# SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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# FORM 10-QSB

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                                      OF THE SECURITIES EXCHANGE ACT OF 1934
                                   For the quarterly period ended March 31, 2003
                                                        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:333-63685CLARKSTON FINANCIAL CORPORATION
                         (Exact name of small business issuer as specified in its charter)

|MICHIGAN
(State of other jurisdiction of
incorporation or organization) | 38-3412321
(I.R.S. Employer
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

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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:
1,028,922 shares of the Companys Common Stock (no par value) were outstanding as of
March 31, 2003.

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



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INDEX

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | PageNumber(s)           
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------
|Part I.    | Financial Information (unaudited):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|           | Item 1.
Consolidated Financial Statements.............................................................
Notes to Consolidated Financial Statements..............................................Item 2.                                                                          
Management's Discussion and Analysis of                                                 
Financial Condition and Results of Operations..........................................Item 3.                                                                          
Controls and Procedures............................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 3-7 
8-14  
15-18    
19
|Part II.   | Other Information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|           | Item 1.                                                                          
Legal Proceedings........................................................................................Item 2.                                                                          
Changes in Securities and Use of Proceeds.................................................Item 3.                                                                          
Defaults Upon Senior Securities.................................................................Item 4.                                                                          
Submission of Matters to a Vote of Security Holders................................Item 5.                                                                          
Other Information.......................................................................................Item 6.                                                                          
Exhibits and Reports on Form 8-K............................................................. | 20
20
20
20
20
20       
|Signatures | .....................................................................................................................                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 21                      

2

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# Part I   Financial
Information (unaudited)

CLARKSTON FINANCIAL
CORPORATION CONSOLIDATED BALANCE
SHEET March 31, 2003
(unaudited) and December 31, 2002 (dollars in thousands,
except per share data)

`March 31,             December 31,
                                                                                  2003                    2002
                                                                               -----------             ----------
                                                                               (Unaudited)

Cash and Cash Equivalents
       Total cash and due from banks................................                $  2,025             $  1,508
        Federal funds sold..........................................                   5,909                2,979
                                                                                    --------             --------

            Total Cash and Cash Equivalents.........................                   7,934                4,487

Securities Available for Sale, at fair value........................                  45,224               54,742

Loans, less Loan Loss Reserve
       Total loans..................................................                  68,536               54,722
       Allowance for loan losses....................................                    (839)               (696)
                                                                                    --------             --------
       Net Loans....................................................                  67,697               54,026

Banking premises and equipment......................................                   1,362                1,400
Interest receivable.................................................                     357                  555
Net Deferred Tax Asset..............................................                      53                   45
Other Assets........................................................                      77                   80
                                                                                    --------             --------
            Total Assets............................................                $122,704             $115,335
                                                                                    ========             ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
       Deposits
       Noninterest-bearing..........................................                  14,173               14,797
       Interest-bearing.............................................                  96,933               90,126
                                                                                    --------             --------
            Total deposits..........................................                 111,106              104,923
       Accrued Expenses and Other Liabilities.......................                   1,642                  654

Shareholders' Equity
       Common stock, no par value: 10,000,000
             Shares authorized; 1,028,922 shares
             issued and outstanding as of March 31,
             2003 and December 31, 2002.............................                   4,311                4,311
       Capital surplus..............................................                   4,311                4,311
       Retained Earnings............................................                   1,103                  889
       Accumulated other comprehensive income.......................                     231                  247
                                                                                    --------             --------
             Total Shareholders' Equity.............................                   9,956                9,758
                                                                                    --------             --------

              Total Liabilities and Shareholders' Equity............                $122,704             $115,335
                                                                                    ========             ========`

See accompanying notes to consolidated financial statements

3

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CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME 
Three Month Periods Ended March 31, 2003 and March 31, 2002
(dollars in thousands, except per share data)
(unaudited)

`Three Months          Three Months
                                                                              Ended                 Ended
                                                                         March 31, 2003        March 31, 2002
                                                                         --------------        --------------

Interest Income
       Loans, including fees ........................................         $1,130                $  692
       Securities....................................................            412                   663
       Federal Funds sold............................................             14                    18
                                                                              ------                ------
            Total interest income....................................          1,556                 1,373

Interest Expense
       Deposits......................................................            673                   620
                                                                              ------                ------

Net Interest Income..................................................            883                   753

