SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ----------------

                                   FORM 10-QSB


                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

                                       OR
                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                        Commission file number: 333-63685

                         CLARKSTON FINANCIAL CORPORATION
        (Exact name of small business issuer as specified in its charter)

             MICHIGAN                                      38-3412321
  (State of other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                       Identification No.)

                 15 South Main Street, Clarkston, Michigan 48346
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (248) 625-8585

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

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

The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock, as of the latest practicable date: 936,600 shares of the Company's Common
Stock (no par value) were outstanding as of August 11, 1999.

Transitional Small Business Disclosure Format (check one):  Yes _____   No __X__

                                       1
<PAGE>
                                      INDEX


                                                                            Page
                                                                       Number(s)

Part I.           Financial Information (unaudited):

                  Item 1.
                  Consolidated Financial Statements                          3-7
                  Notes to Consolidated Financial Statements                8-11

                  Item 2.
                  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations            12-15

Part II.          Other Information

                  Item 1.
                  Legal Proceedings                                           16

                  Item 2.
                  Changes in Securities and Use of Proceeds                   16

                  Item 3.
                  Defaults Upon Senior Securities                             16

                  Item 4.
                  Submission of Matters to a Vote of Securities Holders       16

                  Item 5.
                  Other Information                                           16

                  Item 6.
                  Exhibits and Reports on Form 8-K                            16


Signatures                                                                    17

                                       2
<PAGE>
Part I   Financial Information (unaudited)

                         CLARKSTON FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                 June 30, 1999 (unaudited) and December 31, 1998
                 (dollars in thousands, except per share data)
<TABLE>
                                                                                    June 30,              December 31,
                                                                                      1999                    1998
                                                                                 ---------------         --------------
                                                                                   (Unaudited)
ASSETS
<S>                                                                             <C>                      <C>
Cash and Cash Equivalents:
     Total cash and due from banks                                               $        556            $         92
     Federal funds sold                                                                   350                   8,350
       Total Cash and Cash Equivalents                                                    906                   8,442
                                                                                 ------------            ------------


   Securities Available for Sale, at fair value                                        12,759                      --

   Loans, less Loan Loss Reserve:
     Total loans                                                                        4,649
     Allowance for loan losses                                                            (70)                     --
                                                                                 ------------            ------------
     Net Loans                                                                          4,579                      --

   Net Property and Equipment                                                             332                     291
   Accrued interest receivable                                                             57                      --
   Other Assets                                                                            12                       -
                                                                                 ------------            ------------
     Total Assets                                                                $     18,645            $      8,733
                                                                                 ============            ============

LIABILITIES AND SHAREHOLDERS' EQUITY

   Deposits
     Noninterest-bearing                                                                1,963                      --
     Interest-bearing                                                                   8,254                      --
                                                                                 ------------            ------------
       Total deposits                                                                  10,217                      --
     Accrued Expenses and Other Liabilities                                               293                     126

   Shareholders' Equity
     Common stock, no par value; 10,000,000
       shares authorized, 940,700 and 951,000 shares
       issued and outstanding as of June 30, 1999 and December 31, 1998,
       respectively                                                                     4,335                   4,378
     Capital surplus                                                                    4,336                   4,378
     Accumulated deficit                                                                 (524)                   (149)
     Accumulated other comprehensive income                                               (12)                     --
                                                                                 ------------            ------------
       Total Shareholder Equity                                                         8,135                   8,607
                                                                                 ------------            ------------
       Total Liabilities and Shareholders' Equity                                $     18,645            $      8,733
                                                                                 ============            ============
</TABLE>
           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
                 Three months and six months ended June 30, 1999
                  (dollars in thousands, except per share data)
                                   (unaudited)
<TABLE>
                                                                                  Three Months           Six Months
                                                                                    ended                   ended
                                                                                 June 30, 1999          June 30, 1999
                                                                                 ---------------       ----------------
<S>                                                                              <C>                     <C>
   Interest Income
     Loans, including fees                                                        $        59            $         66
     Securities                                                                           121                     179
     Federal Funds sold                                                                    37                     103
                                                                                 ------------            ------------
       Total interest income                                                              217                     348

   Interest Expense
     Deposits                                                                              72                      97
     Other                                                                                  -                      --
                                                                                 ------------            ------------
       Total interest expense                                                              72                      97

   Net interest income                                                                    145                     251

   Provision for loan losses                                                               52                      70
                                                                                 ------------            ------------

   Net interest income after provision for loan losses                                     93                     181

   Noninterest income                                                                      12                      18

   Noninterest expense
     Salaries and benefits                                                                127                     258
     Occupancy expense of premises                                                         21                      42
     Furniture and equipment expense                                                       19                      39
     Computer and data processing expenses                                                 39                      75
     Advertising and Public Relations                                                      29                      65
     Professional fees                                                                     36                      59
     Other expense                                                                         21                      36
                                                                                 ------------            ------------
       Total noninterest expense                                                          292                     574
                                                                                 ------------            ------------

   Loss before federal income tax                                                        (187)                   (375)

   Federal income tax                                                                       0                       0
                                                                                 ------------            ------------

   Net loss                                                                      $       (187)                   (375)
                                                                                 ============            ------------
   Basic and diluted loss per share                                              $      (0.20)           $      (0.40)
                                                                                 ============            ------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>
                                                                                  Six Months
                                                                                    ended
                                                                                 June 30, 1999
<S>                                                                              <C>
Net Loss as Reported                                                             $       (375)

Other Comprehensive Income, Net of Tax $0
     Change in unrealized gain on securities
          available for sale                                                              (12)
                                                                                 ------------
Comprehensive Loss                                                               $       (387)
                                                                                 =============
</TABLE>










          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         Six months ended June 30, 1999
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>

                                                                                              Accumulated
                                                                                                  Other               Total
                                                  Common       Capital       Accumulated      Comprehensive     Shareholders'Equity
                                                  Stock        Surplus         Deficit           Income
<S>                                            <C>           <C>           <C>                <C>               <C>
Balance, December 31, 1998                     $   4,378     $   4,378     $      (149)       $          0      $      8,607

Net income (loss) for six months
Ended June 30, 1999 (unaudited)                                                   (375)                                 (375)

Purchase and retirement of 10,700 shares
Of the Corporation's common stock                   (43)          (42)                                                   (85)

Other Comprehensive Income                                                                             (12)              (12)
                                               ---------     ---------     -----------        ------------       -----------
Balance June 30, 1999                          $   4,375     $   4,336     $      (524)       $        (12)      $     8,135
                                               =========     =========     ===========        ============       ===========
</TABLE>






          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                         Six months ended June 30, 1999
                             (dollars in thousands)
                                   (unaudited)
<TABLE>

