>
Diluted earnings per share
     Net income available to common
       shareholders                                        $    3,204,933    $     1,562,778    $    2,660,474
                                                           ==============    ===============    ==============

     Weighted average common shares
       outstanding                                                853,910            852,509           850,118
     Add:  Dilutive effects of exercise of
       stock options                                               10,881              1,857             1,468
                                                           --------------    ---------------    --------------

     Weighted average common and dilutive
       potential common shares outstanding                        864,791            854,366           851,586
                                                           ==============    ===============    ==============

     Diluted earnings per share                                $    3.71          $  1.83           $   3.12
                                                               =========          =======           ========
</TABLE>

NOTE 11 - EMPLOYEE BENEFITS

Defined Benefit Plan

Information about the pension plan was as follows.
<TABLE>
                                                                                   2000               1999
                                                                                   ----               ----
     <S>                                                                     <C>                <C>
     Change in benefit obligation:
         Beginning benefit obligation                                        $     1,559,521    $    1,334,322
         Service cost                                                                154,300           127,921
         Interest cost                                                               122,931           100,871
         Actuarial loss                                                              102,065            32,357
         Plan amendments                                                              65,300                 -
         Benefits paid                                                               (45,616)          (35,950)
                                                                             ---------------    --------------
         Ending benefit obligation                                           $     1,958,501    $    1,559,521
                                                                             ===============    ==============

     Change in plan assets, at fair value:
         Beginning plan assets                                                     1,331,916         1,142,109
         Actual return                                                               (31,089)           40,090
         Employer contribution                                                       189,600           185,667
         Benefits paid                                                               (45,616)          (35,950)
                                                                             ---------------    --------------
         Ending plan assets                                                  $     1,444,811    $    1,331,916
                                                                             ===============    ==============

     Net amount recognized:
         Funded status                                                       $      (513,690)   $     (227,605)
         Unrecognized net actuarial loss                                             432,914           217,323
         Unrecognized transition obligation                                           12,318            16,423
         Unrecognized prior service cost                                              10,808            13,517
                                                                             ---------------    --------------
         Prepaid (accrued) benefit cost                                      $       (57,650)   $       19,658
                                                                             ===============    ==============
</TABLE>
                                  (Continued)
                                                                              33
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 11 - EMPLOYEE BENEFITS (Continued)

The  components of pension  expense and related  actuarial  assumptions  were as
follows.
<TABLE>
                                                               2000               1999               1998
                                                               ----               ----               ----
     <S>                                                   <C>               <C>                <C>
     Service cost                                          $      154,300    $       127,921    $      111,178
     Interest cost                                                122,931            100,871            86,414
     Expected return on plan assets                               (94,578)           (78,756)          (61,124)
     Amortization of prior service cost                             2,709              2,709             2,709
     Amortization of transition obligation                          4,105              4,105             4,105
     Recognized net actuarial loss                                 12,141              3,556                 -
     Special termination benefit loss                              65,300                  -                 -
                                                           --------------    ---------------    --------------
         Net pension expense                               $      266,908    $       160,406    $      143,282
                                                           ==============    ===============    ==============

     Discount rate on benefit obligation                          7.5%                7.5%               7.5%
     Long-term expected rate of return
       on plan assets                                             8.0%                8.0%               8.0%
     Rate of compensation increase                                5.0%                5.0%               5.0%
</TABLE>

ESOP and 401(k) Plan

The  Company   maintains  an  employee  stock  ownership  plan  (ESOP)  covering
substantially all employees. The ESOP is designed to enable employees to acquire
common  stock  of  the  Company.   The  cost  of  the  ESOP  is  funded  through
contributions  to an  Employee  Stock  Ownership  Trust  in  amounts  determined
annually by the Board of Directors.  Shares of common stock acquired by the ESOP
are to be allocated to each participating employee and held until the employee's
termination,  retirement or death.  There were no cash contributions to the ESOP
for 2000, 1999 and 1998.

