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

                                   FORM 10-QSB


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

                  For the quarterly period ended June 30, 2001

                                       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:  1,026,012  shares of the Company's
Common Stock (no par value) were outstanding as of June 30, 2001.

Transitional Small Business Disclosure Format (check one):  Yes _____   No __X__
<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                 12-14

Part II.     Other Information

             Item 1.
             ------
             Legal Proceedings                                                15

             Item 2.
             ------
             Changes in Securities and Use of Proceeds                        15

             Item 3.
             ------
             Defaults Upon Senior Securities                                  15

             Item 4.
             ------
             Submission of Matters to a Vote of Securities Holders            15

             Item 5.
             ------
             Other Information                                                15

             Item 6.
             ------
             Exhibits and Reports on Form 8-K                                 15


Signatures                                                                    16



                                                                               2
<PAGE>
Part I   Financial Information (unaudited)

                         CLARKSTON FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                 June 30, 2001 (unaudited) and December 31, 2000
                  (dollars in thousands, except per share data)
<TABLE>
                                                                       June 30,            December 31,
                                                                         2001                  2000
                                                                        ------                ----
                                                                      (Unaudited)
<S>                                                                    <C>                 <C>
ASSETS

Cash and Cash Equivalents
       Total cash and due from banks                                   $   1,237           $      862
        Federal funds sold                                                 5,150                2,550
                                                                       ---------           ----------
            Total Cash and Cash Equivalents                                6,387                3,412

Securities Held to Maturity                                               10,400               21,342
Securities Available for Sale, at fair value                              20,648                8,989

Loans, less Loan Loss Reserve
       Total loans                                                        29,644               25,762
       Allowance for loan losses                                             417                  379
                                                                       ---------           ----------
       Net Loans                                                          29,227               25,383

Net Property and Equipment                                                   683                  282
Accrued interest receivable                                                  250                  457
Deposit premium and conversion costs,
       net of amortization                                                   138                  150
Other Assets                                                                 186                  205
                                                                       ---------           ----------
            Total Assets                                               $  67,919           $   60,220
                                                                       =========           ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits
       Noninterest-bearing                                                 8,556                6,598
       Interest-bearing                                                   50,516               44,810
                                                                       ---------           ----------
            Total deposits                                                59,072               51,408
       Accrued Expenses and Other Liabilities                                340                  534

Shareholders' Equity
       Common stock, no par value: 10,000,000
             Shares authorized; 1,026,012 shares
             issued and outstanding as of June 30, 2001
             and December 31, 2000                                         4,306                4,306
       Capital surplus                                                     4,306                4,306
       Accumulated deficit                                                  (123)                (335)
       Accumulated other comprehensive income (loss)                          18                    1
                                                                       ---------           ----------
             Total Shareholder Equity                                      8,507                8,278
                                                                       ---------           ----------

              Total Liabilities and Shareholders' Equity               $  67,919           $   60,220
                                                                       =========           ==========
</TABLE>

           See accompanying notes to consolidated financial statements

                                                                               3
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
       Three and Six Month Periods Ended June 30, 2001, and June 30, 2000
                  (dollars in thousands, except per share data)
                                   (unaudited)
<TABLE>

                                                 Three Months        Three Months        Six Months           Six Months
                                                    Ended               Ended              Ended                Ended
                                               June 30, 2001       June 30, 2000       June 30, 2001        June 30, 2000
                                               --------------      --------------      -------------        -------------
<S>                                              <C>                    <C>                <C>                  <C>
Interest Income
       Loans, including fees                      $    590              $    359            $  1,167            $     628
       Securities                                      468                   328                 933                  624
       Federal Funds sold                               38                    24                 100                   51
                                                  --------              --------            --------             --------
            Total interest income                    1,096                   711               2,200                1,303

Interest Expense
       Deposits                                        597                   333               1,209                  592
       Other                                             0                     0                   0                    0
                                                  --------              --------            --------             --------
            Total interest expense                     597                   333               1,209                  592

Net Interest Income                                    499                   378                 991                  711