Provision  for loan losses...........................................            243                    15
                                                                              ------                ------

Net interest income
After provision for loan losses......................................            640                   738

Noninterest income
     Gains (losses) on sale of securities............................            210                    20
     Gains (losses) on sale of loans.................................              7                     8
     Gains (losses) other............................................             (7)                   (8)
     Other income....................................................            107                    85
                                                                              ------                ------
            Total noninterest income.................................            317                   105


Noninterest expense
     Salaries and benefits...........................................            353                   343
     Occupancy expense of premises...................................             53                    63
     Furniture and equipment expense.................................             48                    46
     Computer and data processing expenses...........................             68                    60
     Advertising and public relations................................             30                    19
     Professional fees...............................................             42                    42
     Amortization of deposit premium.................................              5                     8
     Other expense...................................................             75                    65
                                                                              ------                ------
            Total non-interest expense...............................            674                   646
                                                                              ------                ------

Income before federal income tax.....................................            283                   197

Federal income tax...................................................             69                    72
                                                                              ------                ------

Net income ..........................................................         $  214                $  125
                                                                              ======                ======

Basic and diluted income per share...................................         $  .21                $  .12
                                                                              ======                ======`

See accompanying notes to consolidated financial statements

4

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CLARKSTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Month Periods Ended March 31, 2003 and March 31, 2002
(dollars in thousands)
(Unaudited)

`Three Months        Three Months
                                                                                   Ended               Ended
                                                                               March 31, 2003      March 31, 2002
                                                                               --------------      --------------

Net Income as Reported.................................................          $     214           $     125

Other Comprehensive Income (Loss), Net of Tax:

       Change in unrealized gain / loss on securities
           Available for sale..........................................                (16)               (498)
                                                                                 ----------          ----------

Comprehensive Income (Loss)............................................          $     198           $    (373)
                                                                                 ==========          ==========`

See accompanying notes to consolidated financial statements

5

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CLARKSTON FINANCIAL CORPORATION
                             CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                         Three Month Period ended March 31, 2003
                                              (dollars in thousands)
                                                    (Unaudited)

`Accumulated
                                                                                                   Other              Total
                                                     Common       Capital      Retained        Comprehensive      Shareholders'
                                                      Stock       Surplus      Earnings            Income            Equity
                                                     ------       -------      --------        -------------      -------------

Balance December 31, 2002.....................      $  4,311      $ 4,311      $     889          $    247           $  9,758

Net income for three months
Ended March 31, 2003 (unaudited)..............            --           --            214                --                214

Increase  (Decrease)  in  fair  market  value  of
securities available for sale.................            --           --             --               (16)               (16)
                                                    --------      -------      ---------          ---------          ---------

Balance March 31, 2003........................      $  4,311      $ 4,311      $   1,103          $    231           $  9,956
                                                    ========      =======      =========          ========           ========`

See accompanying notes to consolidated financial statements

6

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CLARKSTON FINANCIAL CORPORATION
                                       CONSOLIDATED STATEMENT OF CASH FLOWS
                               Three Month Periods ended March 31, 2003 and March 31, 2002
                                              (dollars in thousands)
                                                    (unaudited)

`Three Months                        Three Months
                                                                               Ended                               Ended
                                                                          March 31, 2003                      March 31, 2002
                                                                          --------------                      --------------

Net Cash Provided by Operating Activities:
       Net cash provided by operating activities.....................             $   1,837                     $       40

Cash Flows from Investing Activities:
       Net increase in loans.........................................               (13,814)                        (1,203)
       Purchase of available-for-sale securities.....................                (6,608)                        (9,343)
       Proceeds from sales of available-for-sale securities..........                15,900                          1,001
       Property and equipment expenditures...........................                   (51)                           (10)
                                                                                  ----------                    -----------
       Net cash used in investing activities.........................                (4,573)                        (9,555)

Cash Flows from Financing Activities:
       Increase in deposits..........................................                 6,183                          8,059
                                                                                  ---------                     ----------

Net increase (decrease) in cash and cash equivalents.................                 3,447                         (1,456)
Cash and cash equivalents at beginning of year.......................                 4,487                          5,831
                                                                                  ---------                     ----------

Cash and cash equivalents at March 31, 2003 and 2002.................             $   7,934                     $    4,375
                                                                                  =========                     ==========`

See accompanying notes to consolidated financial statements

7

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CLARKSTON FINANCIAL CORPORATION
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2003 (unaudited) and December 31, 2002

# NOTE 1  SUMMARY OF
CRITICAL ACCOUNTING POLICIES

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
months ended March 31, 2003, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Companys
Proxy Statement dated April 4, 2003 containing audited financial statements as of December
31, 2002, 2001 and 2000.

