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

|[X]  | Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934    
|---- | ----------------------------------------------------------------------------------
|     | For the fiscal year ended December 31, 2001                                       
|     |                                                                                   
|[  ] | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|     | For the transition period from _______________________ to _____________________   

Commission File Number: 333-00724

VALLEY RIDGE FINANCIAL CORP.(Name of Small Business Issuer in Its Charter)

|Michigan
(State or Other Jurisdiction of
Incorporation or Organization)               | 38-2888214
(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------- | -----------------------------------------------
|                                                                                      |                                                
|450 West Muskegon Avenue
Kent City, Michigan
(Address of Principal Executive Offices) | 49330
(Zip Code)                               

(616) 678-5911
(Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act: None.

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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_____

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

The issuer's revenues for the year ended December 31, 2001, were $15,015,511.

As of February 28, 2002, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $16,805,740. This amount is based on the sale price of $28 per share for the registrant's stock as of such date.

As of March 28, 2002, the registrant had outstanding 947,676 shares of common stock.

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

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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Corporation itself. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Furthermore, the Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Risk Factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national economy; and local and global uncertainties created by the terrorist acts of September 11 and the current war on terrorism. These are representative of the Risk Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

PART I

Item 1.  Description of Business.

Valley Ridge Financial Corp. (the "Corporation") is a Michigan bank holding corporation with its headquarters in Kent City, Michigan. The Corporation was formed on May 20, 1988. The Corporation is the parent company of Valley Ridge Bank, a Michigan banking corporation. Valley Ridge Bank is the Corporation's only subsidiary. Valley Ridge Bank owns a 20% interest in a non-banking corporation, West Shore Computer Services, Inc., a data processing firm and owns 100% of the outstanding shares of Valley Ridge Mortgage Company, a mortgage company that also holds a 6% interest in a title company, Valley Ridge Realty, Inc., a real estate brokerage company, Valley Ridge Financial Services, Inc., an insurance agency and 1423 West Main LLC, a limited liability company that owns a parcel of real estate.

On July 1, 1996, Community Bank Corporation ("Community") merged with and into the Corporation (the "Merger"). The then-shareholders of Community received shares of common stock of the Corporation ("Valley Ridge Common Stock") for the shares of common stock of Community that they held, in addition to cash in lieu of fractional shares. The Merger was treated as a pooling of interests for accounting purposes and the assets and liabilities of Community were carried forward in the Corporation's accounts.

Effective at the close of business on December 6, 1996, the Corporation's two subsidiary banks, The Grant State Bank ("Grant") and Kent City State Bank ("Kent City"), were consolidated into a single banking corporation (the "Consolidation"). The purpose of the Consolidation was to allow the Corporation to further realize operational efficiencies and provide more consistent and improved service to the market areas that the Corporation had been servicing. The Consolidation resulted in a single bank named "Valley Ridge Bank" (the "Bank"). On December 31, 2001, the Bank had assets totaling $168.8 million, deposits of $123.8 million and shareholders' equity of $17.5 million.

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The Corporation and the Bank operate in a single industry segment--the business of banking, which includes commercial banking, mortgage banking and other related activities. The Bank is a full service bank offering customary commercial banking services, which include commercial and retail loans, business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, automated transaction machine services, money transfer services and safe deposit facilities, and insurance and real estate brokerage services. No material part of the business of the Corporation or the Bank is dependent upon a single customer or very few customers, the loss of which would have a materially adverse effect on the Corporation.

The principal markets for the Corporation's financial services are presently the Michigan communities in which the Bank's offices are located and the areas immediately surrounding those communities. The Corporation and the Bank serve these markets through eight offices located in Kent City, Coopersville, Egelston, Grant, Newaygo, Ravenna, Sparta and White Cloud, Michigan. This diversification allows the Bank to spread some of its market risk over a wider area and not be subject to downturns in any specific community. Within this market area, the Bank competes with various banks, savings and loan associations and credit unions. The Bank is the only bank with offices in Kent City and Grant, Michigan. Other banks and financial institutions have offices in some of the towns where the Bank's branches are located. The Corporation and the Bank have no material foreign assets or income.

The business of banking is highly competitive. In addition to competition from other commercial banks, banks face significant competition from savings and loan associations, credit unions, finance companies, insurance companies and investment and brokerage firms. The principal methods of competition for financial services are price (interest rates paid on deposits, interest rates charged on borrowings and fees charged for services) and service (convenience and quality of services rendered to customers).

Banks and bank holding companies are extensively regulated. The Bank is chartered under state law and is supervised, examined and regulated by both the Division of Financial Institutions of the Michigan Office of Financial and Insurance Services ("OFIS") and the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Corporation is regulated by the Federal Reserve Board. Deposits of the Bank are insured by the Federal Deposit Insurance Corporation (the "FDIC") to the extent provided by law.

Federal and state laws that govern banks significantly limit their business activities in a number of respects. Prior approval of the Federal Reserve Board, and in some cases various other government agencies, is required for the Corporation to acquire control of any additional banks or other operating subsidiaries. The business activities of the Corporation and the Bank are limited to banking and other activities that are determined by the Federal Reserve Board to be closely related to banking.

The Corporation is a legal entity separate and distinct from the Bank. There are legal limitations on the extent to which the Bank can lend or otherwise supply funds to the Corporation. In addition, payment of dividends to the Corporation by the Bank is subject to various state and federal regulatory limitations.

Under Federal Reserve Board policy, the Corporation is expected to act as a source of financial strength to the Bank and to commit resources to support it. Under federal law, the FDIC also has authority to impose special assessments on insured depository institutions to repay FDIC borrowings from the United States Treasury or other sources and to establish semi-annual assessment rates on Bank Insurance Fund ("BIF") member banks to maintain the BIF at the designated reserve ratio required by law.

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The recapitalization of the Savings Association Insurance Fund ("SAIF") was accomplished through the enactment of The Deposit Insurance Funds Act of 1996. This legislation authorized the Financing Corporation ("FICO") to impose periodic assessments on depository institutions that are members of the BIF, in addition to institutions that are members of the SAIF. The purpose of these periodic assessments is to spread the cost of the interest payments on the outstanding FICO bonds over a larger number of institutions. Until the change in the law, only SAIF member institutions bore the cost of funding these interest payments.

Banks are subject to a number of federal and state laws and regulations that have a material impact on their business. These include, among others, state usury laws, state laws relating to fiduciaries, the Truth in Lending Act, the Truth in Savings Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Expedited Funds Availability Act, the Community Reinvestment Act, the Real Estate Settlement Procedure Act, electronic funds transfer laws, redlining laws, antitrust laws, environmental laws, money laundering laws, and privacy laws. The instruments of monetary policy of authorities, such as the Federal Reserve Board, may influence the growth and distribution of bank loans, investments and deposits, and may also affect interest rates on loans and deposits. These policies may have a significant effect on the operating results of banks.

Bank holding companies may acquire banks and other bank holding companies located in any state in the United States without regard to geographic restrictions or reciprocity requirements imposed by state banking laws. Banks may also establish interstate branch networks through acquisitions and mergers with other banks. The establishment of de novo interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) is allowed only if specifically authorized by state law.

Michigan banking laws do not significantly restrict interstate banking. The Michigan Banking Code permits, in appropriate circumstances and with the approval of the Commissioner of OFIS, (i) acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and loan associations located in other states, (ii) sale by a Michigan bank of branches to an FDIC-insured bank, savings bank or savings and loan association located in a state in which a Michigan bank could purchase branches of the purchasing entity, (iii) consolidation of Michigan banks and FDIC-insured banks, savings banks or savings and loan associations located in other states having laws permitting such consolidation, (iv) establishment of branches in Michigan by FDIC-insured banks located in other states, the District of Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to establish a branch in such jurisdiction, and (v) establishment by foreign banks of branches located in Michigan.

The Gramm-Leach-Bliley Act of 1999 (the "GLB Act") largely removed the restrictions that previously prevented affiliations among banks, securities firms, and insurance companies and provides for a system of functional regulation of the financial services industry. Among other provisions, the GLB Act:

| |  | repeals the restrictions on banks affiliating with securities firms contained in the depression-era Glass-Steagall Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | creates a new regulatory classification called a "financial holding company." A financial holding company may engage in a statutory list of financial activities, including insurance underwriting and agency activities, securities underwriting and brokerage activities, merchant banking, and insurance company portfolio investment activities. Other activities that are "complementary" to financial activities, a category to be further defined by regulation, are also authorized for financial holding companies. The Corporation has not elected to be treated as a financial holding company but may do so in the future.