                                                                                      Six Months
                                                                                         ended
                                                                                     June 30, 1999
                                                                                      (Unaudited)
<S>                                                                                   <C>
Cash Flows from Operating Activities
       Net loss                                                                       $    (375)
       Adjustments to reconcile net loss to net
       cash used in operating activities:
           Increase in interest receivable                                                  (57)
           Depreciation and amortization                                                     36
           Increase in accrued expenses                                                     167
           Loan loss provision                                                               70
           Increase in other assets                                                         (12)
                                                                                      ---------
                  Total adjustments                                                         204
                                                                                      ---------
       Net cash used in operating activities                                               (171)

Cash Flows from Investing Activities:
       Increase in loans                                                                 (4,649)
       Purchase of securities                                                           (12,771)
       Equipment expenditures                                                               (77)
                                                                                      ----------
                                                                                        (17,497)
Cash Flows from Financing Activities:
       Increase in deposits                                                              10,217
       Repurchase of 10,700 shares of common stock                                          (85)
                                                                                      ---------
                                                                                         10,132

Net decrease in cash and cash equivalents                                                (7,536)
Cash and cash equivalents at beginning of year                                            8,442
                                                                                      ---------
Cash and cash equivalents at June 30, 1999                                            $     906
                                                                                      =========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       7
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 (unaudited) and December 31, 1998



NOTE 1 BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information  and with the  instructions  to Form  10-QSB and
Article  10 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals)  considered  necessary for a fair
presentation  have been included.  Operating results for the three and six month
periods ended June 30, 1999, are not necessarily  indicative of the results that
may be expected for the year ending December 31, 1999. For further  information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Proxy Statement dated March 5, 1999 containing  audited  financial
statements  for the  period  from  May 18,  1998  (date of  inception),  through
December 31, 1998.

NOTE 2 COMPUTATION OF EARNINGS PER SHARE

     Basic  earnings  (loss) per share is based on net income (loss)  divided by
the weighted average number of shares outstanding during the period.


NOTE 3 PRINCIPLES OF CONSOLIDATION

     The accompanying  consolidated financial statements include the accounts of
Clarkston Financial Corporation (the "Company), and its wholly-owned subsidiary,
Clarkston  State Bank (the "Bank").  All significant  intercompany  accounts and
transactions have been eliminated in consolidation.


NOTE 4 COMPARATIVE DATA

     The  Company  was  incorporated  on May 18,  1998,  and the Bank opened for
operations  on January 4, 1999.  Comparable  statements of income and cash flows
for the six  months  ended  June 30,  1998,  have not been  presented  since the
Company  had not been  incorporated  and did not  have  operations  during  that
period.




                                       8
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 (unaudited) and December 31, 1998



NOTE 5 - SECURITIES

The  amortized  cost and fair values of securities  were as follows  (dollars in
thousands):

Available for Sale
<TABLE>
                                                                       Gross              Gross
                                                     Amortized       Unrealized         Unrealized          Fair
                                                       Cost            Gains              Losses           Values
<S>                                                  <C>              <C>               <C>                <C>
June 30, 1999 (Unaudited)
   Taxable variable rate demand
     municipal revenue bonds,
     short-term corporate
     commercial paper, and bonds of
     government agencies                             $ 12,771         $       0         $      (12)         $ 12,759
                                                     ========         =========         ==========          ========
</TABLE>

Contractual  maturities of debt securities at June 30, 1999, were as follows. No
held-to-maturity  securities existed at June 30, 1999.  Expected  maturities may
differ from contractual  maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
                                                                                  Available-for-Sale Securities
                                                                                  Amortized              Fair
                                                                                      Cost              Values
                                                                                         (dollars in thousands)
     <S>                                                                        <C>                  <C>
     Due from 1999 to 2002                                                      $     10,770         $  10,768
     Due from 2003 to 2004                                                             2,001             1,991
                                                                                ------------         ---------
                                                                                $     12,771         $  12,759
                                                                                ============         =========
</TABLE>


                                   (Continued)

                                       9
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 (unaudited) and December 31, 1998


   NOTE 6 - LOANS

Loans are as follows (dollars in thousands):
<TABLE>
                                                                                   June 30        December 31,
                                                                                     1999              1998
                                                                                  (Unaudited)
     <S>                                                                         <C>              <C>
     Commercial                                                                  $     2,743      $         -
     Mortgage                                                                          1,136                -
     Consumer                                                                            770                -
                                                                                 -----------
                                                                                       4,649
     Allowance for loan losses                                                            70                -
                                                                                 -----------      -----------
                                                                                 $     4,579      $         -
                                                                                 ===========      ===========
</TABLE>

Activity in the allowance for loan losses is as follows (dollars in thousands):
<TABLE>
                                                                                                       Period from
                                                                                     Six                 May 18,
                                                                                    months        (date of inception)
                                                                                    ended               through
                                                                                   June 30,           December 31,
                                                                                     1999                1998
                                                                                  (Unaudited)
     <S>                                                                         <C>              <C>
     Balance at beginning of period                                              $         0      $          -
       Provision charged to operating expense                                             70                 -
       Loans charged off                                                                   -                 -
                                                                                 -----------      ------------

     Balance at end of period                                                    $        70      $          -
                                                                                 ===========      ============


Allowance for loan losses as a percentage of
     Loans at end of period                                                              1.5%              -0-
                                                                                 ===========      ============
</TABLE>




                                   (Continued)

                                       10
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 1999 (unaudited) and December 31, 1998



NOTE 7 - PREMISES AND EQUIPMENT - NET

Premises and equipment are as follows (dollars in thousands):
<TABLE>
                                                                                           Accumulated        Carrying
                                                                             Cost          Depreciation         Value
<S>                                                                         <C>             <C>              <C>
   June 30, 1999 (unaudited)
     Building and improvements                                              $     75        $       4        $      71
     Furniture and equipment                                                     293               32              261
                                                                            --------        ---------        ---------
                                                                            $    368        $      36        $     332
                                                                            ========        =========        =========

   December 31, 1998
     Building and improvements                                              $     59        $       0        $      59
     Furniture and equipment                                                     232                0              232
                                                                            --------        ---------        ---------
                                                                            $    291        $       0        $     291
                                                                            ========        =========        =========
</TABLE>


NOTE 8 - DEPOSITS

Deposits are summarized as follows (dollars in thousands):
<TABLE>
                                                                                             June 30,       December 31,
                                                                                               1999             1998
   <S>                                                                                     <C>              <C>
   Demand deposit accounts                                                                 $    2,373       $        -
   Money market accounts                                                                        1,835                -
   Savings accounts                                                                             1,555                -
   Certificates of deposit                                                                      4,454                -
                                                                                           -----------      ----------

                                                                                           $   10,217                -
                                                                                           ===========================
</TABLE>

                                                        (Continued)

                                       11
<PAGE>
Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

General

     Clarkston Financial  Corporation (the "Company") is a Michigan  corporation
and was  incorporated  on May 18, 1998. The Company is the bank holding  company
for Clarkston State Bank (the "Bank").  The Bank commenced operations on January
4, 1999. The Bank is a Michigan chartered bank with depository  accounts insured
by the Federal Deposit Insurance Corporation.  The Bank provides a full range of
commercial and consumer banking services,  primarily in Clarkston,  Michigan and
the surrounding market are primarily located in north Oakland County, Michigan.