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 inter-company accounts and
transactions have been eliminated in consolidation.

Use of Estimates To
prepare financial statements in conformity with accounting principles generally accepted
in the United States of America, 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
collectibility of loans, fair values of financial instruments, and status of contingencies
are particularly subject to change.

Income Taxes Deferred
income tax assets and liabilities are determined using the liability (or balance sheet)
method. Under this method, the net deferred tax asset or liability is determined based on
the tax effects of the various temporary differences between the book and tax bases of the
various balance sheet assets and liabilities and gives current recognition to changes in
tax rates and laws.

Allowance for Loan Losses
 The allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is
evaluated on a regular basis by management and is based on managements periodic
review of the collectibility of the loans in light of historical experience, the nature
and volume of the loan portfolio, adverse situations that may affect the borrowers
ability to repay, estimated value of any underlying collateral and prevailing economic
conditions. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

A loan is considered impaired when,
based on current information and events, it is probable that the Corporation will be
unable to collect the scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement. Factors considered by management in
determining

8

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CLARKSTON FINANCIAL
CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

impairment include payment status,
collateral value and the profitability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment delays and payment
shortfalls generally are not classified as impaired.

Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower, including
length of the delay, the reasons of the delay, the borrowers prior payment record,
and the amount of the shortfall in relation to the principal and interest owed. Impairment
is measured on a loan-by-loan basis for commercial and construction loans by either the
present value of expected future cash flows discounted at the loans effective
interest rate, the loans obtainable market price, or the fair value of the
collateral if the loan is collateral dependent.

Large groups of homogeneous loans are
collectively evaluated for impairment. Accordingly, the Corporation does not separately
identify individual consumer and residential loans for impairment disclosures.

Stock Compensation Plans The Corporation has chosen to measure compensation cost for director and
employee stock compensation plans using the intrinsic value-based method of accounting,
whereby compensation cost is the excess, if any, of the quoted market price of the stock
at grant date (or other measurement date) over the amount an option holder must pay to
acquire the stock. Stock options issued under the Corporations stock option plan
have no intrinsic value at the grant date, and no compensation cost is recognized for
them. The fair value-based method of accounting for stock compensation plans measures
compensation cost at the grant date based on the value of the award and is recognized over
the service period, which is usually the vesting period. The Corporation has provided pro
forma disclosures of net income and earnings per share and other disclosures as if the
fair value based method of accounting has been applied. The pro forma disclosures include
the effects of all awards granted since the Corporations inception.

# 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.

9

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CLARKSTON FINANCIAL
CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

# NOTE 3  SECURITIES

At March 31, 2003, investment
securities having a carrying value of $10.7 million were pledged to local municipalities
and county governments. Securities are pledged as required by law to be used as collateral
for public liabilities.

The Bank does not have any securities
in its portfolio that are classified as held to maturity. All securities are classified as
available for sale and the amortized cost and fair values of those securities are as
follows (dollars in thousands):

# Available for Sale

`Gross               Gross          Estimated
                                                    Amortized        Unrealized         Unrealized          Market
                                                       Cost            Gains              Losses            Value
                                                     --------        ---------          ----------         -------

  March 31, 2003 (Unaudited)
         Taxable variable rate demand
             Municipal revenue bonds,
             Short term corporate
             Commercial paper, and bonds
             of government agencies...........      $ 44,874            $545             $  (195)        $ 45,224
                                                    ========            ====             ========        ========`

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. Listed below are the contractual maturities
of debt securities at March 31, 2003:

`Available-for-Sale Securities
                                                                          ---------------------------------
                                                                           Amortized            Estimated
                                                                              Cost             Market Value
                                                                          ------------         ------------
                                                                              (dollars in thousands)

      Due from 2003 to 2004....................................               $     0               $     0
      Due from 2004 to 2006....................................                     0                     0
      Due from 2006 to 2008....................................                 2,285                 2,303
      Due from 2008 to 2032....................................                42,589                42,921
                                                                              -------               -------
                                                                              $44,874               $45,224
                                                                              =======               =======`