At  year-end  2000 and 1999,  the ESOP held  100,270  and  98,325  shares of the
Company's  stock, all of which is allocated to employees.  Upon  distribution of
shares to a participant, the participant has the right to require the Company to
purchase shares at the most recent  appraised value in accordance with the terms
and  conditions  of the  plan.  As such,  these  shares  are not  classified  in
shareholders' equity as permanent equity. The appraisal value of the shares held
by the ESOP was $5,113,770 and $4,326,300 at year-end 2000 and 1999.

The ESOP plan includes a 401(k) provision.  Employees may elect to contribute up
to 15% of their salaries, and the Company will match 100% of the contribution up
to 2% of the eligible  salaries.  Expense  relating to the 401(k)  provision was
$96,924 , $57,600 and $57,622 in 2000, 1999 and 1998.

                                  (Continued)
                                                                              34
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 11 - EMPLOYEE BENEFITS (Continued)

Stock Option Plan

SFAS  No.  123,  Accounting  for  Stock-Based   Compensation  requires  proforma
disclosures for companies that do not adopt its fair value accounting method for
stock-based  compensation.   Accordingly,  the  following  proforma  information
presents net income and basic and diluted  earnings per share had the fair value
method been used to measure  compensation  cost for stock options.  The exercise
price of options  granted during 1999 and 1998 is equivalent to the market value
of underlying stock at the grant date. Accordingly,  no compensation expense was
actually  recognized  for stock  options in 1999 and 1998.  During  2000,  5,720
options were granted at an exercise  price of $44,  which was below market value
of  the  underlying  stock  as  of  the  grant  date.  Accordingly,  $23,465  of
compensation expense was recognized for stock options granted in 2000.
<TABLE>
                                                                2000              1999               1998
                                                                ----              ----               ----
       <S>                                                 <C>               <C>                <C>
       Net income as reported                              $    3,204,933    $     1,562,778    $    2,660,474
       Proforma net income                                      3,151,125          1,533,382         2,639,183
       Reported earnings per common share
           Basic                                           $         3.75    $          1.83    $         3.13
           Diluted                                                   3.71               1.83              3.12
       Proforma earnings per common share
           Basic                                                     3.69               1.80              3.10
           Diluted                                                   3.64               1.79              3.10
</TABLE>
The fair value of options  granted is  estimated  using option  pricing  models,
using the following weighted average information:
<TABLE>
                                                                   2000              1999               1998
                                                                   ----              ----               ----
       <S>                                                        <C>                <C>               <C>
       Risk-free interest rate                                      6.64%              5.10%             5.53%
       Expected option life                                       8 years            8 years           8 years
       Expected stock price volatility                             20.92%            Nominal           Nominal
       Expected dividends                                           1.35%              1.86%             1.20%
</TABLE>
The weighted  average fair value of stock options granted was $24.86,  $7.09 and
$4.57 for 2000,  1999 and 1998.  At year-end  2000,  options  outstanding  had a
weighted average remaining life of 7.1 years.

                                  (Continued)
                                                                              35
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 11 - EMPLOYEE BENEFITS (Continued)

Stock option plans are used to reward directors and certain  executive  officers
and provide them with an additional  equity interest.  Options are issued for 10
year periods and vest over five years.  Information  about options available for
grant and options granted follows:
<TABLE>
                                                                                                     Weighted-
                                                                                                      Average
                                                          Available               Options            Exercise
                                                        For Grant(1)          Outstanding(1)         Price(1)
                                                        ---------             -----------            -----
<S>                                                    <C>                     <C>                 <C>
Balance at January 1, 1998                                   39,520                 12,020         $    19.46
     Options issued                                          (6,340)                 6,340              25.00
     Options exercised                                            -                 (1,920)             21.43
                                                       ------------           ------------         ----------
Balance at December 31, 1998                                 33,180                 16,440              21.37
     Options issued                                          (5,720)                 5,720              36.00
                                                       ------------           ------------         ----------
Balance at December 31, 1999                                 27,460                 22,160              25.14
     Options issued                                          (5,720)                 5,720              44.00
                                                       -------------          ------------         ----------
Balance at December 31, 2000                                 21,740                 27,880         $    29.01
                                                       ============           ============         ==========
</TABLE>
(1)  Restated for a two-for-one stock split in 1999.