     The Company's plan of operation has been to establish its  management  team
within the first few months of its operations.  Management  believes that it has
been successful in  establishing  its management team and that it can administer
the Company's growth.

     On April 6, 1999,  the Bank entered into an agreement  with The State Bank,
Fenton,   Michigan,  to  acquire  certain  assets  and  assume  certain  deposit
liabilities  with  respect  to The State  Bank's  branch  office  located in the
Foodtown grocery store at 6555 Sashabaw Road, Clarkston, Michigan. All necessary
regulatory  approvals having been received,  this transaction was consummated on
July 16, 1999 and added $1.8 million in deposits to the Bank's totals. A deposit
premium of 9.24% of  deposits  (as finally  adjusted)  will be paid to The State
Bank for these  deposits,  along  with  $17,000  for  various  fixed  assets and
equipment. The Bank leased the branch space from Foodtown, Inc. at a rental rate
of $2,500 per month under a lease which runs until July,  2002.  The Chairman of
the Company's  Board of Directors is the principal  owner of Foodtown,  Inc. The
lease is an arm's  length  transaction  on  essentially  the same terms as those
previously in place between Foodtown, Inc. and The State Bank.

Financial Condition

     Total  assets of the  Company  increased  by $9.9  million or 113% to $18.7
million at June 30, 1999,  from $8.7 million at December 31, 1998.  The increase
in assets is primarily  attributable to the Bank continuing to attract  customer
deposits.  The first  half of 1999 was the  Company's  first  full six months of
operations,  and the number of deposit accounts  increased from none at December
31, 1998, to 806 deposit accounts at June 30, 1999. The Company anticipates that
the Bank's assets will continue t increase during 1999, which will be the Bank's
first full year of operations.

     Cash and cash equivalents, which includes federal funds sold and short-term
investments, decreased $7.5 million or 89% to $.9 million at June 30, 1999, from
$8.4 million at December 31, 1998. The decrease is the result of the increase in
the investment and loan portfolios since December 31, 1998.

     Securities  available for sale increased  $12.8 million to $12.8 million at
June 30, 1999 from $0 at December  31,  1998.  The increase is the result of the
investment of customer deposits that have been obtained since December 31, 1998,
and also the  purchase of  securities  using cash  generated  by a reduction  in
federal funds sold.

     The allowance for loan losses as of June 30, 1999 was $70,000, representing
approximately  1.51%  of  total  loans  outstanding,  compared  to no loan  loss
reserves at  December  31,  1998,  at which time the Bank had not yet opened for
business.  Clarkston Financial Corporation has not experienced any credit losses
as of June 30, 1999.

     Bank premises and equipment increased by $41,000 or 14% to $332,000 at June
30, 1999 from $291,000 at December 31, 1998. The increase  included the purchase
of an ATM machine and related  software,  an automobile for the Bank's  courier,
additional printers, and other miscellaneous items.

                                       12
<PAGE>
Results of Operations

     The net loss for the three and six month periods  ended June 30, 1999,  was
$187,000 and $375,000,  respectively. As of December 31, 1998, the Company had a
retained  deficit  of  $149,000,  and as of June 30,  1999,  the  Company  had a
retained deficit of $524,000.  The retained deficit and net losses are primarily
the result of costs of opening the Bank's office,  wages paid to employees,  and
fees and expenses  incurred in forming the Company and  applying for  regulatory
approvals.  Significant  ongoing  additions  to loan  loss  reserves  will  also
contribute  to net  losses  in 1999 as the Bank  increases  its loan  portfolio.
Management  believes  that the  Company  will  generate a net loss for 1999 as a
result  of  expenditures  made to build  its  management  team and open its main
office,  together with the time needed to more  effectively  utilize its capital
and generate loan interest and fee income by making additional loans. Management
believes  that  the  expenditures   made  in  1998  and  1999  will  create  the
infrastructure  and lay the  foundation for future growth and  profitability  in
subsequent years.

     Interest  income  was  $217,000  and  $348,000  for the three and six month
periods ended June 30, 1999,  consisting primarily of interest income on federal
funds and securities and secondarily from lending activities ($7,000 and $66,000
for the three and six month periods ended June 30, 1999).  Interest  expense was
$72,000 and $97,000 for the three and six month  periods ended June 30, 1999 and
relates to interest incurred on interest bearing deposits.

     The Company has an allowance for loan losses of approximately 1.5% of total
loans at June 30,  1999.  The  provision  for loan  losses for the three and six
month  periods ended June 30, 1999 was $52,000 and $72,000,  respectively.  This
amount  is  expected  to  increase  substantially  in the last half of 1999 as a
result of anticipated increases in the total loan portfolio. Management believes
the current rate of providing for loan loss reserve is adequate.

     In each accounting period,  management evaluates the problems and potential
losses in the loan portfolio.  Consideration is also given to off-balance  sheet
items that may  involve  credit  risk,  such as  commitments  to extend  credit.
Management's  evaluation of the allowance is further based on  consideration  of
actual loss  experience,  the present and  prospective  financial  condition  of
borrowers, adequacy of collateral, industry concentrations within the portfolio,
and general economic conditions.  The results of these evaluations are reflected
in the allowance and periodic provision for credit losses.

     The  primary  risk  element   considered  by  management   regarding   each
installment  and  residential  real estate  loan is the lack of timely  payment.
Management  has a reporting  system that monitors past due loans and has adopted
policies  to pursue  its  creditor's  rights  in order to  preserve  the  Bank's
position.  The  primary  risk  elements  concerning  commercial  loans  are  the
financial condition of the borrower, the sufficiency of the collateral, and lack
of timely  payment.  Management has a policy of requesting and reviewing  annual
financial  statements  from its  commercial  loan  customers,  and  periodically
reviews existence of collateral and value for selected loans.

     Other  income of $12,000 and  $18,000  for the three and six month  periods
ended June 30, 1999 consisted of income from deposit  service  charges and other
miscellaneous fees.

     The main components of other expenses were primarily salaries and benefits.
Other  expense  for the three  and six month  periods  ended  June 30,  1999 was
$187,000  and $375,000  respectively,  consisting  primarily  of  occupancy  and
equipment expenses, legal and accounting fees, marketing expenses, insurance and
supplies.