(Continued)

10

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CLARKSTON FINANCIAL CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

NOTE
4  LOANS

Loans
are as follows (dollars in thousands):

`March 31,               December 31,
                                                                                 2003                      2002
                                                                             -------------             ------------
                                                                             (Unaudited)

        Commercial................................................                $ 58,404                 $ 46,460
        Mortgage..................................................                   6,220                    4,668
        Consumer..................................................                   3,912                    3,594
                                                                                  --------                 --------
                                                                                    68,536                   54,722
        Allowance for loan losses.................................                     839                      696
                                                                                  --------                 --------
                                                                                  $ 67,697                 $ 54,026
                                                                                  ========                 ========`

Activity
in the allowance for loan losses is as follows (dollars in thousands):

`Three months                For the
                                                                                 Ended                  Year Ended
                                                                            March 31, 2003             December 31,
                                                                              (Unaudited)                  2002
                                                                              ------------             ------------


        Balance at beginning of period............................                 $   696               $      419
               Provision charged to operating expense.............                     243                      243
               Loan losses........................................                    (100)                     (13)
               Loan recoveries....................................                       0                       47
                                                                                   -------               ----------

        Balance at end of period..................................                 $   839               $      696
                                                                                   =======               ==========

        Allowance for loan losses as a percentage of
               loans at end of period.............................                   1.22%                    1.27%
                                                                                   =======               ==========`

The table below outlines the
allowance for loan loss allocations (dollars in thousands):

`March 31, 2003              December 31, 2002
                                    -------------------------    --------------------------
                                                  % of each                    % of each
                                                  category                      category
                                     Allowance    to total        Allowance     to total
                                      Amount        loans          Amount        loans
                                      ------        -----          ------        -----

Commercial....................           $635         .87%           $487         .89%
Real estate mortgages.........            126         .15             110         .20
Consumer......................             78         .20              99         .18
Unallocated...................              0           0               0           0
                                         ----        -----           ----        -----
     Total....................           $839        1.22%           $696        1.27%`

The above allocations are not
intended to imply limitations on the usage of the allowance. The entire allowance is
available for any future loans without regards to loan type.

(Continued)

11

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CLARKSTON FINANCIAL
CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

# NOTE 5  PREMISES
AND EQUIPMENT  NET

Premises and equipment are as follows
(dollars in thousands):

`March 31,            December 31,
                                                                         2003                   2002
                                                                      -----------           ------------
                                                                      (unaudited)

       Building and improvements.................................     $     1,096            $    1,089
       Furniture and equipment...................................             656                   681
                                                                      -----------            ----------
       Total Bank Premises and Equipment                                    1,752                 1,770
       Less accumulated Depreciation.............................             390                   370
                                                                      -----------            ----------
       Net Carrying Amount                                            $     1,362            $    1,400
                                                                      ===========            ==========`

# NOTE 6  DEPOSITS

Deposits are summarized as follows
(dollars in thousands):

`March 31,            December 31,
                                                                         2003                   2002
                                                                      -----------           ------------

Noninterest bearing demand deposit accounts......................       $  14,173              $  14,797
Interest bearing demand deposit accounts.........................           6,482                  6,309
Savings accounts.................................................           7,064                  6,335
Money market accounts............................................          39,499                 32,589
Certificates of deposit..........................................          43,888                 44,893
                                                                        ---------              ---------
                                                                        $ 111,106              $ 104,923
                                                                        =========              =========`

# NOTE 7  STOCK
BASED COMPENSATION

The Corporation has two stock-based
compensation plans. Under the employees Stock Compensation Plan (Employee
Plan), the Corporation may grant options to key employees for up to 26,125 shares of
common stock. Under the 1998 Founding Directors Stock Option Plan (Director
Plan), the Corporation may grant options for up to 78,375 shares of common stock.
Under both plans, there is a minimum vesting period of between one to three years before
the options may be exercised, and all options expire 10 years after the date of their
grant. Certain options (contingent options) under both plans vest on an accelerated basis
upon the achievement of various future financial and operational goals. All such options
vest 9.5 years after the date of grant regardless of achievement of future goals. Under
both plans, the exercise price of each option equals the market price of the
Corporations common stock on the date of grant.