Provision  for loan losses                              24                    29                  41                   62
                                                  --------              --------            --------             --------
Net interest income
after provision for loan losses                        475                   349                 950                  649

Noninterest income
     Gains (losses) on sale of securities               17                   (11)                 38                  (11)
     Other income                                       80                    56                 155                   92
                                                  --------              --------            --------             --------
            Total noninterest income                    97                    45                 193                   81
                                                  --------              --------            --------             --------
Noninterest expense
     Salaries and benefits                             207                   157                 404                  320
     Occupancy expense of premises                      36                    31                  74                   63
     Furniture and equipment expense                    38                    22                  70                   42
     Computer and data processing expenses              50                    32                  97                   65
     Advertising and public relations                   34                    31                  52                   65
     Professional fees                                  21                    19                  57                   48
     Amortization of deposit premium
         and conversion cost                             6                     6                   2                   11
     Other expense                                      37                    21                  68                   45
                                                  --------              --------            --------             --------
            Total noninterest expense                  429                   319                 834                  659
                                                  --------              --------            --------             --------

Profit before federal income tax                       143                    75                 309                   71

Federal income tax                                      45                     0                  97                    0
                                                  --------              --------            --------             --------

Net profit                                        $     98              $     75            $    212             $     71
                                                  ========              ========            ========             ========

Basic and diluted profit per share                $    .10              $    .08            $    .21             $    .08
                                                  ========              ========            ========             ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                               4
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
        Three and Six Month Periods Ended June 30, 2001 and June 30, 2000
                             (dollars in thousands)
                                   (Unaudited)
<TABLE>


                                                     Three Months         Three Months          Six Months        Six Months
                                                        Ended                 Ended              Ended              Ended
                                                       June 30,              June 30,           June 30,           June 30,
                                                         2001                 2000                 2001              2000
                                                        -------             -------              --------          -------
<S>                                                     <C>                 <C>                  <C>               <C>
Net Profit as Reported                                  $    98             $    75              $    212          $    71

Other Comprehensive Income, Net of Tax:

       Change in unrealized gain on securities
           available for sale                                (6)                  9                    17                7
                                                        -------             -------              --------          -------
Comprehensive Profit                                    $    92             $    84              $    229          $    78
                                                        =======             =======              ========          =======
</TABLE>


          See accompanying notes to consolidated financial statements.

                                                                               5
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         Six Months ended June 30, 2001
                             (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, 2000                        $  4,306         $ 4,306     $  (335)         $      1          $   8,278

Net income for six months
Ended June 30, 2001 (unaudited)                                                   212                                  212

Increase in fair market value of securities
available for sale                                      0               0           0                17                 17
                                                 --------         -------     -------          --------          ---------
Balance June 30, 2001                            $  4,306         $ 4,306     $  (123)         $     18          $   8,507
                                                 ========         =======     =======          ========          =========
</TABLE>



          See accompanying notes to consolidated financial statements.

                                                                               6
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                Six Months ended June 30, 2001, and June 30, 2000
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
                                                                                Six Months              Six Months
                                                                                  Ended                    Ended
                                                                                 June 30,                 June 30,
                                                                                  2001                     2000
                                                                                -------                 ----------
<S>                                                                             <C>                     <C>
Net Cash Provided by Operating Activities:
       Net cash provided by operating activities                                $     242               $     177

Cash Flows from Investing Activities:
       Net increase in loans                                                       (3,775)                 (6,730)
       Purchase of held-to-maturity securities                                     (2,906)                 (5,029)
       Proceeds from maturities of held-to-maturity securities                     10,605                     495
       Proceeds from sales of held-to-maturity securities                           3,243                       0
       Purchase of available-for-sale securities                                  (30,465)                 (1,653)
       Proceeds from sales of available-for-sale securities                        18,806                   3,593
       Property and equipment expenditures                                           (439)                    (18)
                                                                                ---------               ---------
       Net cash provided by (used in) investing activities                         (4,931)                 (9,342)

Cash Flows from Financing Activities:
       Increase on deposits                                                         7,664                   8,440
                                                                                ---------               ---------

Net increase (decrease) in cash and cash equivalents                                2,975                    (725)
Cash and cash equivalents at beginning of year                                      3,412                   2,467
                                                                                ---------               ---------

Cash and cash equivalents at June 30, 2001 and 2000                             $   6,387               $   1,742
                                                                                =========               =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                                                               7
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 2001 (unaudited) and December 31, 2000



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 months ended
June  30,  2001,  are not  necessarily  indicative  of the  results  that may be
expected for the year ending December 31, 2001. For further  information,  refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's  Proxy  Statement  dated April 2, 2001  containing  audited  financial
statements as of December 31, 2000 and 1999.