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| |  | provides a system of functional regulation under which, with certain exceptions, activities of banks as securities brokers and investment advisors to mutual funds are subject to regulation and supervision by the Securities and Exchange Commission, eliminating exemptions that banks previously enjoyed. The effect of the law is to "push out" these activities into functionally regulated bank affiliates.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | reaffirms the traditional authority of states to regulate insurance companies and insurance agencies, but prohibits discrimination against bank affiliates that conduct those activities.                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | requires financial institutions to disclose their privacy policy to consumers and provides protections to consumers against the transfer and use of nonpublic personal information by financial institutions.                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | requires that agreements between banks and non-governmental entities in connection with the Community Reinvestment Act be disclosed to the public, and that community groups that receive funds from banks in excess of defined thresholds disclose how those funds are used.                                                                                                                                     

Although the GLB Act repealed certain pre-existing statutory barriers to cross-industry affiliations and provides a structural framework for achieving the GLB Act's purposes, certain details of implementing the changes authorized by the GLB Act continue to be the subject of the regulations to be adopted by the Federal Reserve Board, the Securities and Exchange Commission, and other federal agencies.

The nature of the business of the Bank is such that it holds title, on a temporary or permanent basis, to a number of parcels of real property. These include properties owned for branch offices and other business purposes as well as properties taken in or in lieu of foreclosure to satisfy loans in default. Under current state and federal laws, present and past owners of real property may be exposed to liability for the cost of cleanup of environmental contamination on or originating from those properties, even if they are wholly innocent of the actions that caused the contamination. These liabilities can be material and can exceed the value of the contaminated property.

The Corporation and the Bank employed approximately 105 persons (82 persons on a full-time equivalent basis) at December 31, 2001.

Certain statistical information describing the business of the Corporation and the Bank appears in Management's Discussion and Analysis or Plan of Operation included in Item 6 of this report and in the Consolidated Financial Statements and notes thereto included in Item 7 of this report.

Item 2.  Description of Property.

The Corporation maintains its offices and conducts its business operations from the principal banking office of the Bank in Kent City, Michigan. The Bank's principal office is located at 450 West Muskegon Avenue, Kent City, Michigan. These premises encompass approximately 24,000 square feet, most of which is occupied by the Bank and the Corporation. The Corporation also owns a vacant lot located in an industrial park in Coopersville, Michigan.

The Bank owns the premises occupied by its branch offices at the following addresses, all of which are in Michigan: 10 West Main Street, Grant (4,051 square feet), the corner of M-37 and M-82, Newaygo (1,450 square feet), 661 West Randall Road, Coopersville (1,950 square feet); 3069 Slocum Road, Ravenna (3,300 square feet); 5475 Apple Avenue, Egelston (3,300 square feet); and 11 South State Street, Sparta (1,040 square feet). The Bank leases its office at 47 South Charles Street, White Cloud, Michigan

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A nonoperating subsidiary of the Bank, 1423 West Main LLC, owns a bank office at 1423 West Main Street in Fremont, Michigan (1,600 square feet) that the Bank intends to open as a branch.

As part of its business, the Bank and its subsidiaries generate all types of mortgages. The Bank occasionally purchases mortgages as part of its business, but typically relies on its ability to generate mortgages for most purposes.

Item 3.  Legal Proceedings.

From time to time, the Corporation or the Bank is party, as plaintiff or defendant, to legal proceedings in the normal course of operations. No pending litigation is considered material at this time.

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

Not applicable.

PART II

Item 5.  Market For Common Equity and Related Stockholder Matters.

There is no established public trading market for Valley Ridge Common Stock. Transactions in Valley Ridge Common Stock are occasionally effected by individuals on an informal basis. Some transactions are effected through the involvement of local brokerage firms. The prices at which such transactions are effected are only occasionally reported to the Corporation. As of December 31, 2001, there were approximately 484 record holders of shares of Valley Ridge Common Stock.

The Corporation has paid regular cash dividends since June 30, 1989. The following table summarizes the quarterly cash dividends paid to common shareholders during the last two full years (adjusted to reflect the 3-for-2 stock split paid in 2000):

| | Quarter | 2000  |  | 2001  | 
| | ------- | ----- |  | ----- | 
| | 1st     | $ .17 |  | $ .18 | 
| | 2nd     | .17   |  | .18   | 
| | 3rd     | .17   |  | .19   | 
| | 4th     | .17   |  | .20   | 
| | Total   | $ .68 |  | $ .75 | 

Holders of Valley Ridge Common Stock are entitled to receive dividends when, as and if declared by the Corporation's board of directors out of funds legally available for that purpose. The earnings of the Corporation, through dividends paid by the Bank, are the principal source of funds to pay cash dividends. Consequently, cash dividends are dependent upon the earnings, capital needs, regulatory constraints and other factors affecting the Corporation. Federal and state banking laws and regulations place certain restrictions on the amount of dividends and loans that a bank can pay or make to its parent company. These restrictions are not expected to prohibit the Corporation from continuing its normal dividend policy.

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Item 6.  Management's Discussion and Analysis or Plan of Operation.

The following discussion is provided by Valley Ridge Financial Corp. management as its analysis of the consolidated financial condition and results of operations of Valley Ridge Financial Corp. ("Corporation") and Valley Ridge Bank ("Bank"). This analysis should be read in conjunction with the consolidated financial statements and related notes.

Twelve Months Ended December 31, 2001 and 2000.

Results of Operations: The Corporation reported net income of $1,725,579 or $1.82 basic and diluted earnings per share for 2001. This was 5.3% lower than the $1,821,967, or $1.93 per share, earned in 2000. The primary reasons for the decrease in net income are as follows: a $490,000 increase in the provision for loan losses and a $810,000 increase in noninterest expenses, offset by a $861,000 increase in noninterest income.

The largest component of operating income is net interest income. Net interest income is the difference between interest and fees earned on earning assets and the interest paid on deposits and other borrowings. The level of net interest income is primarily a function of asset size, as the weighted average interest rate received on earning assets is greater than the weighted average interest cost of funding sources; however, factors such as types of assets and liabilities, interest rate risk, common stock sales, liquidity, and customer behavior also impact net interest income as well as the net interest margin.

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the related yields, as well as the interest expense on average interest-bearing liabilities.

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|                          |         | Years ended December 31, |  
|------------------------- | ------- | ------------------------ | -
|                          | 2 0 0 1 |                          |  
|                          |         | AverageBalance           |  
|                          |         |                          |  
|Taxable securities        | $       | 17,027,291               |  
|Tax-exempt securities (1) |         | 12,868,149               |  
|Total securities          |         | 29,895,440               |  
|Loans (1)(2)(3)           |         | 120,501,625              |  
|Federal funds sold        |         | 3,925,000                |  
|Total earning assets      |         | 154,322,065              |  
|                          |         |                          |  
|Nonaccrual loans          |         | 945,087                  |  
|                          |         |                          |  
|Less allowance for        |         |                          |  
|loan losses               |         | (1,567,302               | )
|Cash and due from banks   |         | 6,283,448                |  
|Other nonearning assets   |         | 9,919,452                |  
|                          |         |                          |  
|Total assets              | $       | 169,902,750              |  
|                          |         |                          |  
|Interest-bearing demand   |         |                          |  
|deposits                  | $       | 10,643,505               |  
|Savings deposits          |         | 32,392,749               |  
|Time deposits             |         | 60,963,788               |  
|Total interest-bearing    |         |                          |  
|deposits                  |         | 104,000,042              |  
|Other borrowings          |         | 25,892,958               |  
|Total interest-bearing    |         |                          |  
|liabilities               |         | 129,893,000              |  
|                          |         |                          |  
|Demand deposits           |         | 20,471,313               |  
|Other liabilities         |         | 2,224,351                |  
|Total liabilities         |         | 152,588,664              |  
|Average equity            |         | 17,314,086               |  
|                          |         |                          |  
|Total liabilities and     |         |                          |  
|equity                    | $       | 169,902,750              |  
|                          |         |                          |  
|Net interest income       |         |                          |  
|Rate spread               |         |                          |  
|Net interest margin       |         |                          |  

|(1) | Yields reflected have been computed on a tax equivalent basis using a marginal tax rate of 34%.
|--- | -----------------------------------------------------------------------------------------------
|(2) | Average outstanding balances exclude non-accruing loans.                                       
|(3) | Includes loans held for sale.                                                                  

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The following table presents the dollar amount of change in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and change due to rate.