                                       13
<PAGE>
Liquidity and Capital Resources

     The  Company  obtained  its  initial  equity  capital in an initial  public
offering of its common stock to investors in November,  1998. The Company's plan
of operation for the next twelve months does not  contemplate  the need to raise
additional  capital  during that period.  Management  believes  that its current
capital and liquidity will provide the Company with adequate  capital to support
its expected level of deposit and loan growth and to otherwise meet its cash and
capital requirements for at least the next two or three years.

Year 2000 Compliance

     Because many computerized systems use only two digits to record the year in
date fields (for example, the year 1998 is recorded as 98), such systems may not
be able to  accurately  process  dates  ending in the year 2000 and  after.  The
effects of the issue will vary from  system to system and may  adversely  affect
the ability of a financial  institution's  operations  as well as its ability to
prepare  financial  statements.  The Company and the Bank were organized in 1998
and the Company  acquired its computer  equipment  within the past twelve months
and has contracted with a leading supplier of information  processing  services.
This equipment and these  services were  purchased with  assurances of Year 2000
compliance.

     Company management has developed a comprehensive Year 2000 Compliance Plan.
The  Company  has  procedures  in place to assess  Year 2000  compliance  by the
Company and its vendors. In addition,  the Bank asks commercial  borrowers about
Year 2000 compliance as part of the loan application and review process.

     To date,  the Company has spent less than $15,000 on Year 2000  compliance.
Management  believes that the  additional  costs to complete the Company's  Year
2000 compliance will be minimal.

     The  Company  presently  anticipates  that it will  complete  its Year 2000
assessment and any necessary  remediation by December 31, 1999.  However,  there
can be no assurance that the Company will be successful in implementing its Year
2000 remediation plan according to the anticipated  schedule.  In addition,  the
Company may be  adversely  affected by the  inability of other  companies  whose
systems interact with the Company to become Year 2000 compliant.

     The Bank's  core  processing  applications  are  provided  by a third party
vendor, Jack Henry and Associates,  Inc. The Company has received correspondence
from Jack Henry and  Associates,  Inc. which  documents the status of their Year
2000  compliance.  The  Company  has  been  advised  that  the  Jack  Henry  and
Associates, Inc. software has been successfully tested for Year 2000 compliance.
In addition,  the Bank has repeated a number these tests internally for specific
Year 2000  critical  dates,  and has had the  successful  results  of such tests
validated by an outside consultant.

     Although the Company expects its internal systems to be Year 2000 compliant
as described  above,  the Company has prepared a contingency plan that specifies
what it plans to do if important  internal or external systems are not Year 2000
compliant in a timely manner.  Further,  the bank has successfully  tested major
portions of the contingency plan by operating manually,  as if no computers were
available, for several days at each location

                                       14
<PAGE>
     Management  does  not  anticipate  that the  Company  will  incur  material
operating  expenses  or  be  required  to  invest  heavily  in  computer  system
improvements  to be Year 2000  compliant.  Nevertheless,  the  inability  of the
Company to successfully  address Year 2000 issues could result in  interruptions
in the Company's  business and have a material  adverse  effect on the Company's
results of operations.

Recent Regulatory Developments

     Various  bills have been  introduced  in the Congress that would allow bank
holding companies to engage in a wider range of nonbanking activities, including
greater  authority to engage in securities and insurance  activities.  While the
scope of permissible  nonbanking  activities and the conditions  under which the
new powers  could be  exercised  varies  among the bills,  the  expanded  powers
generally  would be available to a bank holding company only if the bank holding
company and its bank subsidiaries remain well-capitalized and well-managed.  The
bills also impose various  restrictions on  transactions  between the depository
institution   subsidiaries   of  bank  holding   companies  and  their  non-bank
affiliates.   These   restrictions   are  intended  to  protect  the  depository
institutions from the risks of the new nonbanking  activities  permitted to such
affiliates.  At this time,  the Company is unable to predict  whether any of the
pending  bills will be enacted and,  therefore,  is unable to predict the impact
such legislation may have on the operations of the Company and the Bank.

Forward Looking Statements

     This report contains certain forward-looking  statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.   The  Company  intends  such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Reform Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identifiable  by use  of the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project"  or  similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain.  Factors which could have a material adverse affect on the
operations and future prospects of the Company and the subsidiaries include, but
are not limite to, changes in:  interest  rates,  general  economic  conditions,
legislative/regulatory  changes,  monetary  and  fiscal  policies  of  the  U.S.
Government,  including  policies of the U.S.  Treasury  and the Federal  Reserve
Board, the quality or composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Company's  market area and accounting  principles,  policies and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such  statements.  Further
information  concerning  the  Company  and its  business,  including  additional
factors  that  could  materially  affect the  Company's  financial  results,  is
included in the Company's filings with the Securities and Exchange Commission.

                                       15
<PAGE>
PART II - OTHER INFORMATION


Item 1.      Legal Proceedings.

None.


Item 2.      Changes in Securities and Use of Proceeds.

None.


Item 3.      Defaults Upon Senior Securities.

None.


Item 4.      Submission of Matters to a Vote of Securities Holders

             (a)    The annual meeting of  shareholders  of the  Corporation was
                    held on April 20, 1999.

             (b)    The following  directors  were elected at the Annual Meeting
                    for terms  expiring in 2002:  Louis Beer and William  Clark.
                    Other  directors whose terms continued after the meeting are
                    as follows:  Charles Fortinberry,  Bruce McIntyre and Robert
                    Olsen,  whose terms expire in 2000;  and Edwin Adler,  David
                    Harrison and John Welker, whose terms expire in 2001.

             (c)    At the Annual Meeting,  two directors were elected for terms
                    expiring in 2002. The vote was as follows:

                            Director nominee Louis Beer---
                              812,660 for, none against, 5,200 abstained.

                            Director nominee William Clark---
                              812,440 for, none against, 5,400 abstained.

Item 5.      Other Information.

None.


Item 6.      Exhibits and Reports on Form 8-K.

    (a)  Exhibits -

         10     Lease between Clarkston State Bank and Foodtown, Inc.

         27     Financial Data Schedule
                (EDGAR version only)

    (b)  Reports on Form 8-K - None.



                                       16
<PAGE>
                                   SIGNATURES

     In accordance with the requirements of the Securities Exchange Act of 1934,
as amended,  the Registrant has duly caused this Quarterly Report on Form 10-QSB
for the  quarter  ended  June  30,  1999,  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized.



