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 September 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: 931,600 shares of the Company's Common
Stock (no par value) were outstanding as of
November 5, 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
                 September 30, 1999 (unaudited) and December 31, 1998
                  (dollars in thousands, except per share data)

<TABLE>

                                                                 September 30,                December 31,
                                                                     1999                          1998
                                                                 -------------                ------------
                                                                 (Unaudited)
ASSETS
<S>                                                    <C>                            <C>
Cash and Cash Equivalents
       Total cash and due from banks                       $           574                 $         92
       Federal funds sold                                            1,250                        8,350
                                                                ----------                 ------------
            Total Cash and Cash Equivalents                          1,824                        8,442

Securities Available for Sale, at fair value                        14,141                           --

Loans, less Loan Loss Reserve
       Total loans                                                   7,699
       Allowance for loan losses                                        97                           --
                                                               -----------                 ------------
       Net Loans                                                     7,602                           --

Net Property and Equipment                                             356                          291
Accrued interest receivable                                            185                           --
Deposit premium and conversion costs,
       net of amortization                                             178                           --
Other Assets                                                            14                           --
                                                               -----------                 ------------
            Total Assets                                            24,300                 $      8,733
                                                               ===========                 ============
LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
       Noninterest-bearing                                           1,960                           --
       Interest-bearing                                             14,316                           --
                                                               -----------                 ------------
            Total deposits                                          16,276                           --
       Accrued Expenses and Other Liabilities                          116                          126

Shareholders' Equity
       Common stock, par value: 10,000,000
             shares authorized, 936,600 and 951,000 shares
             issued and outstanding as of September 30, 1999
             and December 31, 1998, respectively                     4,322                        4,378
       Capital surplus                                               4,322                        4,378
       Accumulated deficit                                            (648)                        (149)
       Accumulated other comprehensive income                          (88)                          --
                                                               -----------                 ------------
             Total Shareholder Equity                                7,908                        8,607
                                                               -----------                 ------------

              Total Liabilities and Shareholders' Equity   $        24,300                 $      8,733
                                                               ===========                 ============
</TABLE>
           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
              Three months and nine months ended September 30, 1999
                  (dollars in thousands, except per share data)
                                   (unaudited)

<TABLE>


                                                               Three Months                  Nine Months
                                                                   ended                       ended
                                                             September 30, 1999         September 30, 1999
                                                             ------------------         ------------------
<S>                                                          <C>                        <C>
Interest Income
                                                                 $       121                 $      187
       Loans, including fees                                             194                        373
       Securities                                                         22                        125
                                                                 -----------                -----------
       Federal Funds sold                                                337                        685
            Total interest income

Interest Expense
       Deposits                                                          124                        220
       Other                                                              --                         --
                                                                 -----------                -----------
            Total interest expense                                       124                        220

Net Interest Income                                                      213                        465

Provision  for loan losses                                                27                         97
                                                                 -----------                -----------

Net interest income after provision for loan losses                      186                        368

Noninterest income                                                        21                         38

Noninterest expense
       Salaries and benefits                                             151                        409
       Occupancy expense of premises                                      33                         75
       Furniture and equipment expense                                    33                         72
       Computer and data processing expenses                              43                        118
       Advertising and public relations                                   33                         98
       Professional fees                                                  25                         84
      Amortization of deposit premium and conversion cost                  4                          4
       Other expense                                                      10                         45
                                                             ---------------                 ----------
            Total noninterest expense                                    332                        905
                                                             ---------------                 ----------
Loss before federal income tax                                          (125)                      (499)

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

Net loss                                                     $          (125)                      (499)
                                                             ===============                 ==========

Basic and diluted loss per share                             $         (0.13)                 $    (.53)
                                                             ===============                 ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
              Three months and nine months ended September 30, 1999
                             (dollars in thousands)
                                   (Unaudited)

<TABLE>


                                                      Three Months                           Nine Months
                                                         ended                                  ended
                                                   September 30, 1999                    September 30, 1999
                                                   ------------------                    ------------------
<S>                                                <C>                                   <C>
Net Loss as Reported                                    $      (125)                         $     (499)

Other Comprehensive Income, Net of Tax:

       Change in unrealized gain on securities
           available for sale
                                                                (76)                                (88)
                                                        -----------                          ----------
Comprehensive Loss                                      $      (201)                         $     (587)
                                                        ===========                          ==========


</TABLE>










          See accompanying notes to consolidated financial statements.