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|                                        |   | Year ended December 31,
2001 over 2000 |  
|--------------------------------------- | - | -------------------------------------- | -
|                                        |   | Total                                  |  
|Increase (decrease) in interest income  |   |                                        |  
|Loans (including loans held for sale)   | $ | (125,839                               | )
|Taxable securities                      |   | 7,836                                  |  
|Nontaxable securities                   |   | (284,295                               | )
|Federal funds sold                      |   | 125,430                                |  
|Net change in tax-equivalent income     |   | (276,868                               | )
|                                        |   |                                        |  
|Increase (decrease) in interest expense |   |                                        |  
|Interest-bearing demand deposits        |   | (6,987                                 | )
|Savings deposits                        |   | (113,377                               | )
|Time deposits                           |   | 34,550                                 |  
|Other borrowings                        |   | (471,566                               | )
|Net change in interest expense          |   | (557,380                               | )
|                                        |   |                                        |  
|Net change in tax-equivalent            |   |                                        |  
|net interest income                     | $ | 280,512                                |  

Net interest margin remained strong at 5.05% for 2001, an increase of 3 basis points over 2000.

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

During 2001, commercial loans with balances totaling approximately $963,000 were charged-off to the allowance for loan losses. Management felt it was necessary to provide an additional $500,000 provision expense as a result of these charge-offs. The remaining charge-offs from 2001 and 2000 primarily consist of smaller balance consumer loans. Activity in the allowance for loan losses is as follows:

|                                                | As of and for the years
ended December 31, |           
|----------------------------------------------- | ------------------------------------------ | ----------
|                                                |                                            | 2001      
|                                                |                                            |           
|Balance at beginning of year                    | $                                          | 1,624,820 
|Provision for loan losses                       |                                            | 680,000   
|                                                |                                            |           
|Recoveries on loans charged-off                 |                                            | 59,515    
|Loans charged-off                               |                                            | (1,125,242
|Net charge-offs                                 |                                            | (1,065,727
|                                                |                                            |           
|Balance at end of year                          | $                                          | 1,239,093 
|                                                |                                            |           
|Allowance for loan losses as a percentage of    |                                            |           
|total loans as of year end                      |                                            | 1.01%     
|Ratio of net charge-offs to average total loans |                                            |           
|outstanding during the year                     |                                            | .009      

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The allowance for loan losses at December 31, 2001 was 1.11 times impaired loans outstanding at year end. Loan recoveries were 24.87% of the prior year's charge-offs. Net charge-offs increased from $184,868 in 2000 to $1,065,727 in 2001. Management continually evaluates the loan portfolio for probable losses and makes provisions necessary to maintain the allowance at a level appropriate to provide for those losses. The provision increased from $190,000 in 2000 to $680,000 in 2001 due to the additional provision expense incurred as a result of the previously mentioned commercial loan charge-offs. This factor caused the ratio of allowance to total loans to decrease to 1.01% at December 31, 2001 compared to 1.34% at December 31, 2000. Management believes that this level of allowance is adequate to cover inherent losses in the loan portfolio.

Note 4 of the consolidated financial statements provides information concerning impaired and nonaccrual loans. The balance of impaired loans at December 31, 2001 of $1,115,724 is $924,006 lower than the level of impaired loans at December 31, 2000. The decrease can be attributed to the charge-offs of commercial loans with remaining balances of approximately $963,000. Management does not anticipate significant loss exposure relating to the loans classified as impaired.

The allowance for loan losses was allocated in an amount deemed necessary to provide for probable losses within the following loan categories as of December 31:

|                                      |         | (Dollars in thousands) | 
|------------------------------------- | ------- | ---------------------- | 
|                                      | 2 0 0 1 |                        | 
|Balance at End ofPeriod Applicable to |         | PrincipalBalance       | 
|                                      |         |                        | 
|Commercial and agricultural           | $       | 63,443                 | 
|Real estate - mortgages               |         | 43,797                 | 
|Consumer                              |         | 15,341                 | 
|Unallocated                           |         |                        | 
|                                      |         |                        | 
|                                      | $       | 122,581                | 

Noninterest income was $2,397,348 and $1,684,619 for 2001 and 2000, respectively. This increase was attributable to an increase in service charge income and the net realized gain on securities sales. Noninterest expense increased to $6,809,906 compared to $6,265,339 in 2000. Noninterest expense was higher in 2001 largely because of salaries and benefits, which increased $251,331 or 8%. This increase was due to the hiring of additional employees and increase in salaries and insurance for 2001. Legal and professional fees for 2001 increased in comparison to 2000 due to the establishment of a mortgage company subsidiary.

Following are overall return percentages and the dividend pay-out ratio for the past two years:

| |                                        | 2001  |   |  | 2000  |  
| | -------------------------------------- | ----- | - |  | ----- | -
| |                                        |       |   |  |       |  
| | Return on average assets               | 1.02  | % |  | 1.11  | %
| | Return on average equity               | 9.97  |   |  | 11.88 |  
| | Dividend pay-out ratio                 | 41.21 |   |  | 35.05 |  
| | Average equity to average assets ratio | 10.19 |   |  | 9.38  |  

Management is not aware of any existing trends, events, uncertainties or current recommendations by regulatory authorities that are expected to have a material impact on Valley Ridge's future operating results or financial condition.

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Financial Condition, Liquidity, and Capital Resources.

Total assets increased by $224,000 to $169.8 million at December 31, 2001 compared to $169.6 million at December 31, 2000. This growth is attributable to growth in the loan portfolio, which was funded by deposit growth. Total liabilities decreased by $897,000 or .59% to $152.3 million at December 31, 2001 compared to $153.2 million at December 31, 2000. Shareholders' equity increased by $1.1 million in comparison to the prior year. The increase in shareholders' equity is due to the retention of earnings, along with an increase in the unrealized gain on securities available for sale.

Total loans increased by $1.4 million or 1.15% from the balance at December 31, 2000 to $122.6 million at December 31, 2001. Deposits increased by $701,202 or 5.7% to $123.6 million at December 31, 2001. The overall impact of these two changes was an increase in the net loan to deposit ratio to 98.2% at December 31, 2001 compared to 97.3% at December 31, 2000.

Valley Ridge Mortgage Company ("Mortgage Company"), a subsidiary of the Bank that was formed to increase profitability, initiated business during the first quarter of 2001 via the Bank's contribution of most of its residential mortgage loan portfolio. At the same time the Bank also transferred its residential mortgage origination function to the Mortgage Company. Mortgage loans originated and held by the Mortgage Company are serviced by the Bank pursuant to a servicing agreement.

The following table shows the maturity of commercial, consumer, real estate construction and agricultural loans outstanding at December 31, 2001. Also provided below is the amount due after one year classified according to the terms of the loans. Demand loans, loans with no stated maturity and overdrafts are reported as due in one year or less.

|                         |                        | Due in
One Yearor Less |  |   | Due after One
Year ThroughFive Years |  |   | Due
AfterFive Years
|------------------------ | ---------------------- | ---------------------- |  | - | ------------------------------------ |  | - | -------------------
|                         | (Dollars in thousands)
|                         |                        |                        |  |   |                                      |  |   |                    
|Commercial               | $                      | 18,394                 |  | $ | 36,062                               |  | $ | 1,603              
|Consumer                 |                        | 2,391                  |  |   | 12,482                               |  |   | 468                
|Residential real estate  |                        | 8,151                  |  |   | 30,826                               |  |   | 4,820              
|Agricultural             |                        | 3,071                  |  |   | 3,504                                |  |   | 809                
|                         |                        |                        |  |   |                                      |  |   |                    
|                         | $                      | 32,007                 |  | $ | 82,874                               |  | $ | 7,700              
|                         |                        |                        |  |   |                                      |  |   |                    
|Loans due after one year |                        |                        |  |   |                                      |  |   |                    
|With fixed rates         |                        |                        |  | $ | 80,663                               |  | $ | 7,628              
|With floating rates      |                        |                        |  |   | 2,211                                |  |   | 72                 
|                         |                        |                        |  |   |                                      |  |   |                    
|                         |                        |                        |  | $ | 82,874                               |  | $ | 7,700              

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The times remaining until maturity of time certificates of deposit of $100,000 or more at December 31, 2001 were as follows:

| | Three months or less                  | $ | 2,900,000 | 
| | ------------------------------------- | - | --------- | 
| | Over three months through six months  |   | 1,865,000 | 
| | Over six months through twelve months |   | 3,100,000 | 
| | Over twelve months                    |   | 1,141,000 | 
| |                                       |   |           | 
| |                                       | $ | 9,006,000 | 

Total cash, cash equivalents and investment securities totaled $37.1 million at December 31, 2001 or 21.8% of total assets. The principal source of funding for the Corporation continues to come from its deposit customers, which have historically been a stable source of funds. Other sources of funding include normal loan repayments, sales and maturities of securities, federal funds available from correspondent banks, and additional advances available from the Federal Home Loan Bank. Management believes that the current level of liquidity is sufficient to meet the normal operating needs of the Bank.