Options exercisable at year-end are as follows:
<TABLE>
                                                                                            Weighted-
                                                                                             Average
                                                                        Number of           Exercise
                                                                         Options              Price
                                                                         -------              -----
                         <S>                                               <C>             <C>
                         2000                                              16,464        $     24.09
                         1999                                               9,964              22.25
                         1998                                               4,908              19.82
</TABLE>

NOTE 12 - COMMITMENTS, OFF-BALANCE-SHEET RISK AND CONTINGENCIES

At year-end 2000 and 1999,  reserves of $3,573,000 and $2,895,000  were required
as deposits with the Federal  Reserve or as cash on hand.  These reserves do not
earn interest.

Some financial instruments are used in the normal course of business to meet the
financing needs of customers. These financial instruments include commitments to
extend  credit,  standby  letters  of credit  and  financial  guarantees.  These
involve,  to varying  degrees,  credit and  interest-rate  risk in excess of the
amount reported in the financial statements.

                                  (Continued)
                                                                              36
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 12 - COMMITMENTS, OFF-BALANCE-SHEET RISK AND CONTINGENCIES (Continued)

The Company has the following commitments outstanding at year-end:
<TABLE>
                                                                                 2000                1999
                                                                                 ----                ----
     <S>                                                                   <C>                 <C>
     Commitments to extend credit                                          $    58,476,000     $    56,996,000
     Credit card arrangements                                                    2,725,000           2,185,000
     Standby letters of credit                                                     696,000             514,000
                                                                           ---------------     ---------------

                                                                           $    61,897,000     $    59,695,000
                                                                           ===============     ===============
</TABLE>
Exposure to credit loss if the other  party does not perform is  represented  by
the  contractual  amount for  commitments to extend credit,  standby  letters of
credit, and financial  guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there  is  no  violation  of  any  condition   established  in  the  commitment.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being used, the total  commitments do not  necessarily  represent
future cash  requirements.  Standby  letters of credit and financial  guarantees
written are conditional  commitments to guarantee a customer's  performance to a
third party.


NOTE 13 - PARENT CORPORATION CONDENSED

The Company's  primary source of funds to pay dividends to  shareholders  is the
dividends it receives from the Bank. The Bank is subject to certain restrictions
on the amount of dividends it may declare without prior regulatory approval.  At
December 31, 2000,  approximately  $8,571,000 of the Bank's retained earnings is
available  for transfer in the form of dividends  without  prior  approval  from
regulatory agencies.

Following are condensed parent corporation financial statements.

                                  (Continued)
                                                                              37
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 13 - PARENT CORPORATION CONDENSED (Continued)
<TABLE>
                            CONDENSED BALANCE SHEETS
                           December 31, 2000 and 1999

                                                                                       2000               1999
                                                                                       ----               ----
<S>                                                                               <C>               <C>
Assets
Cash and cash equivalents                                                         $    1,031,430    $       417,928
Securities available for sale                                                            727,894            938,133
Investment in subsidiary                                                              23,774,861         21,395,761
Other                                                                                    437,518             23,439
                                                                                  --------------    ---------------

     Total assets                                                                 $   25,971,703    $    22,775,261
                                                                                  ==============    ===============

Liabilities and Shareholders' Equity
Other                                                                             $      504,955    $             -
Common stock subject to repurchase obligation in ESOP                                  5,113,770          4,326,300
Shareholders' equity                                                                  20,352,978         18,448,961
                                                                                  --------------    ---------------