(Continued)

12

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CLARKSTON FINANCIAL
CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

The following table summarizes stock
option transactions for both plans and the related average exercise prices for the three
month periods ended March 31, 2003 and 2002:

`2003                     2002
                                                 --------------           --------------
                                                          Weighted                 Weighted
                                                          Average                   Average
                                              Number      Exercise      Number     Exercise
                                            of Shares      Price      of Shares      Price
                                            ---------      -----      ---------      -----

Options Outstanding - beginning of period     57,643       $9.01        66,350       $8.96
Options granted                                   --          --            --          --
Options exercised                                 --          --            --          --
Options expired                                   --          --            --          --

Options Outstanding - End of period           57,643       $9.01        66,350       $8.96`

`Stock Options Outstanding                      Stock Options Exercisable
                             -------------------------------------------------------    ------------------------------
                                                          Weighted
                                                           Average       Weighted
                              Range of                    Remaining       Average         Number of      Weighted
                              Exercise     Number of     Contractual     Exercise          Shares         Average
                               Prices        Shares          Life          Price         Exercisable   Exercise Price
                               ------        ------          ----          -----         -----------   --------------

Contingent                   $    9.09       28,070       5.9 years     $    9.09          11,228       $    9.09
Noncontingent                     9.07       28,473       5.9 years          9.09          22,775            9.09
Noncontingent                     5.00        1,000       2.3 years          5.00           1,100            5.00`

The Corporation has adopted the
disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, but applies the intrinsic value method to account for its plan. The
Corporation has estimated fair market value of the options granted in 2000 at $2.34 per
share, using a minimum value concept. The value was calculated using an
assumed interest rate of 6.5 percent and estimated life of five years.

If the Corporation had elected to
recognize compensation costs for the plans based on the fair value of awards at the grant
date, net income per share on a pro forma basis for three month periods ended March 31,
2003 and 2002 would have been as follows (000s omitted, except per share data):

`2003                       2002
                                            ----------------------     ----------------------
                                                As         Pro             As         Pro
                                             Reported     Forma         Reported     Forma
                                             --------     -----         --------     -----

Net income                                       $214      $210             $125      $121
Net income per common share:
     Basic                                       0.21      0.20             0.12      0.12
     Fully diluted                               0.21      0.20             0.12      0.12`

(Continued)

13

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CLARKSTON FINANCIAL
CORPORATION NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS March 31, 2003
(unaudited) and December 31, 2002

# NOTE 8  MINIMUM
REGULATORY CAPITAL REQUIREMENTS

The Corporation (on a consolidated
basis) and the Bank are subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Corporations and the
Banks financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Corporation and the Bank must meet specific
capital guidelines that involve quantitative measures of the assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting practices. The
capital amounts and classification are also subject to qualitative judgments by regulators
about components, risk weightings, and other factors. Prompt corrective action provisions
are not applicable to bank holding companies.

Quantitative measures established by
regulation to ensure capital adequacy require the Corporation and the Bank to maintain
minimum amounts and ratios (set forth in the following table) of total and Tier I capital
(as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital
(as defined) to average assets (as defined). Management believes, as of March 31, 2003 and
December 31, 2002, that the Corporation and the Bank met all capital adequacy requirements
to which they are subject.

As of March 31, 2003, the most recent
notification from the FDIC categorized the Bank as well-capitalized under the regulatory
framework for prompt corrective action. To be categorized as well-capitalized, an
institution must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the following table. There are no conditions or events since that
notification that management believes have changed the Banks capital category. The
Corporations and the Banks actual capital amounts and ratios as of March 31,
2003 and December 31, 2002 are also presented in the table below.

`For Capital                      To be
                                            Actual                Adequacy Purposes             Well-Capitalized
                                    ------------------------    -----------------------     --------------------------
                                                   Ratio                      Ratio                         Ratio
                                      Amount     (Percent)        Amount    (Percent)         Amount      (Percent)

As of March 31, 2003:
   Total risk-based capital            $10,562        13.05         $6,476        8.00           $8,096         10.00
      (to risk-weighted assets)
   Tier 1 capital                        9,724        12.01          3,238        4.00            4,857          6.00
      (to risk-weighted assets)
   Tier 1 capital                        9,724         8.06          4,824        4.00            6,029          5.00
      (to average assets)

As of December 31, 2002:
   Total risk-based capital            $10,116        14.76         $5,482        8.00           $6,853         10.00
      (to risk-weighted assets)
   Tier 1 capital                        9,420        13.75          2,741        4.00            4,112          6.00
      (to risk-weighted assets)
   Tier 1 capital                        9,420         8.32          4,529        4.00            5,661          5.00
      (to average assets)`

14

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# Item 2.  
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

General

Clarkston
Financial Corporation (the Company) is a Michigan corporation 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 area primarily located in
north Oakland County, Michigan. The Bank operates five customer service locations
including two full service branches.