The following table shows by class of maturities at December 31, 2001, the amounts and weighted average yields of investment securities (1):

|                                                 |   | CarryingValue          |  | AverageYield (2) |  
|------------------------------------------------ | - | ---------------------- |  | ---------------- | -
|                                                 |   | (Dollars in thousands) | 
|U.S. Treasury securities and obligations of U.S. |   |                        |  |                  |  
|Government corporations and agencies             |   |                        |  |                  |  
|One year or less                                 | $ | 1,451                  |  | 4.85             | %
|Over five through ten years                      |   | 1,005                  |  | 5.75             |  
|                                                 |   | 2,456                  |  | 5.22             |  
|Obligations of states and political subdivisions |   |                        |  |                  |  
|One year or less                                 |   | 2,151                  |  | 8.46             |  
|Over one through five years                      |   | 1,784                  |  | 7.09             |  
|Over five through ten years                      |   | 3,774                  |  | 7.92             |  
|Over ten years                                   |   | 4,246                  |  | 8.28             |  
|                                                 |   | 11,955                 |  | 8.02             |  
|                                                 |   |                        |  |                  |  
|Mortgage-backed securities                       |   | 13,033                 |  | 5.57             |  
|                                                 |   |                        |  |                  |  
|                                                 | $ | 27,444                 |  | 6.61             | %

Because of their variable payments, mortgage-backed securities are not reported by a specific maturity grouping.

|(1) | Calculated on the basis of the cost and effective yields weighted for the scheduled maturity of each security.                                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Weighted average yield has been computed on a fully taxable equivalent basis. The rates shown on state and municipal securities have been adjusted to a fully taxable equivalent using a federal income tax rate of 34%.

---

As of December 31, 2001, the securities of no issuer except the U.S. Government had an aggregate carrying value that exceeded 10% of shareholders' equity.

Securities sold under agreements to repurchase generally mature within one to three days from the transaction date. The Bank has pledged certain investment securities, which are held in safekeeping, as collateral against these borrowings. Valley Ridge Bank had $3,352,630 and $2,965,626 in repurchase agreements at year end 2001 and 2000, respectively.

The Corporation had $22,000,000 and $23,750,000 in advances from the Federal Home Loan Bank at year-end 2001 and 2000, respectively. Each advance requires monthly interest payments at either fixed or adjustable rates. These borrowings are collateralized by nonspecific loans within the mortgage portfolio up to the principal outstanding and specific qualifying securities within the securities portfolio.

The following table shows the interest sensitivity gaps for four different time intervals as of December 31, 2001 (dollars in thousands). The Bank remains liability rate sensitive within a one year time horizon.

|                                 |   | Maturity or Repricing Frequency |  
|-------------------------------- | - | ------------------------------- | -
|                                 |   | 0-3 months                      |  
|Interest-earning assets          |   |                                 |  
|Loans                            | $ | 29,889                          |  
|Securities                       |   | 2,966                           |  
|Allowance for loan losses        |   |                                 |  
|Other assets                     |   | 795                             |  
|                                 |   |                                 |  
|Total                            | $ | 33,650                          |  
|                                 |   |                                 |  
|Interest-bearing liabilities     |   |                                 |  
|Certificates of deposit          | $ | 11,418                          |  
|Savings accounts                 |   | 19,813                          |  
|Money market accounts            |   | 13,436                          |  
|NOW and Super NOW accounts       |   | 10,807                          |  
|Federal funds purchased          |   | 1,000                           |  
|Securities sold under agreements |   |                                 |  
|to repurchase                    |   | 3,353                           |  
|FHLB advances                    |   |                                 |  
|Noninterest-bearing deposits     |   |                                 |  
|Other liabilities                |   |                                 |  
|                                 |   | 59,827                          |  
|                                 |   |                                 |  
|Shareholders' Equity             |   |                                 |  
|                                 |   |                                 |  
|Total                            | $ | 59,827                          |  
|                                 |   |                                 |  
|Interest sensitivity gap         | $ | (26,177                         | )
|                                 |   |                                 |  
|Cumulative gap                   | $ | (26,177                         | )

---

The above table is based on contractual terms. Mortgage-backed securities were categorized by expected maturities based on prepayment trends as of December 31, 2001. Savings accounts, money market accounts, and NOW accounts are subject to immediate withdrawal and are presented as repricing in the earliest period presented. Although demand and savings accounts, for which rates paid are not readjusted on a pre-established contract cycle and are subject to immediate withdrawal, are presented as repricing in the 0-3 months period, management believes that these types of accounts are not as sensitive to changes in interest rates in the short-term as this presentation would indicate. The practice of underwriting loans with maturity dates of five years or less and with variable rates allows for a repricing of those assets over a relatively short period. Additionally, management does not aggressively price deposits, preferring to maintain a level of lending supported primarily by its base of core deposits. The Corporation's asset/liability management committee meets semi-annually, or more often as needed, to review gap positions and determine management strategies for loan and deposit pricing, purchase and sale of securities, and other borrowing decisions.

Shareholders' equity is a noninterest-bearing source of funds that provides support for asset growth. Shareholders' equity was $17.5 and $16.4 million at December 31, 2001 and 2000, respectively. The increase during 2001 is attributable to net income from operations and a mark-to-market adjustment for available for sale securities as defined by Statement of Financial Accounting Standard No. 115. The Corporation paid dividends totaling $711,028 in 2001, compared to $638,515 paid during 2000. The board of directors approved a three-for-two stock split which was paid on April 26, 2000. The Corporation's capital ratios exceeded the minimum levels prescribed by the Federal Reserve Board at year-end 2001 and 2000, as shown in Note 17 of the consolidated financial statements.

Impact of Inflation and Changing Prices.

Most assets and liabilities of a financial institution are monetary in nature. This differs from most commercial and industrial companies that have significant investments in fixed assets or inventories. The effect of inflation on financial institutions is to a large extent indirect and the measure of such impact is largely subjective.

Noninterest expenses tend to rise during periods of general inflation. Inflation levels are to some degree reflected in interest rates. Changes in interest rates, which are to some extent attributable to changes in inflation rates or uncertainty concerning changes in inflation rates, do affect the earnings of the Corporation. The Corporation seeks to protect net interest income from the adverse effects of interest rate fluctuations through its asset/liability management program.

The Corporation's management believes that increases in financial institution assets and deposits result in part from monetary inflation. As assets increase, the financial institution must increase equity capital proportionately to maintain appropriate relationships between assets and equity.

Gramm-Leach-Bliley Act of 1999

The Gramm-Leach-Bliley Act of 1999 (the "Act") eliminated many Federal and state law barriers to affiliations among banks, securities firms, insurance companies, and other financial service providers. The overall thrust of the Act is to remove the historic laws that separated commercial banking from other financial service organizations. Companies that are presently engaged primarily in insurance activities or securities activities will be permitted to acquire banks and bank holding companies and vice versa.

The Act does not introduce new products or services to the financial services industry overall. The Act, however, does provide for a more efficient means for financial institutions to offer those products and services by creating a "financial holding company," or "FHC." Banks, securities firms, and insurance

---

An FHC may go beyond traditional bank holding company powers and engage in activities that the Federal Reserve deems to be "financial in nature." Prior to the passage of the Act, banks and their subsidiaries could pursue many activities, such as selling insurance, dealing in certain securities, and offering investment advisory services. However, prior regulatory rules generally placed limits on the extent of a bank's and bank holding company's involvement in those activities, or created barriers to entry. The Act allows for a more efficient means for bank holding companies to offer all financial services within the new structure - the FHC.

The new legislation is expected, in time, to alter the competitive landscape of the product market served by the Corporation and may, in the future, also increase the Corporation's competition to include large, more diversified financial companies.

The Act also requires financial institutions to disclose their privacy policy to customers and provides protections to customers against the transfer and use of nonpublic personal information by financial institutions.

---

Item 7.  Financial Statements.