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



<TABLE>


                                                                                 Accumulated
                                                                                    Other              Total
                                           Common      Capital     Accumulated  Comprehensive      Shareholders'
                                            Stock      Surplus       Deficit       Income           Equity
                                           ------      -------     -----------  -------------      ------------
<S>                                      <C>          <C>         <C>           <C>                 <C>

Balance December 31, 1998                $   4,378    $  4,378    $    (149)    $     0             $   8,607


Net income (loss) for nine months
ended September 30, 1999 (unaudited)                                   (499)                             (499)

Purchase and retirement of 14,400
shares                                                                                                   (112)
of the Corporation's common stock              (56)        (56)

Increase (decrease) in fair market
value of securities available for sale                                               (88)                 (88)
                                         ----------   --------   ----------     ---------           ---------
Balance September 30, 1999               $   4,322    $  4,322    $    (648)    $    (88)           $   7,908
                                         ==========   ========   ==========     =========           =========



</TABLE>







          See accompanying notes to consolidated financial statements.



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




                                                          Nine Months
                                                             ended
                                                      September 30, 1999
                                                      ------------------
                                                          (Unaudited)

 Cash Flows from Operating Activities:
       Net loss                                              $    (499)
       Adjustments to reconcile net loss to net
       cash used in operating activities:
            Increase in interest receivable                       (185)
            Depreciation and amortization                           64
            Decrease in accrued expenses                            (9)
            Loan loss provision                                     97
            Increase in other assets                               (14)
                                                             ---------
                  Total adjustments                                (47)
                                                             ---------
            Net cash used in operating activities                 (546)

Cash Flows from Investing Activities:
       Increase in loans                                        (7,699)
       Purchase of securities                                  (14,228)
       Equipment expenditures                                     (126)
       Deposit premium and conversion cost                        (182)
                                                             ---------
                                                               (22,235)
Cash Flows from Financing Activities:
       Increase in deposits                                     16,276
       Repurchase of 14,400 shares of common stock                (112)
                                                             ---------
                                                                16,164

Net decrease in cash and cash equivalents                       (6,617)
Cash and cash equivalents at beginning of year                   8,442
                                                             ---------
Cash and cash equivalents at September 30, 1999              $   1,825
                                                             =========









          See accompanying notes to consolidated financial statements.



                                       7
<PAGE>

                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              September 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 nine month
periods ended September 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 nine months ended  September 30, 1998, have not been presented since the
Company did not have operations during that period.


                                       8
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              September 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>
September 30, 1999 (Unaudited)
       Taxable variable rate demand
           municipal revenue bonds,
           short term corporate
           commercial paper, and bonds
           of government agencies                $  14,228       $    0          $  (87)       $ 14,141
                                                 =========       ======          ======        ========


</TABLE>

Contractual  maturities  of debt  securities  at  September  30,  1999,  were as
follows. No held-to-maturity  securities existed at September 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.




                                         Available-for-Sale Securities
                                         -----------------------------
                                        Amortized              Fair
                                          Cost                Values
                                        ---------             ------
                                            (dollars in thousands)

Due from 1999 to 2002                  $  10,760             $  10,706
Due from 2003 to 2004                      3,001                 2,981
Due in 2006                                  467                   454
                                       ---------             ---------
                                       $  14,228             $  14,141
                                       =========             =========







                                   (Continued)

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




NOTE 6 - LOANS

Loans are as follows (dollars in thousands):

<TABLE>

                                                September 30,            December 31,
                                                   1999                      1998
                                                -------------            ------------
                                                (Unaudited)
<S>                                             <C>                      <C>
Commercial                                        $    4,076                $     --
Mortgage                                               1,857                      --
Consumer                                               1,766                      --
                                                  ----------                --------
                                                       7,699                      --
Allowance for loan losses                                 97                      --
                                                  ==========                --------
                                                  $    7,602                $     --
                                                  ==========                ========
</TABLE>



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


<TABLE>

                                                                            Period from
                                                                              May 18
                                                      Six months        (date of inception)
                                                        ended                 through
                                                     September 30,          December 31,
                                                         1999                   1998
                                                     -------------       -----------------
                                                      (Unaudited)
<S>                                                    <C>                      <C>
Balance at beginning of period                           $       0              $     --
       Provision charged to operating expense                   97                    --
       Loans charged off                                        --                    --
                                                         ---------              --------

Balance at end of periods                                $      97              $     --
                                                         =========              ========
Allowance for loan losses as a percentage of
       loans at end of period                                                         --
                                                              1.25%
                                                         =========              ========