As
a Company we continue our maturation process and have become more profitable while
maintaining sound asset quality and expanding our breadth of products. The Bank became
profitable in its tenth month of operation and has continued that momentum throughout the
first four years of operations. Despite operating in a very competitive market place and
challenging economic times, the Bank has continued to grow the size of its assets and
increase its profitability.

Financial Condition

Total
assets of the Company increased by $7.4 million or 6.4% to $122.7 million at March 31,
2003, from $115.3 million at December 31, 2002. The continued growth is attributable to
ongoing marketing efforts for deposits and an increase in lending relationships. During
2003, which is the Banks fifth year of operations, it is anticipated that the
Banks assets will continue to grow.

Cash
and cash equivalents, which include federal funds sold and short-term investments,
increased $3.4 million or 75.6% to $7.9 million at March 31, 2003 from $4.5 million at
December 31, 2002. Management has increased the level of cash on hand as increased loan
demand and growth in both retail and commercial deposits require more accessibility to
funds.

Securities
decreased $9.5 million or 17.4% to $45.2 million at March 31, 2003 from $54.7 million at
December 31, 2002. The decrease is directly attributable to selling securities in an
effort to keep pace with the Banks loan demand. This is consistent with
managements intent to reduce the level of lower interest bearing securities and
replace them with higher interest bearing loans. The Bank continues to have excellent
liquidity and will monitor its level of securities to ensure proper liquidity is
maintained.

Total
loans increased by $13.8 million or 25.2% to $68.5 million at March 31, 2003, from $54.7
million at December 31, 2002. This pattern of growth is consistent with the Banks
business plan and is expected to continue throughout 2003. Most notably were significant
increases in commercial and commercial real estate loans which increased by 25.9% from
$46.4 million at December 31, 2002 to $58.4 million at March 31, 2003. In addition,
residential real estate loans increased by 31.9% from $4.7 million to $6.2 million for the
same period. Management has placed an emphasis on enhancing its mortgage loan production
which has contributed to the increased improvement.

15

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The
allowance for loan losses as of March 31, 2003 was $839,000, representing approximately
1.22% of total loans outstanding, compared to $696,000 as of December 31, 2002. The
increase in the allowance is directly attributable to the growth in the loan portfolio.
Management did, however, charge-off one loan in the amount of approximately $100,000 for
the period ended March 31, 2003.

The
loan loss allowance represents managements assessment of both current and future
losses inherent within the loan portfolio. Consideration is also given to off-balance
sheet items that may involve credit risk, such as commitments to extend credit. This
analysis is conducted on a quarterly basis utilizing a methodology that has been employed
since the Banks inception. The methodology employed utilizes several factors to
determine the appropriateness of the allowance. Specifically, historical loss experience,
present and prospective financial condition of borrowers, collateral adequacy, credit risk
rating system and current economic conditions are incorporated in this analysis.

The
primary risk element considered by management regarding each installment and residential
real estate loan is the lack of timely payments. 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
the existence and value of collateral for selected loans.

Although
the loan portfolio is unseasoned and actual loss experience is not readily determinable
management believes the allowance for loan losses is adequate as of March 31, 2003.
Management considers it adequate based on the use of its credit risk rating system which
identifies problem credits and ranks loans by specific categories. Moreover, management
utilizes peer comparisons and industry data for similar type loans to further assess the
proper level of the loan loss allowance. Going forward, management will closely monitor
the performance of the loan portfolio as it becomes more seasoned.

Please
note, the Bank has no other off-balance sheet liabilities other than commitments to extend
credit in the form of letters and lines of credit.

As
of March 31, 2003, the Company had an accumulated profit of $1.1 million as compared to
$889,000 at December 31, 2002. The accumulated profit continues to improve as the Bank has
increased its net interest and non-interest income while continuing to maintain low
operating expenses.