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Valley Ridge Financial Corp.
Kent City, Michigan

We have audited the accompanying consolidated balance sheets of Valley Ridge Financial Corp. as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Valley Ridge Financial Corp. at December 31, 2001 and 2000, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

| | Crowe, Chizek and Company LLP
| | -----------------------------

Grand Rapids, Michigan
February 15, 2002

---

VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000

---

|                                                |   | 2001        |   |   | 2000        |  
|----------------------------------------------- | - | ----------- | - | - | ----------- | -
|ASSETS                                          |   |             |   |   |             |  
|Cash and due from banks                         | $ | 8,130,078   |   | $ | 7,265,136   |  
|Securities available for sale                   |   | 27,444,295  |   |   | 31,523,131  |  
|Other securities                                |   | 1,502,368   |   |   | 1,502,368   |  
|Loans held for sale                             |   | 933,150     |   |   | 164,200     |  
|                                                |   |             |   |   |             |  
|Loans                                           |   | 122,581,155 |   |   | 121,181,709 |  
|Allowance for loan losses                       |   | (1,239,093  | ) |   | (1,624,820  | )
|                                                |   | 121,342,062 |   |   | 119,556,889 |  
|                                                |   |             |   |   |             |  
|Accrued interest receivable                     |   | 972,535     |   |   | 1,241,241   |  
|Premises and equipment, net                     |   | 5,423,504   |   |   | 4,931,871   |  
|Cash surrender value of life insurance policies |   | 2,725,529   |   |   | 2,431,397   |  
|Other assets                                    |   | 1,337,063   |   |   | 970,187     |  
|                                                |   |             |   |   |             |  
|Total assets                                    | $ | 169,810,584 |   | $ | 169,586,420 |  
|                                                |   |             |   |   |             |  
|LIABILITIES AND SHAREHOLDERS' EQUITY            |   |             |   |   |             |  
|Deposits                                        |   |             |   |   |             |  
|Noninterest-bearing                             | $ | 22,990,091  |   | $ | 19,671,065  |  
|Interest-bearing                                |   | 100,595,152 |   |   | 103,212,976 |  
|Total                                           |   | 123,585,243 |   |   | 122,884,041 |  
|Federal funds purchased                         |   | 1,000,000   |   |   | 1,600,000   |  
|Securities sold under agreement to repurchase   |   | 3,352,630   |   |   | 2,965,626   |  
|Federal Home Loan Bank advances                 |   | 22,000,000  |   |   | 23,750,000  |  
|Accrued expenses and other liabilities          |   | 2,329,881   |   |   | 1,964,791   |  
|Total liabilities                               |   | 152,267,754 |   |   | 153,164,458 |  
|                                                |   |             |   |   |             |  
|Shareholders' equity                            |   |             |   |   |             |  
|Common stock, no par value: 2,000,000 shares    |   |             |   |   |             |  
|authorized and 947,676 and 944,912 shares       |   |             |   |   |             |  
|outstanding in 2001 and 2000                    |   | 8,034,990   |   |   | 7,917,009   |  
|Retained earnings                               |   | 9,293,474   |   |   | 8,278,923   |  
|Unearned restricted stock                       |   | (145,062    | ) |   | (116,760    | )
|Accumulated other comprehensive income          |   | 359,428     |   |   | 342,790     |  
|Total shareholders' equity                      |   | 17,542,830  |   |   | 16,421,962  |  
|                                                |   |             |   |   |             |  
|Total liabilities and shareholders' equity      | $ | 169,810,584 |   | $ | 169,586,420 |  

See accompanying notes to consolidated financial statements.

---

VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2001 and 2000

---

|                                                    |   | 2001       |  |   | 2000       | 
|--------------------------------------------------- | - | ---------- |  | - | ---------- | 
|Interest income                                     |   |            |  |   |            | 
|Loans, including fees                               | $ | 10,699,713 |  | $ | 10,863,091 | 
|Federal funds sold                                  |   | 163,653    |  |   | 38,223     | 
|Securities                                          |   |            |  |   |            | 
|Taxable                                             |   | 980,485    |  |   | 972,649    | 
|Nontaxable                                          |   | 774,312    |  |   | 961,947    | 
|Total interest income                               |   | 12,618,163 |  |   | 12,835,910 | 
|                                                    |   |            |  |   |            | 
|Interest expense                                    |   |            |  |   |            | 
|Deposits                                            |   | 3,963,867  |  |   | 4,049,681  | 
|Federal Home Loan Bank advances                     |   | 1,126,587  |  |   | 1,540,356  | 
|Securities sold under agreement to repurchase       |   | 91,014     |  |   | 92,978     | 
|Federal funds purchased and other                   |   | 86,478     |  |   | 144,326    | 
|Total interest expense                              |   | 5,267,946  |  |   | 5,827,341  | 
|                                                    |   |            |  |   |            | 
|Net interest income                                 |   | 7,350,217  |  |   | 7,008,569  | 
|                                                    |   |            |  |   |            | 
|Provision for loan losses                           |   | 680,000    |  |   | 190,000    | 
|                                                    |   |            |  |   |            | 
|Net interest income after provision for loan losses |   | 6,670,217  |  |   | 6,818,569  | 
|                                                    |   |            |  |   |            | 
|Noninterest income                                  |   |            |  |   |            | 
|Service charges                                     |   | 1,413,373  |  |   | 999,625    | 
|Net gains on sales of securities                    |   | 396,082    |  |   | 5,050      | 
|Net gains on sales of loans                         |   | 48,660     |  |   | 9,084      | 
|Net gains on sales of premises and equipment        |   | 0          |  |   | 11,659     | 
|Income earned on life insurance policies            |   | 159,600    |  |   | 160,451    | 
|Other income                                        |   | 379,633    |  |   | 498,750    | 
|Total noninterest income                            |   | 2,397,348  |  |   | 1,684,619  | 
|                                                    |   |            |  |   |            | 
|Noninterest expense                                 |   |            |  |   |            | 
|Salaries and benefits                               |   | 3,399,187  |  |   | 3,147,856  | 
|Occupancy                                           |   | 504,423    |  |   | 462,655    | 
|Furniture and fixtures                              |   | 582,506    |  |   | 551,597    | 
|Legal and professional fees                         |   | 312,654    |  |   | 163,971    | 
|Directors' fees                                     |   | 135,679    |  |   | 138,675    | 
|Data processing                                     |   | 308,562    |  |   | 305,184    | 
|Advertising                                         |   | 137,604    |  |   | 140,935    | 
|Supplies and postage                                |   | 166,426    |  |   | 156,317    | 
|Other                                               |   | 1,262,865  |  |   | 1,198,149  | 
|Total noninterest expense                           |   | 6,809,906  |  |   | 6,265,339  | 
|                                                    |   |            |  |   |            | 
|Income before federal income tax                    |   | 2,257,659  |  |   | 2,237,849  | 
|                                                    |   |            |  |   |            | 
|Federal income tax expense                          |   | 532,080    |  |   | 415,882    | 
|                                                    |   |            |  |   |            | 
|Net income                                          | $ | 1,725,579  |  | $ | 1,821,967  | 
|Basic and diluted earnings per share                | $ | 1.82       |  | $ | 1.93       | 

See accompanying notes to consolidated financial statements.

---

VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended December 31, 2001 and 2000

---

|                                                                           |   | CommonStock |   |   | RetainedEarnings |   |   | Unearned
RestrictedStock |   |   | Accumulated
Other
ComprehensiveIncome (Loss) |   |   | Total
Shareholders'Equity |  
|-------------------------------------------------------------------------- | - | ----------- | - | - | ---------------- | - | - | ------------------------ | - | - | -------------------------------------------- | - | - | ------------------------- | -
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Balance, January 1, 2000                                                   | $ | 7,866,728   |   | $ | 7,098,379        |   | $ | (78,487                  | ) | $ | (323,609                                     | ) | $ | 14,563,011                |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Comprehensive income:                                                      |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Net income                                                                 |   |             |   |   | 1,821,967        |   |   |                          |   |   |                                              |   |   | 1,821,967                 |  
|Change in unrealized gain (loss) on                                        |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|securities available for sale, net of
    reclassification and tax effects |   |             |   |   |                  |   |   |                          |   |   | 666,399                                      |   |   | 666,399                   |  
|Total comprehensive income                                                 |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   | 2,488,366                 |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Cash dividend ($0.68 per share)                                            |   |             |   |   | (638,515         | ) |   |                          |   |   |                                              |   |   | (638,515                  | )
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Fractional shares paid on 3-for-2 stock split                              |   |             |   |   | (2,908           | ) |   |                          |   |   |                                              |   |   | (2,908                    | )
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Issuance of restricted stock awards (unearned)                             |   | 53,475      |   |   |                  |   |   | (53,475                  | ) |   |                                              |   |   |                           |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Restricted stock awards earned                                             |   |             |   |   |                  |   |   | 15,202                   |   |   |                                              |   |   | 15,202                    |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Stock options exercised                                                    |   | 25,766      |   |   |                  |   |   |                          |   |   |                                              |   |   | 25,766                    |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Stock repurchased                                                          |   | (28,960     | ) |   |                  |   |   |                          |   |   |                                              |   |   | (28,960                   | )
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Balance, December 31, 2000                                                 |   | 7,917,009   |   |   | 8,278,923        |   |   | (116,760                 | ) |   | 342,790                                      |   |   | 16,421,962                |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Comprehensive income:                                                      |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Net income                                                                 |   |             |   |   | 1,725,579        |   |   |                          |   |   |                                              |   |   | 1,725,579                 |  
|Change in unrealized gain (loss) on                                        |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|securities available for sale, net of
    reclassification and tax effects |   |             |   |   |                  |   |   |                          |   |   | 16,638                                       |   |   | 16,638                    |  
|Total comprehensive income                                                 |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   | 1,742,217                 |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Cash dividend ($0.75 per share)                                            |   |             |   |   | (711,028         | ) |   |                          |   |   |                                              |   |   | (711,028                  | )
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Issuance of restricted stock awards (unearned)                             |   | 56,729      |   |   |                  |   |   | (56,729                  | ) |   |                                              |   |   |                           |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Restricted stock awards earned                                             |   |             |   |   |                  |   |   | 27,999                   |   |   |                                              |   |   | 27,999                    |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Forfeited restricted stock awards                                          |   | (428        | ) |   |                  |   |   | 428                      |   |   |                                              |   |   |                           |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Stock options exercised                                                    |   | 61,680      |   |   |                  |   |   |                          |   |   |                                              |   |   | 61,680                    |  
|                                                                           |   |             |   |   |                  |   |   |                          |   |   |                                              |   |   |                           |  
|Balance, December 31, 2001                                                 | $ | 8,034,990   |   | $ | 9,293,474        |   | $ | (145,062                 | ) | $ | 359,428                                      |   | $ | 17,542,830                |  