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.



                                                                               8
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 2001 (unaudited) and December 31, 2000

NOTE 4 - SECURITIES

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

Available for Sale
<TABLE>
                                                                          Gross               Gross           Estimated
                                                       Amortized        Unrealized         Unrealized           Market
                                                          Cost            Gains              Losses             Value
                                                       ---------        ----------         ----------         ----------
<S>                                                    <C>              <C>                <C>                <C>
  June 30, 2001 (Unaudited)
         Taxable variable rate demand
             Municipal revenue bonds,
             Short term corporate
             Commercial paper, and bonds
             of government agencies                     $ 20,630         $    107           $      89         $ 20,648
                                                        ========         ========           =========         ========


Held to Maturity

  June 30, 2001 (Unaudited)
         Taxable variable rate demand
             Municipal revenue bonds,
             Short term corporate
             Commercial paper, and bonds
             of government agencies                     $ 10,400           $  294           $       0         $ 10,694
                                                        ========           ======           =========         ========
</TABLE>

During the six month  period ended June 30,  2001,  the bank sold  approximately
$3,200,000 of securities, classified as held-to-maturity,  due to concerns about
the issuer's creditworthiness and in some cases, adverse prepayment risks.

Contractual  maturities of debt  securities  at June 30, 2001,  were as follows.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay  obligations with or without call or prepayment
penalties.
<TABLE>
                                                                                   Available-for-Sale Securities
                                                                                ------------------------------------
                                                                                Amortized                Estimated
                                                                                  Cost                  Market Value
                                                                                ---------               ------------
                                                                                     (dollars in thousands)
      <S>                                                                         <C>                     <C>
      Due from 2001 to 2002                                                         $ 315                    $ 319
      Due from 2002 to 2004                                                           498                      513
      Due from 2004 to 2006                                                         1,000                      998
      Due from 2006 to 2034                                                        18,817                   18,818
                                                                                   --------                 ------
                                                                                  $20,630                  $20,648

                                                                                            Held-To-Maturity
                                                                                --------------------------------------
                                                                                  Amortized                Estimated
                                                                                    Cost                 Market Value
                                                                                -----------              -------------
      Due from 2001-2004                                                            $   0                    $   0
      Due from 2004-2006                                                            1,807                    1,860
      Due from 2006-2031                                                            8,593                    8,834
                                                                                  -------                 --------
                                                                                  $10,400                 $ 10,694
                                                                                  =======                 ========
</TABLE>
                                                                               9
<PAGE>
                                   (Continued)
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 2001 (unaudited) and December 31, 2000


NOTE 5 - LOANS

Loans are as follows (dollars in thousands):
<TABLE>
                                                                                     June 30,                  December 31,
                                                                                       2001                        2000
                                                                                    -----------                 ---------
                                                                                    (Unaudited)
        <S>                                                                           <C>                       <C>
        Commercial                                                                      $19,892                   $16,100
        Mortgage                                                                          3,454                     3,955
        Consumer                                                                          6,298                     5,707
                                                                                        -------                  --------
                                                                                         29,644                    25,762
        Allowance for loan losses                                                           417                       379
                                                                                        -------                  --------
                                                                                        $29,227                  $ 25,383
                                                                                        =======                  ========
</TABLE>

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

<TABLE>
                                                                                     Six months                For the
                                                                                       Ended                  Year Ended
                                                                                      June 30,                December 31,
                                                                                        2001                      2000
                                                                                     -----------             ------------
                                                                                     (Unaudited)
        <S>                                                                           <C>                    <C>
        Balance at beginning of period                                                     $379              $     140
               Provision charged to operating expense                                        41                    243
        Net loans (charge-offs) recoveries                                                   (3)                    (4)
                                                                                           ----              ---------