                                           CLARKSTON FINANCIAL CORPORATION


                                           /s/ David T. Harrison
                                           David T. Harrison
                                           President and Chief Executive Officer



                                           /s/ James L. Richardson
                                           James L. Richardson
                                           Treasurer


DATE:     August 12, 1999



                                       17

329527v1
<PAGE>
EXHIBIT 10

                                      LEASE

THIS LEASE, is made April ___ 1999 between Waldon  Properties,  Inc., a Michigan
corporation  with offices at 20 W.  Washington,  Suite 15,  Clarkston,  Michigan
48346,  (hereinafter  referred to as  "Landlord"),  and Clarkston  State Bank, a
Michigan  banking  corporation,  with offices at 15 S. Main St.,  Clarkston,  MI
48346, (hereinafter referred to as "Tenant").

DEMISED  PREMISES 1. In  consideration of the rents to be paid and the covenants
and agreements to be performed by Tenant,  Landlord  leases to Tenant the retail
premises  containing  approximately 480 square feet, situated in the Township of
Independence, County of Oakland, State of Michigan, located on the main floor in
that certain building  currently  housing a Foodtown grocery store,  with street
address  of  6555  Sashabaw  Rd.,  Clarkston,   Michigan,  (which  premises  are
hereinafter  referred  to  as  the  "demised   premises"),   together  with  the
non-exclusive right to use the parking and common facilities which may from time
to time be furnished by  Landlord,  in common with  Landlord and the tenants and
occupants,  their agents, employees,  customers and invitees, of the building in
which the demised premises are located.

TERM 2. The term of this Lease shall be for a period of three years,  commencing
on July ___, 1999, fully to be completed and ended.  Tenant accepts the premises
for  occupancy "as is",  subject only to any "latent  defects" that Tenant could
not reasonably have discovered with a careful inspection of the premises.

MINIMUM RENT 3. Tenant shall pay to Landlord, in advance, without any set-off or
deduction  whatsoever,  as minimum  rent for the  demised  premises,  the sum of
Ninety-nine  Thousand Dollars  ($99,000.00),  payable in monthly installments of
Twenty-seven  Hundred  Fifty  Dollars  ($2,750.00)  on the first day of each and
every month throughout the term of this Lease.

USE AND OCCUPANCY 4. During the continuation of this Lease, the demised premises
shall  be used  and  occupied  for  retail  banking  offices,  and  related  and
incidental  purposes,  and for no other purposes  without the written consent of
Landlord.  Tenant shall not conduct its business in a manner which will cause an
increase  in fire and  extended  coverage  insurance  premiums  for the  demised
premises or building, and Tenant will comply with all requirements of applicable
insurance  policies and of the American  Insurance  Association  relating to the
demised  premises.  Tenant shall not use the demised premises for any purpose in
violation  of any law,  municipal  ordinance,  or  regulation,  nor shall Tenant
perform any acts or carry on any practices which may injure the demised premises
or the  building  in which the  demised  premises  are located or be a nuisance,
disturbance or menace to the other tenants of said building.
<PAGE>
The demised  premises are located entirely within the Landlord's  building,  and
have no separate access except through  premises leased to another tenant of the
building.  Tenant  acknowledges  that  access to the  demised  premises  will be
limited to the hours in which the Landlord's other tenant is open for business.

Notwithstanding anything herein to the contrary, it is understood by the parties
that  Tenant's  employees  may solicit  banking  business from the customers and
employees of the  supermarket in the building  outside of the demised  premises,
and that this right shall be exclusive to the Tenant.

UTILITIES  AND SERVICES 5.  Landlord  shall provide at its expense all utilities
for the demised premises including gas, electrical, water and sewer, heating and
air  conditioning.  Landlord  shall  provide  utilities for common areas at such
times and in the  manner the same are  customarily  provided  in similar  office
buildings  in the area.  Landlord  shall not be  liable or  responsible  for any
interruption in such utilities or other services due to causes beyond Landlord's
reasonable  control,  or for  interruptions  in  connection  with the  making of
repairs or  improvements  to the demised  premises or the  building in which the
demised premises are located, nor shall such interruption be deemed an actual or
constructive  eviction or partial  eviction or result in an abatement of rental.
Tenant  shall  install  and  pay for all  necessary  electrical,  communication,
security, networking and computer cabling.

REPAIRS 6. Landlord  shall make all necessary  repairs and  replacements  to the
building in which the demised  premises  are located,  and to the common  areas,
including parking areas, and Landlord shall also make all repairs to the demised
premises  which are structural in nature or required due to fire,  casualty,  or
other act of God.  Tenant shall  reimburse  Landlord,  within 30 days of invoice
therefor,  for the full cost of  repairs  and  replacements  made  necessary  by
Tenant's act,  neglect,  default or omission.  Tenant shall, at its own cost and
expense,  make all repairs and provide all  maintenance  in connection  with the
demised  premises.  Tenant shall keep the demised  premises in good repair,  and
Tenant shall upon the expiration of the term of this Lease, yield and deliver up
the demised  premises in like  condition as when taken,  reasonable use and wear
thereof and repairs required to be made by Landlord excepted.

In the event that the  Landlord  shall deem it  necessary  or be required by any
governmental authority to repair, alter, remove, reconstruct or improve any part
of the demised  premises or of the  building in which the demised  premises  are
located, the same shall be made by Landlord with reasonable dispatch, and should
the making of such repairs,  alterations or improvements  cause any interference
with Tenant's use of the demised premises,  such interference  shall not relieve
Tenant  from  the  performance  of its  obligations  hereunder  nor  shall  such
interference be deemed an actual or constructive eviction or partial eviction or
result in an abatement of rental.

                Waldon Properties, Inc. Lease - 4/20/99 - Page 2
<PAGE>
ALTERATIONS 7. Tenant shall not make any alterations,  additions or improvements
to the demised  premises  (whether or not the same may be  structural in nature)
without  Landlord's  prior written consent,  and all  alterations,  additions or
improvements made by either party hereto to the demised premises, except movable
office  furniture  and  equipment  installed at Tenant's  expense,  shall be the
property  of  Landlord  and  remain  upon and be  surrendered  with the  demised
premises at the expiration of the term thereof. Provided, however, that Landlord
may require Tenant to remove any additions, alterations, or improvements made by
Tenant to the  premises  and to repair any damage  caused by such  removal,  and
provided  further,  that if Tenant has not removed its  property  and  equipment
within  thirty  (30) days after the  expiration  or  termination  of this Lease,
Landlord  may elect to retain the same as abandoned  property,  and recover from
Tenant the cost of removal and repair.

Tenant  shall  only use  contractors  approved  by  Landlord  for the  permitted
alterations  to the  premises  and shall not  permit any  mechanics  liens to be
placed or remain upon the  premises.  In the event  Tenant  permits such a lien,
Landlord may, at its option,  cause such lien to be discharged,  and be entitled
to reimbursement of the full costs thereof within 30 days of invoice therefor.