See accompanying notes to consolidated financial statements.

---

VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2001 and 2000

---

|                                                            |   | 2001        |   |   | 2000        |  
|----------------------------------------------------------- | - | ----------- | - | - | ----------- | -
|Cash flows from operating activities                        |   |             |   |   |             |  
|Net income                                                  | $ | 1,725,579   |   | $ | 1,821,967   |  
|Adjustments to reconcile net income                         |   |             |   |   |             |  
|to net cash from operating activities                       |   |             |   |   |             |  
|Depreciation and amortization                               |   | 543,989     |   |   | 500,916     |  
|Amortization of the premiums and                            |   |             |   |   |             |  
|discounts on securities, net                                |   | 102,261     |   |   | 19,960      |  
|Provision for loan losses                                   |   | 680,000     |   |   | 190,000     |  
|Net gains on sales of securities                            |   | (396,082    | ) |   | (5,050      | )
|Net gains on sales of loans                                 |   | (48,660     | ) |   | (9,084      | )
|Loans originated for sale                                   |   | (18,493,847 | ) |   | (1,802,400  | )
|Proceeds from loans sold                                    |   | 17,773,557  |   |   | 1,716,730   |  
|Net gains on sales of premises and equipment                |   |             |   |   | (11,659     | )
|Net change in                                               |   |             |   |   |             |  
|Accrued interest receivable and other assets                |   | (305,356    | ) |   | (240,815    | )
|Accrued expenses and other liabilities                      |   | 384,518     |   |   | 404,949     |  
|Net cash from operating activities                          |   | 1,965,959   |   |   | 2,585,514   |  
|                                                            |   |             |   |   |             |  
|Cash flows from investing activities                        |   |             |   |   |             |  
|Loan originations and payments, net                         |   | (2,556,893  | ) |   | (4,662,130  | )
|Proceeds from                                               |   |             |   |   |             |  
|Sales of securities available for sale                      |   | 20,505,876  |   |   | 2,659,873   |  
|Repayments and maturities of securities available for sale  |   | 10,666,720  |   |   | 2,115,797   |  
|Sales of premises and equipment                             |   |             |   |   | 29,589      |  
|Purchases of                                                |   |             |   |   |             |  
|Securities available for sale                               |   | (26,774,730 | ) |   | (5,150,211  | )
|Federal Reserve Bank stock                                  |   |             |   |   | (61,140     | )
|Premises and equipment                                      |   | (1,030,848  | ) |   | (378,117    | )
|Net cash from investing activities                          |   | 810,125     |   |   | (5,446,339  | )
|                                                            |   |             |   |   |             |  
|Cash flows from financing activities                        |   |             |   |   |             |  
|Net increase in deposits                                    |   | 701,202     |   |   | 3,572,345   |  
|Net change in federal funds purchased                       |   | (600,000    | ) |   | (200,000    | )
|Net increase (decrease) in securities sold under agreements |   |             |   |   |             |  
|to repurchase                                               |   | 387,004     |   |   | (2,009,459  | )
|Advances from Federal Home Loan Bank                        |   | 7,500,000   |   |   | 15,750,000  |  
|Repayments of Federal Home Loan Bank advances               |   | (9,250,000  | ) |   | (17,000,000 | )
|Shares repurchased                                          |   |             |   |   | (28,960     | )
|Stock options exercised                                     |   | 61,680      |   |   | 25,766      |  
|Fractional shares paid                                      |   |             |   |   | (2,908      | )
|Dividends paid                                              |   | (711,028    | ) |   | (638,515    | )
|Net cash from financing activities                          |   | (1,911,142  | ) |   | (531,731    | )
|                                                            |   |             |   |   |             |  
|Net change in cash and cash equivalents                     |   | 864,942     |   |   | (3,392,556  | )
|                                                            |   |             |   |   |             |  
|Cash and cash equivalents at beginning of year              |   | 7,265,136   |   |   | 10,657,692  |  
|                                                            |   |             |   |   |             |  
|Cash and cash equivalents at end of year                    | $ | 8,130,078   |   | $ | 7,265,136   |  
|                                                            |   |             |   |   |             |  
|Supplemental disclosures of cash flow information           |   |             |   |   |             |  
|Cash paid during the year for                               |   |             |   |   |             |  
|Interest                                                    | $ | 4,674,273   |   | $ | 5,693,227   |  
|Income taxes                                                |   | 659,500     |   |   | 421,000     |  

See accompanying notes to consolidated financial statements.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include Valley Ridge Financial Corp., its wholly owned subsidiary, Valley Ridge Bank, and its wholly owned subsidiaries, Valley Ridge Realty, Inc., Valley Ridge Mortgage Company, Inc., and Valley Ridge Financial Services, Inc. after elimination of significant intercompany transactions and accounts.

Nature of Operations: Valley Ridge Financial Corp. ("Corporation") is a regional, community-based financial institution, that owns all of the outstanding stock of Valley Ridge Bank ("Bank"). The Bank's loan and deposit accounts are primarily with customers located in Western Michigan, within the counties of Kent, Ottawa, Muskegon and Newaygo. The Bank also owns all of the outstanding stock of three subsidiaries, Valley Ridge Realty, Inc., Valley Ridge Mortgage Company, Inc., and Valley Ridge Financial Services, Inc. The primary business of these subsidiaries are real estate sales, mortgage banking and insurance, respectively. Substantially all revenues are derived from banking products and services.

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

Cash Flows: Cash and cash equivalents include cash on hand, demand deposits with other financial institutions and federal funds sold. Cash flows are reported net for customer loan and deposit transactions, interest-bearing time deposits with other financial institutions and short-term borrowings with maturities of 90 days or less.

Securities: Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income. Other securities such as Federal Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains and losses on sales are based on the amortized cost of the security sold. Securities are written down to fair value when a decline in fair value is not temporary.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Loans held for sale are reported at the lower of cost or market, on an aggregate basis.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income is not reported when full loan repayment is in doubt, typically when the loan is impaired or payments are past due over 90 days. Payments received on such loans are reported as principal reductions.

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

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

Premises and Equipment: Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using both straight-line and accelerated methods over the estimated useful lives of the respective assets.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at the lower of cost or market when acquired, establishing a new cost basis. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

Servicing Rights: Servicing rights represent the allocated cost of servicing rights retained on loans sold. Servicing rights are expensed in proportion to, and over the period of, estimated net servicing revenues. Impairment is evaluated based on the fair value of the rights, using groupings of the underlying loans as to interest rates and then, secondarily, as to geographic and prepayment characteristics. Any impairment of a grouping is reported as a valuation allowance.

Intangibles: Purchased intangibles, primarily goodwill and core deposit value, are recorded at cost and amortized over the estimated lives. Goodwill amortization is straight-line over 25 years, and core deposit amortization is accelerated over 12 years.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-Term Assets: These assets are reviewed for impairment when events indicate the carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at discounted amounts.