     Total liabilities and shareholders' equity                                   $   25,971,703    $    22,775,261
                                                                                  ==============    ===============
</TABLE>

                         CONDENSED STATEMENTS OF INCOME
                            Years ended December 31,
<TABLE>
                                                                     2000              1999               1998
                                                                     ----              ----               ----
<S>                                                            <C>                 <C>              <C>
Dividends from subsidiary                                      $    1,200,000     $      600,000    $       700,000
Interest on securities                                                 38,183             43,596             43,835
Other expenses                                                       (118,318)               (15)            (2,742)
                                                               --------------     --------------    ---------------

Income before equity in undistributed income
  of subsidiary bank                                                1,119,865            643,581            741,093

Equity in undistributed net income of
  subsidiary                                                        2,085,068            919,197          1,919,381
                                                               --------------     --------------    ---------------

Net income                                                     $    3,204,933     $    1,562,778    $     2,660,474
                                                               ==============     ==============    ===============
</TABLE>
                                  (Continued)
                                                                              38
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 13 - PARENT CORPORATION CONDENSED (Continued)
<TABLE>
                       CONDENSED STATEMENTS OF CASH FLOWS
                            Years ended December 31,

                                                                     2000            1999              1998
                                                                     ----            ----              ----
<S>                                                            <C>               <C>              <C>
Operating activities
Net income                                                     $    3,204,933    $   1,562,778    $   2,660,474
Adjustments to reconcile net income to net cash
  provided by operating activities
     Equity in undistributed net income of
       subsidiary                                                  (2,085,068)        (919,197)      (1,919,381)
     Net amortization of investment securities                          4,100            3,627            3,035
     Other                                                             87,862           60,763          (10,322)
                                                               --------------    -------------    -------------
         Net cash from operating activities                         1,211,827          707,971          733,806

Investing Activities
Activity in available for sale securities
     Maturities and calls                                             215,000          105,000                -
     Purchases                                                              -                -         (113,177)
                                                               --------------    -------------    -------------
         Net cash from investing activities                           215,000          105,000         (113,177)

Financing Activities
Repurchase of common stock                                           (151,405)         (36,936)         (27,200)
Issuance of common stock                                              117,065           96,030           78,700
Exercise of stock options                                                   -                -           41,138
Issuance of stock options below market value                           23,465                -                -
Dividends paid and fractional shares                                 (802,450)        (634,775)        (569,227)
                                                               --------------    -------------    -------------
     Net cash from financing activities                              (813,325)        (575,681)        (476,589)
                                                               --------------    -------------    -------------

Net change in cash and cash equivalents                               613,502          237,290          144,040

Beginning cash and cash equivalents                                   417,928          180,638           36,598
                                                               --------------    -------------    -------------

Ending cash and cash equivalents                               $    1,031,430    $     417,928    $     180,638
                                                               ==============    =============    =============
</TABLE>
                                  (Continued)
                                                                              39
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998


NOTE 14 - FAIR VALUES OF FINANCIAL INSTRUMENTS

The  following  methods and  assumptions  were used to estimate  fair values for
financial  instruments.  The carrying  amount is considered to approximate  fair
value for cash and cash  equivalents,  demand and savings  deposits,  short-term
borrowings,  accrued interest,  and variable rate loans or deposits that reprice
frequently and fully.  Securities  fair values are based on quoted market prices
or, if no quotes  are  available,  on the rate and term of the  security  and on
information about the issuer.  For fixed rate loans or deposits and for variable
rate loans or deposits with infrequent  repricing or repricing limits,  the fair
value is estimated by discounted  cash flow analysis  using current market rates
for the  estimated  life and credit  risk.  Fair values for  impaired  loans are
estimated using discounted cash flow analyses or underlying  collateral  values,
where  applicable.  Fair  value  of loans  held  for  sale is  based  on  market
estimates. Fair value of mortgage servicing rights is estimated using discounted
cash flows based on current market interest  rates.  The fair value of long-term
borrowings is based on currently available rates for similar financing. The fair
value of other financial  instruments and  off-balance-sheet  items  approximate
cost and are not considered significant to this presentation.