16

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Results of Operations

The
Companys net profit was $214,000 for the first quarter of 2003 compared to net
profit of $125,000 for the first quarter of 2002. The Bank began operations in 1999 and
has earned a profit every month since January, 2000. Net profit for the three month period
ended March 31, 2003 included gains on the sale of securities of $210,000 and a federal
income tax provision of $69,000. Management continues to follow their business plan for
2003 by selling securities to fund loans yielding higher returns than the liquidated
securities. Conditions in the bond market have provided the opportunity to sell securities
at a net gain while also achieving the objective of reinvesting into higher interest
earning loans.

Interest
income for the first quarter of 2003 was $1.56 million, an increase of 13.9% from interest
income of $1.37 million for the first quarter of 2002. This increase resulted primarily
from continued loan growth throughout the quarter. Interest expense was $673,000 for the
three months ended March 31, 2003, an increase of 8.5% from interest expense of $620,000
for the three months ended March 31, 2002. This consisted of interest paid on interest
bearing deposits.

The
Company had an allowance for loan losses of approximately 1.22% of total loans at March
31, 2003. The provision expense for loan loss for the three month period ended March 31,
2003, was $243,000. Management believes the current rate of providing for the loan loss
reserve is adequate.

Non-interest
income for the three month period ended March 31, 2003 was $317,000 an increase of 202%
over the three months ended March 31, 2002 when non-interest income was $105,000. The
increase is the result of higher loan fees due to additional loan growth and gains
realized on the sale of securities. Given the current economic uncertainties and
volatility of the bond market the sale of securities at a gain may not continue into
future periods.

Non-interest
expense was $674,000 for the first quarter of 2003, a $28,000 (or 4.3%) increase over the
first quarter of 2002. The increase is primarily attributable to higher salary and benefit
costs due to the increase in full time equivalents and normal raises given to employees.
In addition, management has increased its marketing budget to further enhance efforts to
market the Banks products and services during 2003.

17

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Liquidity and Capital
Resources

Liquidity
is measured by our ability to raise funds through deposits, borrowed funds, capital or
cash flow from the repayment of loans and investment securities. These funds are used to
meet deposit withdrawals, maintain reserve requirements, fund loans and support our
operations. Liquidity is primarily achieved through the growth of deposits and liquid
assets such as securities available for sale, matured securities, and federal funds sold.
Asset and liability management is the process of managing our balance sheet to achieve a
mix of earning assets and liabilities that maximizes profitability, while providing
adequate liquidity.

Our
liquidity strategy is to fund loan growth with deposits and to maintain an adequate level
of short-and medium-term investments to meet typical daily loan and deposit activity.
Although deposits from depositors located in our market area have consistently increased,
there is no assurance that deposit growth alone will be sufficient to fund our loan growth
and provide monies for additional investing activities.

Shareholders
equity is a non-interest bearing source of funds that provides support for asset growth.
The Company obtained its initial equity capital in an initial public offering of its
common stock 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 year.

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 limited 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.

18

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Item 3     CONTROLS AND PROCEDURES

|(a) | Evaluation of Disclosure Controls and Procedures. The  Company's  Chief  Executive  Officer and Chief
                Financial  Officer,  after evaluating the  effectiveness of the company's  disclosure  controls and
                procedures  (as defined in Exchange Act Rules  13a-14(c) and 15d-14(c)) as of a date within 90 days
                of the filing date of this Form 10-QSB  Quarterly Report (the  "Evaluation  Date"),  have concluded
                that as of the Evaluation  Date,  the Company's  disclosure  controls and procedures  were adequate
                and  effective to ensure that material  information  relating to the Company would be made known to
                them by others  within the  Company,  particularly  during  the  period in which  this Form  10-QSB
                Quarterly Report was being prepared.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) | Changes in Internal Controls. There were no significant  changes in the Company's  internal  controls or
                in other factors that could  significantly  affect internal controls  subsequent to the date of the
                most recent evaluation,  nor any significant  deficiencies or material  weaknesses in such internal
                controls requiring corrective actions.  As a result, no corrective actions were taken.                                                                                                                                                                                                                                                                                                                                                                                                                           

19

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# PART II  OTHER
INFORMATION

|Item 1.                                                                                                                                                                                                                                                            | Legal Proceedings.                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------
|From
time to time, we may be involved in various legal proceedings that are incidental to our
business. In our opinion, we are not a party to any current legal proceedings that are
material to our financial condition, either individually or in the aggregate.
|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.
|None.                                                                                                                                                                                                                                                             

|Item 5. | Other Information.               
|------- | ---------------------------------
|None.  
|Item 6. | Exhibits and Reports on Form 8-K.

| | (a) | Exhibits              
| | --- | ----------------------
| |     |                       
| |     |                       
| | (b) | Reports on 8-K - None.