        Balance at end of periods                                                          $417              $     379
                                                                                           ====              =========
        Allowance for loan losses as a percentage of
               loans at end of period                                                     1.41%                  1.47%
                                                                                          =====              =========
</TABLE>
                                                                              10
<PAGE>
                                   (Continued)
                         CLARKSTON FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 June 30, 2001 (unaudited) and December 31, 2000



NOTE 6 - PREMISES AND EQUIPMENT - NET

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

                                                                                          Accumulated            Carrying
                                                                             Cost         Depreciation             Value
                                                                             ----         ------------           ---------
<S>                                                                         <C>             <C>                  <C>
June 30, 2001 (unaudited)
       Building and improvements                                             $ 491          $     16            $    475
       Furniture and equipment                                                 406               198                 208
                                                                               ---          --------            --------
                                                                              $897          $    214            $    683
                                                                              ====          ========            ========

December 31, 2000
       Building and improvements                                             $  86          $      8            $     78
       Furniture and equipment                                                 372               168                 204
                                                                               ---          --------            --------
                                                                             $ 458          $    176            $    282
                                                                             =====          =========           ========
</TABLE>


NOTE 7 - DEPOSITS

Interest-bearing deposits are summarized as follows (dollars in thousands):
<TABLE>

                                                                                   June 30,                    December 31,
                                                                                     2001                         2000
                                                                                   ---------                    ----------
<S>                                                                                 <C>                         <C>
Demand deposit accounts                                                                $ 1,825                  $  1,635
Money market accounts                                                                    2,768                     3,524
Savings accounts                                                                         5,529                     5,796
Certificates of Deposit                                                                 40,394                    33,855
                                                                                        ------                  --------
                                                                                      $ 50,516                  $ 44,810
                                                                                      ========                  ========
</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 Bank also  operates a branch  office in the  Farmer  Jack  grocery  store in
Clarkston,  Michigan.  The Bank has opened a full service branch located at 6600
Highland  Road,  Suite #2 in  Waterford,  Michigan.  The Bank  will  also open a
temporary  office just north of  Clarkston,  this summer,  to help our customers
because of the downtown construction.

Financial Condition

     Total  assets of the Company  increased  by $7.7  million or 12.8% to $67.9
million at June 30, 2001,  from $60.2 million at December 31, 2000. The increase
in assets is primarily  attributable to the Bank continuing to attract  customer
deposits.  The  Company  anticipates  that the Bank's  assets  will  continue to
increase during 2001, which will be the Bank's third full year of operations.

     Cash and cash equivalents,  which include federal funds sold and short-term
investments,  increased  $3.0 million or 88.2% to $6.4 million at June 30, 2001,
from $3.4  million at  December  31,  2000.  The  increase  is the result of the
increase in deposits since December 31, 2000.

     Securities increased $0.7 million or 2.3% to $31.0 million at June 30, 2001
from $30.3 million at December 31, 2000. The increase is the result of increased
deposits.

     The Company's  portfolio of  held-to-maturity  securities declined to $10.4
million at June 30, 2001 from $21.3  million at December 31, 2000.  The decrease
is  primarily a result of call  options  being  exercised  by the issuers of the
securities, and, in some cases, management's decision to sell certain securities
as a result of  concerns  over the  issuer's  creditworthiness.  New  securities
purchased by the Bank with proceeds from those  maturities and from new deposits
have been classified as available-for-sale.

     Total loans increased by $3.8 million or 14.7% to $29.6 million at June 30,
2001,  from $25.8  million at December 31, 2000.  Management  believes  that the
total loans will continue to increase over time, although potentially at a lower
rate of increase.

     The   allowance  for  loan  losses  as  of  June  30,  2001  was  $417,000,
representing  approximately  1.41%  of  total  loans  outstanding,  compared  to
$379,000 as of December 31, 2000.  This  increase  resulted  primarily  from the
increase in the Bank's total loans.