The estimated year-end fair values of financial instruments were:
<TABLE>
                                                          2 0 0 0                              1 9 9 9
                                                          -------                              -------
                                                Carrying                            Carrying
                                                 Amount           Fair Value         Amount            Fair Value
Financial assets:                                ------           ----------         ------            ----------
<S>                                         <C>                <C>                <C>               <C>
Cash and cash equivalents                   $    12,992,516    $   12,993,000     $    9,509,898    $     9,510,000
Securities available for sale                    19,321,007        19,321,000         23,024,175         23,024,000
Stock in Federal Home Loan Bank                   2,503,700         2,504,000          2,503,700          2,504,000
Stock in Federal Reserve Bank                       360,000           360,000            360,000            360,000
Loans held for sale                                 803,040           803,000            758,651            759,000
Loans, net                                      212,317,017       211,907,000        192,720,533        192,344,000
Accrued interest receivable                       1,898,947         1,899,000          1,576,279          1,576,000
Mortgage servicing rights                         1,515,924         1,516,000          1,335,419          1,335,000

Financial liabilities:

Demand and savings deposits                 $  (115,782,067)   $ (115,782,000)    $ (112,545,250)   $  (112,545,000)
Time deposits                                  (108,360,588)     (109,317,000)       (86,661,159)       (87,189,000)
Borrowed funds                                   (7,936,150)       (7,871,000)       (16,176,754)       (16,183,000)
</TABLE>
                                  (Continued)
                                                                              40
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998



NOTE 15 - REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital  requirements
administered  by federal  banking  agencies.  Capital  adequacy  guidelines and,
additionally  for  banks,   prompt   corrective   action   regulations   involve
quantitative  measures of assets,  liabilities,  and  certain  off-balance-sheet
items  calculated  under regulatory  accounting  practices.  Capital amounts and
classifications are also subject to qualitative judgments by regulators. Failure
to meet capital requirements can initiate regulatory action.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and plans for capital restoration are required.

The Company and Bank were  categorized as well  capitalized at year-end.  Actual
and required capital levels (in millions) and ratios were:
<TABLE>
                                                                                                Minimum Required
                                                                                                   To Be Well
                                                                     Minimum Required              Capitalized
                                                                        For Capital          Under Prompt Corrective
                                                Actual               Adequacy Purposes         Action Regulations
                                                ------               -----------------         ------------------
                                          Amount      Ratio          Amount      Ratio         Amount     Ratio
                                          ------      -----          ------      -----         ------     -----
<S>                                       <C>        <C>             <C>         <C>           <C>        <C>
2000

Total capital (to risk weighted assets)
   Consolidated                           $  27.8    12.7%           $ 17.5      8.0%          $ 21.9     10.0%
   Bank                                      26.1    11.9%             17.5      8.0%            21.9     10.0%
Tier 1 capital (to risk weighted assets)
   Consolidated                              25.5    11.6%              8.8      4.0%            13.2      6.0%
   Bank                                      23.8    10.9%              8.8      4.0%            13.1      6.0%
Tier 1 capital (to average assets)
   Consolidated                              25.5     9.9%             10.3      4.0%            12.9      5.0%
   Bank                                      23.8     9.3%             10.3      4.0%            12.8      5.0%