ASSIGNMENT  AND  SUBLETTING  8. Tenant  covenants not to assign or transfer this
Lease or hypothecate or mortgage the same or sublet the demised  premises or any
part thereof  without the prior written  consent of the Landlord,  which consent
shall  not be  unreasonably  withheld.  In the event of any such  assignment  or
transfer,  Tenant shall  remain  fully liable to perform all of the  obligations
under this Lease. Any assignment,  transfer (including transfers by operation of
law or otherwise),  hypothecation,  mortgage or subletting  without such written
consent  shall give  Landlord the right to terminate  this Lease and to re-enter
and repossess the demised premises pursuant to legal proceedings, but Landlord's
right to  damages  shall  survive.  No consent by  Landlord  to any  assignment,
transfer,  hypothecation,  mortgage or subletting  on any one occasion  shall be
deemed a consent to any subsequent assignment, transfer, hypothecation, mortgage
or subletting by Tenant or by any successors,  assigns, transferees,  mortgagees
or subleases of Tenant.  Nothwithstanding the foregoing,  Tenant may assign this
Lease to, or at the order of,  banking  regulators,  FDIC,  or other  regulatory
agencies.

INSURANCE  AND  INDEMNIFICATION  9. Tenant  shall  indemnify  and hold  Landlord
harmless  from any  liability for damages or death to any person or property in,
on, or about the demised  premises and common  areas from any cause  whatsoever,
excepting  that  caused  by  the  negligence  of the  Landlord,  its  agents  or
employees. Tenant shall procure and keep in effect during the entire term hereof
public  liability and property damage insurance  protecting  Landlord and Tenant
from all causes  including their own  negligence,  having as limits of liability
One  Million  Dollars  ($1,000,000.00)  for  damages or death  resulting  to one
person; Two Million Dollars ($2,000,000.00) for

          Waldon Properties, Inc. Lease - 4/20/99 - Page 3
<PAGE>
damages or death resulting from one casualty;  and Five Hundred Thousand Dollars
($500,000.00)  for  property  damage  resulting  from  any one  occurrence.  The
policies  shall name  Landlord as  additional  insured,  and  provide  that such
insurance  shall  be  primary  with  respect  to  Landlord,  and  any  insurance
maintained by Landlord is excess and noncontributing with such insurance. Tenant
shall deliver policies of such insurance or certificates thereof to Landlord and
such policies  shall not be cancelable  without thirty (30) days' written notice
to Landlord. In the event Tenant shall fail to procure such insurance,  Landlord
may,  at its option,  procure  the same for the account of Tenant,  and the full
cost thereof shall be paid to Landlord within 30 days of invoice  therefor.  The
provisions  hereof shall survive the  termination or earlier  expiration of this
Lease with  respect to any  damage,  injury,  or death  occurring  prior to such
termination or expiration.

Landlord  and  Tenant  do each  hereby  release  the  other  from any  liability
resulting  from damage by fire or any other peril  covered by extended  coverage
insurance with waiver of subrogation normally available in the State of Michigan
irrespective of the cause therefor;  provided,  however,  that if an increase in
premium is  required  for such waiver of  subrogation,  the other party will pay
such increase or the waiver will not be furnished. The policies required by this
Lease shall provide that this waiver shall not invalidate the coverage.

FIRE 10. In the event the demised  premises are damaged or destroyed in whole or
in part by fire or other  insured  casualty  during  the term  hereof,  Landlord
shall,  at its own cost and expense,  repair and restore the same to  tenantable
condition  with  reasonable  dispatch,  and the rent  herein  provided  shall be
reduced in direct proportion to the amount of the demised premises so damaged or
destroyed  until such time as the demised  premises are  restored to  tenantable
condition.  If the demised  premises cannot be restored to tenantable  condition
within a period of Sixty (60)  days,  Landlord  and  Tenant  shall each have the
right to  terminate  this  Lease  upon  written  notice to the  other  (Tenant's
cancellation  notice  shall be given  with  thirty  (30) days  after  receipt of
written  notice  from  Landlord  that the  demised  premises  cannot  be  timely
restored),  and any rent  paid for any  period  in  advance  of the date of such
damage and destruction  shall be refunded to Tenant. If the demised premises are
damaged  due to fire or  other  casualty,  Tenant  shall,  at its own  cost  and
expense,  remove such of its  furniture  and other  belongings  from the demised
premises  as Landlord  shall  require in order to repair and restore the demised
premises.  Landlord  shall use  reasonable  discretion  as to the  extent of the
untenantability  of the demised premises and of the time required for the repair
and rebuilding of the same and no such damage or untenantability shall be deemed
either an actual or  constructive  eviction or result in an  abatement of rental
(except as provided herein for insured casualties).

In the event the building in which the demised premises are located is destroyed
to the extent of more than one-half of the then value  thereof,  Landlord  shall
have the right to

          Waldon Properties, Inc. Lease - 4/20/99 - Page 4
<PAGE>
terminate this Lease upon written notice to Tenant, in which event any rent paid
in advance of the date of such destruction shall be refunded to Tenant.

EMINENT DOMAIN 11. If the whole or any substantial  part of the demised premises
or the building in which the demised  premises are located shall be taken by any
public authority under the power of eminent domain,  then the term of this Lease
shall  cease on the part so taken on the date  possession  of that part shall be
required  for  public  use,  and any rent paid in  advance of such date shall be
refunded to Tenant.  Landlord  and Tenant shall each have the right to terminate
this Lease as to the balance of the demised  premises upon written notice to the
other,  which notice shall be delivered  within  thirty (30) days  following the
date notice is received of such taking,  and such termination shall be effective
on the date of possession of the condemned  premises.  In the event that neither
party hereto  shall  terminate  this Lease,  Landlord  shall,  to the extent the
proceeds of the  condemnation  award  (other than any  proceeds  awarded for the
value of any land  taken)  are  available,  make all  necessary  repairs  to the
demised  premises  and the  building  in which  they are  located  to render and
restore the same to a complete  architectural  unit and Tenant shall continue in
possession  of the portion of the demised  premises not taken under the power of
eminent  domain,  under the same terms and  conditions  as are herein  provided,
except that the rent  reserved  herein shall be reduced in direct  proportion to
the  amount of the  demised  premises  so taken.  All  damages a warded for such
taking shall belong to and be the property of Landlord,  whether such damages be
awarded as  compensation  for diminution in value of the leasehold or the fee of
the demised premises;  provided,  however, Landlord shall not be entitled to any
portion of the award  made to Tenant for  removal  and  reinstallation  of trade
fixtures, loss of business, or moving expenses.

REAL & PERSONAL  PROPERTY TAXES 12. Tenant shall pay all personal property taxes
levied or assessed against  Tenant's  property and improvements on or affixed to
the demised  premises,  including without  limitation taxes  attributable to all
alterations, additions or improvements made by Tenant. In the event Tenant shall
fail to pay such latter taxes, Landlord may, at its option, pay the same for the
account of Tenant, and the cost thereof shall be paid to Landlord within 30 days
of invoice therefor.