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

Employee Benefits: The Corporation maintains a profit sharing 401(k) plan for substantially all employees. Contributions to the profit sharing plan are made at the discretion of the board of directors. The plan allows employee contributions up to 15% of employee compensation. Up to 6% of the contributions are matched at 50% by the Bank.

Restricted Stock Awards: The measurement of total compensation cost for restricted stock awards is based upon the fair value of the shares at the grant date. Compensation expense is recognized on a prorata basis over the vesting period of the award. The unearned compensation value of the restricted stock awards is shown as a reduction of shareholders' equity.

Stock Compensation: Employee compensation expense under stock option plans is reported if options are granted below market price at grant date. Proforma disclosures of net income and earnings per share are shown using the fair value method to measure expense for options granted, using an option pricing model to estimate fair value.

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

Fair Values of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed separately. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and standby letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Dividend Restrictions: Banking regulations require the maintenance of certain capital levels and may limit the amount of dividends which may be paid by the Bank to the Corporation or by the Corporation to shareholders.

Earnings Per Share: Basic earnings per share is based on weighted-average common shares outstanding. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and dividends through the date of issue of the financial statements.

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Operating Segments: While the Corporation's chief decision-makers monitor the revenue streams of the various Bank products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a company-wide basis. Accordingly, all of the Corporation's financial service operations are considered by management to be aggregated in one reportable operating segment.

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

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New Accounting Pronouncements: A new accounting standard requires all business combinations to be recorded using the purchase method of accounting for any transaction initiated after June 30, 2001. Under the purchase method, all identifiable tangible and intangible assets and liabilities of the acquired company must be recorded at fair value at date of acquisition, and the excess of cost over fair value of net assets acquired is recorded as goodwill. Identifiable intangible assets must be separated from goodwill. Identifiable intangible assets with finite useful lives will be amortized under the new standard, whereas goodwill, both amounts previously recorded and future amounts purchased, will cease being amortized starting in 2002. Annual impairment testing will be required for goodwill with impairment being recorded if the carrying amount of goodwill exceeds its implied fair value. Adoption of this standard on January 1, 2002 did not have a material effect on the Corporation's financial statements.

NOTE 2 - CASH AND DUE FROM BANKS

Minimum cash balances, which are based on the deposit levels of the Bank, are required to be maintained by the Federal Reserve as legal reserve requirements. Cash balances restricted from usage due to these requirements were approximately $775,000 and $751,000 at year-end  2001 and 2000, respectively.

NOTE 3 - SECURITIES

The amortized cost and fair values of securities available for sale at year-end were as follows:

Securities Available for Sale

|                               |   | AmortizedCost |  |   | Gross
UnrealizedGains |  |   | Gross
UnrealizedLosses |   |   | FairValues
|------------------------------ | - | ------------- |  | - | --------------------- |  | - | ---------------------- | - | - | ----------
|2001                           |   |               |  |   |                       |  |   |                        |   |   |           
|U.S. Treasury securities and   |   |               |  |   |                       |  |   |                        |   |   |           
|obligations of U.S. Government |   |               |  |   |                       |  |   |                        |   |   |           
|corporations and agencies      | $ | 2,480,837     |  | $ | 5,098                 |  | $ | (28,755                | ) | $ | 2,457,180 
|Obligations of states and      |   |               |  |   |                       |  |   |                        |   |   |           
|political subdivisions         |   | 11,572,911    |  |   | 399,877               |  |   | (18,183                | ) |   | 11,954,605
|                               |   | 14,053,748    |  |   | 404,975               |  |   | (46,938                | ) |   | 14,411,785
|Mortgage-backed securities     |   | 12,845,958    |  |   | 190,441               |  |   | (3,889                 | ) |   | 13,032,510
|                               |   |               |  |   |                       |  |   |                        |   |   |           
|                               | $ | 26,899,706    |  | $ | 595,416               |  | $ | (50,827                | ) | $ | 27,444,295

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 3 - SECURITIES(Continued)

|                               |   | AmortizedCost |  |   | Gross
UnrealizedGains |  |   | Gross
UnrealizedLosses |   |   | FairValues
|------------------------------ | - | ------------- |  | - | --------------------- |  | - | ---------------------- | - | - | ----------
|2000                           |   |               |  |   |                       |  |   |                        |   |   |           
|U.S. Treasury securities and   |   |               |  |   |                       |  |   |                        |   |   |           
|obligations of U.S. Government |   |               |  |   |                       |  |   |                        |   |   |           
|corporations and agencies      | $ | 9,912,844     |  | $ | 25,095                |  | $ | (102,676               | ) | $ | 9,835,263 
|Obligations of states and      |   |               |  |   |                       |  |   |                        |   |   |           
|political subdivisions         |   | 18,472,618    |  |   | 679,702               |  |   | (92,055                | ) |   | 19,060,265
|                               |   | 28,385,462    |  |   | 704,797               |  |   | (194,731               | ) |   | 28,895,528
|Mortgage-backed securities     |   | 2,618,291     |  |   | 15,345                |  |   | (6,033                 | ) |   | 2,627,603 
|                               |   |               |  |   |                       |  |   |                        |   |   |           
|                               | $ | 31,003,753    |  | $ | 720,142               |  | $ | (200,764               | ) | $ | 31,523,131

Other Securities

|                                                |   | 2001      |  |   | 2000     
|----------------------------------------------- | - | --------- |  | - | ---------
|                                                |   |           |  |   |          
|Federal Reserve Bank stock                      | $ | 241,140   |  | $ | 241,140  
|Federal Home Loan Bank stock                    |   | 1,250,000 |  |   | 1,250,000
|Federal Agricultural Mortgage Corporation stock |   | 11,228    |  |   | 11,228   
|                                                |   |           |  |   |          
|                                                | $ | 1,502,368 |  | $ | 1,502,368

The amortized cost and fair values of debt securities at year-end 2001, by contractual maturity, are shown below. 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. Securities not due at a single maturity date, mortgage-backed securities, are shown separately.

|                                       |   | AmortizedCost |  |   | FairValues
|-------------------------------------- | - | ------------- |  | - | ----------
|                                       |   |               |  |   |           
|Due in one year or less                | $ | 3,605,797     |  | $ | 3,602,338 
|Due after one year through five years  |   | 1,738,347     |  |   | 1,783,624 
|Due after five years through ten years |   | 4,683,113     |  |   | 4,779,696 
|Due after ten years                    |   | 4,026,491     |  |   | 4,246,127 
|                                       |   | 14,053,748    |  |   | 14,411,785
|Mortgage-backed securities             |   | 12,845,958    |  |   | 13,032,510
|                                       |   |               |  |   |           
|                                       | $ | 26,899,706    |  | $ | 27,444,295

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 3 - SECURITIES (Continued)

Gross gains from sales of securities available for sale were $433,988 and $52,609 for 2001 and 2000, respectively. Gross losses on those sales were $37,906 and $47,559 for 2001 and 2000, respectively.

Securities with a par value of approximately $400,000 were pledged to secure public deposits and for various other purposes as required or permitted by law at December 31, 2001 and 2000. Securities with a par value of approximately $4,896,000 and $3,000,000 were pledged to secure short-term borrowings at year-end 2001 and 2000. Nonspecific securities were pledged to secure Federal Home Loan Bank advances at year-end 2001 and 2000.

NOTE 4 - LOANS

Year-end loans are as follows:

|                               |   | 2001        |   |   | 2000        |  
|------------------------------ | - | ----------- | - | - | ----------- | -
|                               |   |             |   |   |             |  
|Commercial                     | $ | 56,058,403  |   | $ | 51,225,173  |  
|Residential real estate        |   | 43,797,146  |   |   | 46,979,856  |  
|Consumer                       |   | 15,341,485  |   |   | 17,138,037  |  
|Agricultural                   |   | 7,384,121   |   |   | 5,838,643   |  
|                               |   | 122,581,155 |   |   | 121,181,709 |  
|Less allowance for loan losses |   | (1,239,093  | ) |   | (1,624,820  | )
|                               | $ | 121,342,062 |   | $ | 119,556,889 |  

Loans serviced for others were $29,128,566 and $18,231,571 at year-end 2001 and 2000, respectively.