1999

Total capital (to risk weighted assets)
   Consolidated                           $  25.7    12.6%           $ 16.3      8.0%          $ 20.3     10.0%
   Bank                                      24.3    12.1%             16.1      8.0%            20.1     10.0%
Tier 1 capital (to risk weighted assets)
   Consolidated                              23.1    11.3%              8.2      4.0%            12.2      6.0%
   Bank                                      21.7    10.8%              8.0      4.0%            12.1      6.0%
Tier 1 capital (to average assets)
   Consolidated                              23.1     9.9%              9.4      4.0%            11.7      5.0%
   Bank                                      21.7     9.3%              9.3      4.0%            11.7      5.0%
</TABLE>
                                  (Continued)
                                                                              41
<PAGE>
                              LENAWEE BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2000, 1999 and 1998




NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
                                  Interest        Net Interest            Net            Earnings (Loss) per Share
                                                                                         -------------------------
                                   Income            Income          Income (Loss)      Basic         Fully Diluted
                                   ------            ------          ------------       -----         -------------
<S>                           <C>               <C>                <C>               <C>              <C>
2000
     First quarter            $    4,833,000    $     2,889,000    $      704,000    $     0.83      $     0.81
     Second quarter                5,143,000          3,013,000           822,000          0.96            0.95
     Third quarter                 5,378,000          3,040,000           804,000          0.94            0.93
     Fourth quarter                5,497,000          3,199,000           875,000          1.02            1.02


1999
     First quarter            $    4,149,000    $     2,638,000    $      656,000    $     0.77      $     0.77
     Second quarter                4,323,000          2,822,000           793,000          0.93            0.93
     Third quarter                 4,608,000          3,035,000           844,000          0.99            0.99
     Fourth quarter                4,843,000          3,116,000          (730,000)*       (0.86)          (0.86)
</TABLE>
*    The significant  fluctuation in net income (loss) during the fourth quarter
     of 1999 is primarily the result of recording  additional provision for loan
     losses  of  approximately  $2.3  million  attributed  to  loans to a single
     borrower in which the Bank had  purchased  a  participating  interest  from
     another financial institution. This event is further discussed in Note 4.


                                                                              42
<PAGE>
                            COMMON STOCK INFORMATION

There is no active market for Company's  common stock, and there is no published
information with respect to its market price. There are occasional sales through
brokers and direct sales by  shareholders  of which the Company's  management is
aware.  It is the  understanding  of the management of the Company that over the
last three  years,  the  Company's  common stock has sold at prices in excess of
book value.  During 2000, there were, as far as the Company's  management knows,
sales of shares  of the  Company's  common  stock,  involving  a total of 81,176
shares.   The  price  was  reported  to  management  in  only  a  few  of  these
transactions,  and  management  has no way of  confirming  the prices  that were
reported.  During this period,  the highest price known by management to be paid
was  $72.50  per share,  and the  lowest  price was  $60.00  per  share.  To the
knowledge  of  management,  the last sale of common  stock  occurred in December
2000, involving the sale of 75 shares at a price of $60.00 per share.

The  following  table sets  forth the range of high and low sales  prices of the
Company's  Common Stock during 2000,  1999, and 1998 , based on information made
available to the Company,  as well as per share cash dividends  declared  during
those periods. Although management is not aware of any transactions at higher or
lower  prices,  there may have been  transactions  at prices  outside the ranges
listed below:
<TABLE>
                                                                                    Cash
                                           Sales Prices (1)                  Dividends Declared (1)
                                           ----------------                  ----------------------
                                       High                Low
                                       ----                ---
<S>                                   <C>                <C>                        <C>
             2000
First Quarter...............          $72.50             $65.00                     0.34
Second Quarter..............          $67.50             $62.50                     0.20
Third Quarter...............          $65.00             $60.00                     0.20
Fourth Quarter..............          $67.50             $60.00                     0.20

             1999                      High                Low
First Quarter...............          $46.00             $46.00                     0.23
Second Quarter..............          $52.50             $47.50                     0.16
Third Quarter...............          $70.00             $52.50                     0.17
Fourth Quarter..............          $75.00             $70.00                     0.19

             1998                      High                Low
First Quarter...............          $26.25             $25.00                     0.20
Second Quarter..............          $35.00             $26.25                     0.15
Third Quarter...............          $42.50             $37.00                     0.16
Fourth Quarter..............          $45.00             $42.50                     0.16
</TABLE>
(1)      Adjusted for all stock splits.