QUIET ENJOYMENT 13. Landlord warrants that Tenant, upon paying the rents herein,
and in performing each and every covenant  hereof,  shall peacefully and quietly
hold, occupy and enjoy the demised premises throughout the term hereof,  without
molestation or hindrance by any person holding under or through Landlord.

SUBORDINATION 14. Landlord and its mortgagee(s) reserve the right to subject and
subordinate  this Lease at all times to the lien of any  mortgages) or ground or
underlying  lease(s) now or  hereafter  placed upon  Landlord's  interest in the
demised premises or on the land and building of which the demised premises are a
part, or upon

          Waldon Properties, Inc. Lease - 4/20/99 - Page 5
<PAGE>
any building hereafter placed upon the land parcel of which the demised premises
are a part, and Tenant agrees upon request to execute an agreement subordinating
its interest  and/or  attornment  agreement to such  mortgagees  and lessors and
appoints  Landlord  its   attorney-in-fact  to  execute  and  deliver  any  such
instruments in the event Tenant fails to execute such  agreement  within 30 days
of  written  request  by the  Landlord;  provided,  however,  that no default by
Landlord  under any such mortgage or ground lease shall affect  Tenant's  rights
hereunder so long as Tenant shall not be in default.

NON-LIABILITY  15. Landlord shall not be responsible or liable to Tenant for any
loss or damage  that may be  occasioned  by or through  the acts or  omission of
persons occupying  adjoining premises or any part of the premises adjacent to or
connected  with the demised  premises  or any part of the  building of which the
demised premises are a part or for any loss or damage resulting to Tenant or his
property from burst,  stopped,  or leaking water, gas, sewer, or steam pipes, or
for any damage or loss of property  within the demised  premises  from any cause
whatsoever.  In the event of any sale or  transfer  (including  any  transfer by
operation of law) of the demised premises, Landlord (and any subsequent owner of
the demised  premise making such a transfer)  shall be relieved from any and all
obligations  and  liabilities  under  this Lease  except  such  obligations  and
liabilities as shall have arisen during Landlord's (or such subsequent  owner's)
respective period of ownership,  provided that the transferee assumes in writing
all of the obligations of the Landlord under this Lease.

NON-WAIVER  16. One or more  waivers by  Landlord of any breach of a covenant or
condition  hereof by Tenant  shall not be  construed as a waiver of a subsequent
breach of the same  covenant  or  condition,  and the  consent  or  approval  by
Landlord  to or of any act by Tenant  requiring  Landlord's  consent or approval
shall  not be  deemed  to waive or  render  unnecessary  Landlord's  consent  or
approval to or of any subsequent similar act by Tenant.

BANKRUPTCY 17.  Notwithstanding  any other provisions  herein,  in the event (a)
Tenant or its successors or assignees shall become insolvent or bankrupt,  or if
it or its  interests  under  this  Lease  shall  be  levied  upon or sold  under
execution  or  other  legal  process,  or (b) the  depository  institution  then
operating on the demised premises is closed,  or is taken over by any depository
institution  supervisory authority  ("Authority"),  Landlord may, in either such
event,  terminate  this  Lease  only with the  concurrence  of any  Receiver  or
Liquidator appointed by such Authority;  provided,  that in the event this Lease
is terminated by the Receiver or  Liquidator,  the maximum claim of Landlord for
rent,   damages,  or  indemnity  for  injury  resulting  from  the  termination,
rejection,  or abandonment of the unexpired Lease shall by law in no event be in
an amount  exceeding  an amount equal to all accrued and unpaid rent to the date
of termination.

          Waldon Properties, Inc. Lease - 4/20/99 - Page 6
<PAGE>
LANDLORD'S REMEDIES 18.
     (a) In the event Tenant shall fail to pay the rent or any other  obligation
involving  the payment of money  reserved  herein when due,  and if Tenant shall
fail to cure such  default  within  seven (7) days  after  the  written  notice,
Landlord shall, in addition to these other remedies provided by law, and in this
Lease, have the remedies set forth in subparagraph (c) below.

     (b) If Tenant  shall be in default in  performing  any of the terms of this
Lease  other than the  payment  of rent or any other  obligation  involving  the
payment of money, Landlord shall give Tenant written notice of such default, and
if Tenant shall fail to cure such default within ten (10) days after the receipt
of such notice, or if the default is of such a character as to require more than
ten (10) days to cure, then if Tenant shall fail within said ten (10) day period
to commence and thereafter proceed diligently to cure such default,  then and in
either of such events,  Landlord may (at its option and in addition to its other
legal  remedies) cure such default for the account of Tenant and the full sum so
expended by Landlord  shall be owed Landlord  forthwith as additional  rental as
provided in Section 3.

     (c) If any rent or any other  obligation  involving  the  payment  of money
shall be due and  unpaid or  Tenant  shall be in  default  upon any of the other
terms of this Lease, and such default has not been cured after notice and within
the time provided in  subparagraphs  (a) and (b) above,  or, if the premises are
abandoned or vacated,  then Landlord,  in addition to its other remedies,  shall
have the immediate right to re-entry.  Should Landlord elect to re-enter or take
possession  pursuant to legal  proceedings  or any notice  provided  for by law,
Landlord  may  either  terminate  this  Lease  or  from  time to  time,  without
terminating this Lease, relet the premises or any part thereof on such terms and
conditions as Landlord shall in its sole discretion  deem advisable.  The avails
of such reletting  shall be applied first to the payment of any  indebtedness of
Tenant to Landlord other than rent due hereunder;  second, to the payment of any
reasonable  costs  of such  reletting,  including  the  cost  of any  reasonable
alterations  and repairs to the premises;  third, to the payment of rent due and
unpaid hereunder; and the residue, if any, shall be held by Landlord and applied
in payment of future  rent as the same may  become  due and  payable  hereunder.
Should the avails of such  reletting  during any month be less than the  monthly
rent  reserved  hereunder,  then  Tenant  shall  during each such month pay such
deficiency to Landlord.

     (d) All rights and remedies of Landlord  hereunder  shall be cumulative and
none shall be exclusive of any other rights and remedies  allowed by law. Should
Landlord pursue the remedy of summary  proceedings  for default of Tenant,  give
notice to quit as required  thereby,  obtain a judgment for  possession,  and/or
recover  possession  of the  demised  premises,  such acts shall not  constitute
forfeiture or termination of Tenant's  obligation to pay rent  hereunder,  which
shall continue for the full term of the Lease Agreement.

                Waldon Properties, Inc. Lease - 4/20/99 - Page 7
<PAGE>
     (e)  Tenant  shall  reimburse  Landlord  for all its  reasonable  costs  of
enforcing the terms of this Lease, including reasonable attorney fees.