20

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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
March 31, 2003, to be signed on its behalf by the undersigned, thereunto duly authorized.

| | CLARKSTON FINANCIAL CORPORATION
/s/ Edwin L. Adler    
Edwin L. Adler
Chief Executive Officer
/s/ J. Grant Smith    
J. Grant Smith
Chief Financial Officer
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

Date:   May 15, 2003

21

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# CERTIFICATIONS

I, Edwin L. Adler, certify that:

|1. | I have reviewed this quarterly report on Form 10-QSB of Clarkston Financial
                    Corporation;
|-- | ------------------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
                    statement of a material fact or omit to state a material fact necessary to make
                    the statements made, in light of the circumstances under which such statements
                    were made, not misleading with respect to the period covered by this quarterly
                    report;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
                    included in this quarterly report, fairly present in all material respects the
                    financial condition, results of operations and cash flows of the registrant as
                    of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
                    establishing and maintaining disclosure controls and procedures (as defined in
                    Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
                    our most recent evaluation, to the registrants auditors and the audit
                    committee of registrants board of directors (or persons performing the
                    equivalent function):
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
                    quarterly report whether or not there were significant changes in internal
                    controls or in other factors that could significantly affect internal controls
                    subsequent to the date of our most recent evaluation, including any corrective
                    actions with regard to significant deficiencies and material weaknesses.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 15, 2003

| | /s/ Edwin L. Adler

Edwin L. Adler
Chief Executive Officer | 
| | ---------------------------------------------------------- | 

22

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I, J. Grant Smith, certify that:

|1. | I have reviewed this quarterly report on Form 10-QSB of Clarkston Financial
                    Corporation;
|-- | ------------------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
                    statement of a material fact or omit to state a material fact necessary to make
                    the statements made, in light of the circumstances under which such statements
                    were made, not misleading with respect to the period covered by this quarterly
                    report;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
                    included in this quarterly report, fairly present in all material respects the
                    financial condition, results of operations and cash flows of the registrant as
                    of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
                    establishing and maintaining disclosure controls and procedures (as defined in
                    Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
                    our most recent evaluation, to the registrants auditors and the audit
                    committee of registrants board of directors (or persons performing the
                    equivalent function):
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
                    quarterly report whether or not there were significant changes in internal
                    controls or in other factors that could significantly affect internal controls
                    subsequent to the date of our most recent evaluation, including any corrective
                    actions with regard to significant deficiencies and material weaknesses.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 15, 2003

| | /s/ J. Grant Smith

J. Grant Smith
Chief Financial Officer | 
| | ---------------------------------------------------------- | 

23

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EXHIBIT INDEX

|Exhibit | Description                                                                                                                                                                            
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|99.1    | Certificate of the Chief Executive Officer of Clarkston Financial Corporation
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|99.2    | Certificate of the Chief Financial Officer of Clarkston Financial Corporation
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

24

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# EXHIBIT 99-1

I, Edwin L. Adler, Chief Executive
Officer of Clarkston Financial Corporation, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)        
          the Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
          2003 which this statement accompanies fully complies with the requirements of
          Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)        
          the information contained in the Quarterly Report on Form 10-QSB for the
          quarterly period ended March 31, 2003 fairly presents, in all material respects,
          the financial condition and results of operations of Clarkston Financial
          Corporation.

Date: May 15, 2003

| | /s/ Edwin L. Adler

Edwin L. Adler
Chief Executive Officer | 
| | ---------------------------------------------------------- | 

25

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# EXHIBIT 99-2

I, J. Grant Smith,  Chief Financial  Officer of Clarkston  Financial  Corporation,  certify,  pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)        
          the Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
          2003 which this statement accompanies fully complies with the requirements of
          Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)        
          the information contained in the Quarterly Report on Form 10-QSB for the
          quarterly period ended March 31, 2003 fairly presents, in all material respects,
          the financial condition and results of operations of Clarkston Financial
          Corporation.

Date: May 15, 2003

| | /s/ J. Grant Smith

J. Grant Smith
Chief Financial Officer | 
| | ---------------------------------------------------------- | 

26