There are 3,000,000  shares of the Company's common stock  authorized,  of which
851,551 shares were issued and  outstanding as of December 31, 2000.  There were
approximately  570  shareholders of record,  including trusts and shares jointly
owned, as of that date.

The holders of the Company's common stock are entitled to dividends when, as and
if  declared  by the Board of  Directors  of the  Company  out of funds  legally
available for that purpose.  Dividends  have been paid four times  annually.  In
determining  dividends,  the Board of Directors considers the earnings,  capital
requirements  and  financial  condition of the Company and the Bank,  along with
other  relevant  factors.  The  Company's  principal  source  of funds  for cash
dividends is the dividends  paid by the Bank. The ability of the Company and the
Bank to pay dividends is subject to regulatory restrictions and requirements.

                                                                              43
<PAGE>
Lenawee Bancorp, Inc.                                    This Proxy is solicited
135 East Maumee Street                                   on behalf of the
Adrian, Michigan 49221                                   Board of Directors

                                      PROXY

     The  undersigned  holder of  _________________  shares of capital  stock of
Lenawee  Bancorp,  Inc. hereby appoints Douglas L. Kapnick and Allan F. Brittain
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent  and to vote, as  designated  below,  all the shares of Common
Stock of Lenawee  Bancorp,  Inc. held of record by the  undersigned  on March 8,
2001, at the annual  meeting of  shareholders  to be held April 18, 2001, and at
any adjournment thereof.

1.   In the election of three directors to be elected for terms expiring in 2004

     [ ]  FOR all nominees listed below          [ ] WITHHOLD AUTHORITY
          (except as marked to the               to vote for all nominees
           contrary below)                        listed below

     (INSTRUCTION:  To  withhold  authority to  vote for any individual  nominee
     strike a line through the nominee's name in the list below.)

            Fred R. Duncan    -    J. Paul Rupert    -    Emory M. Schmidt

2.   Proposal to approve the Lenawee Bancorp 2001 Stock Option Plan.

           [   ]   FOR              [   ]    AGAINST           [   ]    ABSTAIN

3.   Proposal to approve the selection of the Corporation's auditors for the
     2001 fiscal year.

           [   ]   FOR              [   ]    AGAINST           [   ]    ABSTAIN

4.   In their  discretion,  the Proxies are  authorized  to vote upon such other
     business as may properly come before the meeting.


This Proxy, when properly executed,  will be voted in the manner directed herein
by the  undersigned  shareholder.  If no direction  is made,  this Proxy will be
voted FOR all nominees listed in Item 1 and FOR the Other Proposals.


Please  sign  exactly  as name  appears  below.  When  shares  are held by joint
tenants,  both should sign. When signing as attorney,  executor,  administrator,
trustee or guardian,  please give full title as such. If a  corporation,  please
sign in full  corporate  name by president  or other  authorized  officer.  If a
partnership or limited liability company,  please sign in partnership or company
name by authorized person.


_____________________________________    _______________________________________
Signature                                Signature if held jointly


Dated: ______________________, 2001




PLEASE MARK,  SIGN,  DATE AND RETURN THE PROXY CARD PROMPTLY  USING THE ENCLOSED
ENVELOPE.
<PAGE>
                                   Exhibit 21

                           Subsidiaries of Registrant

             Name                       Ownership                  Incorporation
             ----                       ---------                  -------------
Bank of Lenawee                            100%                       Michigan

Bank of Washtenaw                          100%                       Michigan

Lenawee Financial Services, Inc.           100% by                    Michigan
                                       Bank of Lenawee

Pavilion Mortgage Company                  100% by                    Michigan
                                       Bank of Lenawee