HOLDING  OVER 19. It is hereby  agreed that in the event of Tenant  holding over
after the termination of this Lease,  thereafter the tenancy shall be from month
to month in the absence of a written agreement to the contrary, and Tenant shall
pay to Landlord a daily  occupancy  charge  equal to seven  percent  (7%) of the
monthly rental under  Paragraph  three (3) for the last lease year, for each day
from the  expiration  or  termination  of this Lease  until the date the demised
premises are delivered to Landlord in the condition  required  herein,  plus all
other  charges  payable by Tenant  under this  Lease,  and  Landlord's  right to
damages for such illegal occupancy shall survive.

ENTIRE  AGREEMENT 20. This Lease shall  constitute  the entire  agreement of the
parties hereto;  all prior  agreements  between the parties,  whether written or
oral,  are merged herein and shall be of no force and effect.  This Lease cannot
be changed,  modified or discharged orally, but only by an agreement in writing,
signed by the party  against whom  enforcement  of the change,  modification  or
discharge is sought.

NOTICES 21. Whenever under this Lease a provision is made for notice of any kind
it shall be deemed  sufficient  notice and  service  thereof  if such  notice to
Tenant  is in  writing  addressed  to Tenant  at 15 South  Main St.,  Clarkston,
Michigan  48346,  Attention  President  and  CEO,  and  deposited  in the  mail,
certified  or  registered  mail,  with  postage  prepaid,  and if such notice to
Landlord  is in  writing  addressed  to the last known  post  office  address of
Landlord and deposited in the mail,  certified or registered  mail, with postage
prepaid.  Notice  need be sent to only one Tenant or  Landlord  where  Tenant or
Landlord is more than one person.

SUCCESSORS 22. This agreement shall inure to the benefit of and be binding upon,
the  parties  hereto,   their  respective  heirs,   administrators,   executors,
representatives, successors and assigns.

OBLIGATIONS  FOR  PREPARATION  OF DEMISED  PREMISES  23.  Except as specified in
Paragraph  One hereof,  all costs of making the  premises  ready for  occupancy,
including,  but not limited to, telephone lines and computer lines, shall be the
responsibility of Tenant.  Notwithstanding any provision herein to the contrary,
Tenant shall be solely responsible for the demised premises' compliance with the
Americans with  Disabilities  Act, and regulations  thereunder,  as amended from
time to time, and shall indemnify and hold Landlord  harmless from any liability
therefor. Landlord shall fully comply with the ADA as to all common areas.

          Waldon Properties, Inc. Lease - 4/20/99 - Page 8
<PAGE>
OPTION TO RENEW  LEASE 24.  Landlord  grants to Tenant  the right and  option to
renew the term of this  Lease for one  additional  term of three  years upon the
same terms, conditions, and provisions set forth herein, except:

      (a) Tenant  shall pay to Landlord as minimum  rent during any renewal term
          of this Lease the minimum  rental  payable  during the original  term,
          plus a  percentage  of that  minimum  rental  that  is the  percentage
          increase in the cost of living in the Detroit  Metropolitan  area,  as
          determined  by regularly  published  statistics  of the United  States
          Department of Labor,  from the commencement  date of this Lease to the
          commencement  date of the renewal  term. In no event shall the minimum
          rental for the renewal  term be less than the  minimum  rental for the
          original  term.  The minimum rental for the renewal term shall be paid
          in  advance,  without any set-off or  deduction  whatsoever,  in equal
          monthly  installments  on  the  first  day of  each  and  every  month
          throughout the renewal term of this Lease; and

      (b) The renewal term shall have no option to renew.

The right and option to renew shall be  contingent  upon Tenant being current in
its  rental  and other  obligations  under  this Lease on the date the option to
renew is exercised  and on the date the renewal  term is to commence.  Notice of
Tenant's  intention to exercise its option shall be given by Tenant to Landlord,
in writing,  at least one hundred  eighty  days prior to the  expiration  of the
original term of the Lease.

IN WITNESS  WHEREOF,  the parties hereto have caused this Lease  Agreement to be
executed as of the day and year first above written.

WITNESSES:                               WALDON PROPERTIES, Inc., a Michigan
                                         Corporation, Landlord

/s/ Dawn M. Horner
Dawn M. Horner                           By: /s/ Ed L. Adler
                                         Its: Partner
/s/ Doreen L. Schwaze
Doreen L. Schwaze



WITNESSES:                               CLARKSTON STATE BANK, a Michigan
                                         Banking Corporation, Tenant

/s/ Dawn M. Horner                       /s/ David Harrison
Dawn M. Horner                           By:  D. T. Harrison
                                         Its: President
/s/ Doreen L. Schwaze
Doreen L. Schwaze

                Waldon Properties, Inc. Lease - 4/20/99 - Page 9
<PAGE>
STATE OF MICHIGAN  )
                   )ss
COUNTY OF OAKLAND  )

     On this 27 day of April,  1999  before  me a Notary  Public in and for said
County, Oakland,  personally known to me, who, being sworn by me, did depose and
say that  (s)he  is,  the  President  of Waldon  Properties,  Inc.,  a  Michigan
corporation with offices at 20 W. Washington,  Ste 15, Clarkston,  Michigan, the
corporation named as Landlord in and which executed the within  instrument,  and
that  the  seal  affixed  to  said  instrument  is the  corporate  seal  of said
corporation,  and that said  instrument  was signed and sealed in behalf of said
corporation by authority of its Board of Directors, and said he acknowledges the
said instrument to be the free act and deed of said corporation.


/s/ Roberta S. Trzos                            Roberta S. Trzos
                                         Notary Public, Oakland County, MI
Notary Public, Oakland County, Michigan. My Commission Expires: 05/21/2003




STATE OF MICHIGAN  )
                   )ss
COUNTY OF OAKLAND  )

     On this 27 day of April,  1999  before  me a Notary  Public in and for said
County, Oakland,  personally known to me, who, being sworn by me, did depose and
say that (s)he is, the President of Clarkston State Bank, a Michigan Corporation
with offices at 15 South Main,  Clarkston,  Michigan,  the corporation  named as
Tenant in and which executed the within instrument, and that the seal affixed to
said  instrument  is the  corporate  seal of said  corporation,  and  that  said
instrument  was signed and sealed in behalf of said  corporation by authority of
its Board of Directors,  and said he acknowledges  the said instrument to be the
free act and deed of said corporation.

/s/ Roberta S. Trzos                            Roberta S. Trzos
                                         Notary Public, Oakland County, MI
Notary Public, Oakland County, Michigan. My Commission Expires: 05/21/2003


                Waldon Properties, Inc. Lease - 4/20/99 - Page 11
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