</TABLE>








                                   (Continued)

                                       10
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              September 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>
September 30, 1999 (unaudited)
       Building and improvements                 $    87          $      6        $     81
       Furniture and equipment                       329                54             275
                                                 -------          --------        --------
                                                 $   416          $     60        $    356
                                                 =======          ========        ========
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>
                                                             September 30,        December 31,
                                                                 1999                 1998
                                                             -------------        ------------
<S>                                                          <C>                 <C>
Demand deposit accounts                                        $    4,041             $    --
Money market accounts                                               2,490                  --
Savings accounts                                                    3,736                  --
Certificates of Deposit                                             6,009                  --
                                                               ----------             -------
                                                               $   16,276             $    --
                                                               ==========             =======

</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
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 Company's plan of operation has been to establish its  management  team
within the first few months of its operations  and to grow in a prudent  manner,
primarily by providing prompt, quality service.  Management believes that it has
been  successful  in  establishing  a management  team that can  administer  the
Company's growth in such a manner.

     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.  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) was paid to The State Bank for these deposits,  along with $17,000 for
various  fixed  assets and  equipment.  The Bank  leases  the branch  space from
Foodtown,  Inc.  at a rental  rate of $2,750 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 $15.6  million or 179% to $24.3
million at  September  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 three  quarters of 1999 were the Company's  first
full nine months of  operations,  and the number of deposit  accounts  increased
from none at December 31, 1998, to 2,285 deposit accounts at September 30, 1999.
The Company  anticipates that the Bank's assets will continue to increase during
1999, which will be the Bank's first full year of operations.

     Cash and cash equivalents,  which include federal funds sold and short-term
investments,  decreased  $6.6 million or 79% to $1.8  million at  September  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 to $14.1 million at September 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.

                                       12
<PAGE>
     The  allowance  for loan  losses  as of  September  30,  1999 was  $96,500,
representing approximately 1.25% 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 September 30, 1999.

     Bank  premises  and  equipment  increased  by $65,000 or 22% to $356,000 at
September 30, 1999 from $291,000 at December 31, 1998. The increase included the
purchase of two ATM machines and related software,  an automobile for the Bank's
courier,  computer equipment for the new branch,  additional printers, and other
miscellaneous items.

Results of Operations

     The net loss for the three and nine month periods ended September 30, 1999,
was $125,000 and $499,000,  respectively.  As of December 31, 1998,  the Company
had a retained  deficit of $149,000,  and as of September 30, 1999,  the Company
had a retained  deficit of  $648,000.  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  and its  first  branch,  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  $337,000  and  $685,000  for the three and nine month
periods ended  September 30, 1999,  consisting  primarily of interest  income on
federal funds and securities and secondarily from lending  activities  ($121,000
and $187,000 for the three and nine month  periods  ended  September  30, 1999).
Interest  expense was $124,000 and $220,000 for the three and nine month periods
ended  September 30, 1999 and relates to interest  incurred on interest  bearing
deposits.

     The Company had an  allowance  for loan  losses of  approximately  1.25% of
total loans at September  30, 1999.  The provision for loan losses for the three
and nine month  periods  ended  September  30,  1999 was  $27,000  and  $97,500,
respectively.  This  amountis  expected  to increase  substantially  in the last
quarter  of  1999  as a  result  of  anticipated  increases  in the  total  loan
portfolio.  Management  believes the current rate of providing for the 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

                                       13
<PAGE>
reviewing  annual financial  statements from its commercial loan customers,  and
periodically reviews the existence and value of collateral for selected loans.

     Other  income of $21,000 and  $38,000 for the three and nine month  periods
ended  September 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 nine month periods ended  September 30, 1999 was
$181,000 and  $496,000,  respectively,  consisting  primarily  of occupancy  and
equipment expenses, legal and accounting fees, marketing expenses, insurance and
supplies.

Liquidity and Capital Resources

     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 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  has  completed  its  Year  2000   assessment   and  necessary
remediation.  However, 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.

                                       14
<PAGE>
     Although  the  Company  believes  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.

     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  vary  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 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.

                                       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

None


Item 5.      Other Information.

None.


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

   (a)  Exhibits -

       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  September  30,  1999,  to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                           CLARKSTON FINANCIAL CORPORATION



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



                                           //ss// James L. Richardson
                                           James L. Richardson
                                           Treasurer

DATE:     November 4, 1999

                                       17