     As of December 31, 2000, the Company had an accumulated deficit of $335,000
and as of June 30, 2001, the accumulated  deficit was $123,000.  The accumulated
deficit  is  primarily  the result of opening  the  Bank's  main  office and its
branches,  wages paid to  employees,  fees and expenses  incurred in forming the
Company and applying  for  regulator  approvals.  Future  operating  profits are
expected to eliminate the accumulated deficit.

                                                                              12
<PAGE>
Results of Operations

     The  Company's  net  profit  was  $98,000  for the  second  quarter of 2001
compared  to net profit of $75,000  for the  second  quarter of 2000.  Basic and
diluted  earnings per share were $0.10 in the second quarter of 2001 compared to
$0.08 for the second quarter of 2000. Net profit was $212,000 for the six months
ended June 30, 2001, compared to $71,000 for the six months ended June 30, 2000.
The Bank began  operations  in 1999 and has earned a profit  every  month  since
January,  2000.  Net profit for the three and six month  periods  ended June 30,
2001 included federal income tax provision of $45,000 and $97,000, respectively.
The comparable  periods in 2000 did not include any federal income tax provision
due to the Company's operating loss carryforward for federal tax purposes.

     Interest  income  for the  second  quarter  of 2001  was $1.1  million,  an
increase of 54.7% from  interest  income of $711,000  for the second  quarter of
2000.  This  increase  resulted   primarily  from  the  increase  in  loans  and
securities.  Interest  income was $2.2 million for the six months ended June 30,
2001,  an increase  of 69.2% from  interest  income of $1.3  million for the six
months ended June 30, 2000.

     Interest  expense was $1.2  million for the six months ended June 30, 2001,
an increase of 104.2% from interest expense of $592,000 for the six months ended
June 30, 2000. This consisted of interest paid on interest bearing deposits.

     The Company had an  allowance  for loan  losses of  approximately  1.41% of
total loans at June 30 , 2001. The provision for loan loss for the three and six
month  periods  ended June 30,  2001,  was  $25,000 and  $41,000,  respectively.
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  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.

     Noninterest  income was $80,000 for the second  quarter of 2001 compared to
$56,000  for the  second  quarter  of  2000.  This  increase  was due in part to
increases in service charges, loan fees (net) and other miscellaneous fees.

     Noninterest expense was $411,000 for the second quarter of 2001, an $81,000
(or 24.5%) increase over the second quarter of 2000, with the increase primarily
attributable  to  increases in salaries and benefits due to the increase of full
time equivalents and normal raises given to employees. There were also increases
in computer and data processing expenses due to growth in the number of accounts
processed.

                                                                              13
<PAGE>
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.

                                                                              14
<PAGE>
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

        (a)    The annual meeting of the  shareholders  of the  Corporation  was
               held on May 8, 2001.

        (b)    The following  directors were elected at the annual meeting for a
               term expiring in 2004: Edwin L. Adler, David T. Harrison and John
               H.  Welker.  Other  directors  whose  terms  continued  after the
               meeting are as follows:  Louis D. Beer, William J. Clark, Charles
               L. Fortinberry, Bruce H. McIntyre and Robert A. Olsen.

        (c)    At the Annual  Meeting  directors were elected for terms expiring
               in 2004:

               Director Nominee            For            Against        Abstain
               ----------------            ---            -------        -------
               Edwin L. Adler             933,658         11,550            0
               David T. Harrison          912,759         32,450            0
               John H. Welker             933,459         11,750            0



Item 5.  Other Information.

None.


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

        (a)     Exhibits -

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


                                                                              15
<PAGE>
                                   SIGNATURES


     In accordance with the requirements of the Securities Exchange Act of 1934,
as amended,  the Registrant has duly caused this Quarterly Report on Form 10-QSB
for the  quarter  ended  June  30,  2001,  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized.



                                         CLARKSTON FINANCIAL CORPORATION



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



                                         /s/ Terry R. Wolf
                                         Terry R. Wolf
                                         Principal Financial and Account Officer


DATE:    August 10, 2001


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