Activity in the allowance for loan losses was as follows:

|                          |   | 2001       |   |   | 2000      |  
|------------------------- | - | ---------- | - | - | --------- | -
|                          |   |            |   |   |           |  
|Beginning balance         | $ | 1,624,820  |   | $ | 1,619,688 |  
|Provision for loan losses |   | 680,000    |   |   | 190,000   |  
|Loans charged-off         |   | (1,125,242 | ) |   | (239,332  | )
|Recoveries                |   | 59,515     |   |   | 54,464    |  
|                          |   |            |   |   |           |  
|Ending balance            | $ | 1,239,093  |   | $ | 1,624,820 |  

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 4 - LOANS (Continued)

Impaired loans are as follows:

|                                                           |   | 2001      |  |   | 2000     
|---------------------------------------------------------- | - | --------- |  | - | ---------
|                                                           |   |           |  |   |          
|Year-end loans with no allowance for loan losses allocated | $ | 1,115,724 |  | $ | 2,039,730
|Year-end loans with allowance for loan losses allocated    |   | 0         |  |   | 0        
|                                                           |   |           |  |   |          
|Total                                                      | $ | 1,115,724 |  | $ | 2,039,730
|                                                           |   |           |  |   |          
|Amount of the allowance allocated                          | $ | 0         |  | $ | 0        
|                                                           |   |           |  |   |          
|Average of impaired loans during the year                  | $ | 1,994,516 |  | $ | 1,241,334
|Interest income recognized during impairment               |   | 95,694    |  |   | 122,873  
|Cash basis interest income recognized                      |   | 114,619   |  |   | 86,665   

Nonperforming loans, included in impaired loans, are as follows:

|                                             |   | 2001    |  |   | 2000     
|-------------------------------------------- | - | ------- |  | - | ---------
|                                             |   |         |  |   |          
|Loans past due over 90 days still on accrual | $ | 0       |  | $ | 0        
|Nonaccrual loans                             |   | 102,895 |  |   | 1,005,274

NOTE 5 - PREMISES AND EQUIPMENT, NET

Year-end premises and equipment are as follows:

|                              |   | 2001       |   |   | 2000       |  
|----------------------------- | - | ---------- | - | - | ---------- | -
|                              |   |            |   |   |            |  
|Land                          | $ | 521,730    |   | $ | 305,422    |  
|Building and improvements     |   | 4,501,807  |   |   | 3,988,595  |  
|Furniture and equipment       |   | 4,752,084  |   |   | 4,450,567  |  
|                              |   | 9,775,621  |   |   | 8,744,584  |  
|Less accumulated depreciation |   | (4,352,117 | ) |   | (3,812,713 | )
|                              |   |            |   |   |            |  
|                              | $ | 5,423,504  |   | $ | 4,931,871  |  

Depreciation expense was approximately $539,000 and $496,000 for 2001 and 2000, respectively.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001 and 2000

---

NOTE 6 - DEPOSITS

Deposits at year-end are summarized as follows:

|                                            |   | 2001        |  |   | 2000       
|------------------------------------------- | - | ----------- |  | - | -----------
|                                            |   |             |  |   |            
|Noninterest-bearing demand deposit accounts | $ | 22,990,091  |  | $ | 19,671,065 
|Money market accounts                       |   | 13,435,670  |  |   | 13,138,870 
|NOW and Super NOW accounts                  |   | 10,806,760  |  |   | 10,561,623 
|Savings accounts                            |   | 19,812,715  |  |   | 18,840,048 
|Time deposits                               |   | 56,540,007  |  |   | 60,672,435 
|                                            |   |             |  |   |            
|                                            | $ | 123,585,243 |  | $ | 122,884,041

At year-end 2001, stated maturities of all time deposits were as follows for the years ending December 31:

|           |   | 2001       | 
|---------- | - | ---------- | 
|           |   |            | 
|2002       | $ | 45,624,669 | 
|2003       |   | 4,987,296  | 
|2004       |   | 2,048,834  | 
|2005       |   | 2,739,445  | 
|2006       |   | 871,954    | 
|Thereafter |   | 267,809    | 
|           |   |            | 
|           | $ | 56,540,007 | 

Time deposits in denominations of $100,000 or more were $9,006,000 and $12,420,000 at year-end 2001 and 2000, respectively.

NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Information concerning securities sold under agreements to repurchase is summarized as follows:

|                                               |   | 2001      |   |   | 2000      |  
|---------------------------------------------- | - | --------- | - | - | --------- | -
|                                               |   |           |   |   |           |  
|Amount outstanding at year-end                 | $ | 3,352,630 |   | $ | 2,965,626 |  
|Weighted average interest rate at year-end     |   | 1.23      | % |   | 4.85      | %
|Average daily balance during the year          | $ | 2,977,419 |   | $ | 1,951,292 |  
|Weighted average interest rate during the year |   | 3.06      | % |   | 4.76      | %
|Maximum month end balance during the year      | $ | 4,018,911 |   | $ | 5,142,475 |  

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 8 - FEDERAL HOME LOAN BANK ADVANCES

The Corporation had the following advances from the Federal Home Loan Bank at year-end:

|Maturity Date     |  | Interest Rate |  |   | 2001       |  |   | 2000      
|----------------- |  | ------------- |  | - | ---------- |  | - | ----------
|                  |  |               |  |   |            |  |   |           
|Variable Rate     |  |               |  |   |            |  |   |           
|March 19, 2001    |  | 6.70%         |  |   |            |  | $ | 3,000,000 
|April 30, 2001    |  | 6.70          |  |   |            |  |   | 2,750,000 
|June 4, 2001      |  | 6.70          |  |   |            |  |   | 1,000,000 
|December 2, 2002  |  | 2.08          |  | $ | 2,500,000  |  |   | 5,000,000 
|                  |  |               |  |   |            |  |   |           
|Fixed Rate        |  |               |  |   |            |  |   |           
|October 22, 2003  |  | 5.12          |  |   | 3,000,000  |  |   | 3,000,000 
|December 4, 2006  |  | 5.16          |  |   | 2,500,000  |  |   |           
|January 12, 2010  |  | 5.83          |  |   | 2,000,000  |  |   | 2,000,000 
|November 3, 2010  |  | 5.95          |  |   | 2,000,000  |  |   | 2,000,000 
|December 20, 2010 |  | 4.98          |  |   | 5,000,000  |  |   |           
|March 31, 2011    |  | 3.99          |  |   | 5,000,000  |  |   | 5,000,000 
|                  |  |               |  |   |            |  |   |           
|                  |  |               |  | $ | 22,000,000 |  | $ | 23,750,000

The variable rate advance has an interest rate equal to the three month LIBOR less 3 basis points and adjusts quarterly. Several of the advances are subject to prepayment penalties. The advances are collateralized by a blanket lien on first mortgage loans and U.S. Government agency mortgage-backed securities totaling $34,043,181 and $35,944,760 at year-end 2001 and 2000, respectively.

At year-end, scheduled maturities are as follows:

| | 2002       | $ | 2,500,000  | 
| | ---------- | - | ---------- | 
| | 2003       |   | 3,000,000  | 
| | 2004       |   | 0          | 
| | 2005       |   | 0          | 
| | 2006       |   | 2,500,000  | 
| | Thereafter |   | 14,000,000 | 
| |            |   |            | 
| |            | $ | 22,000,000 | 

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 9 - FEDERAL INCOME TAXES

The provision for income taxes consists of:

|         |   | 2001    |  |   | 2000    |  
|-------- | - | ------- |  | - | ------- | -
|         |   |         |  |   |         |  
|Current  | $ | 438,878 |  | $ | 462,894 |  
|Deferred |   | 93,202  |  |   | (47,012 | )
|         |   |         |  |   |         |  
|         | $ | 532,080 |  | $ | 415,882 |  

Year-end deferred tax assets and liabilities consist of:

|                                                             |   | 2001     |   |   | 2000     |  
|------------------------------------------------------------ | - | -------- | - | - | -------- | -
|Deferred tax assets                                          |   |          |   |   |          |  
|Allowance for loan losses                                    | $ | 270,055  |   | $ | 401,202  |  
|Deferred loan fees                                           |   | 38,177   |   |   | 64,806   |  
|Deferred compensation                                        |   | 442,738  |   |   | 357,267  |  
|Core deposit                                                 |   | 10,660   |   |   | 16,545   |  
|Other                                                        |   | 12,961   |   |   | 14,337   |  
|                                                             |   | 774,591  |   |   | 854,157  |  
|Deferred tax liabilities                                     |   |          |   |   |          |  
|Net unrealized appreciation on securities available for sale |   | (185,161 | ) |   | (176,588 | )
|Fixed assets                                                 |   | (195,956 | ) |   | (215,474 | )
|Other                                                        |   | (102,161 | ) |   | (69,009  | )
|                                                             |   | (483,278 | ) |   | (461,071 | )
|                                                             |   |          |   |   |          |  
|Net deferred tax asset                                       | $ | 291,313  |   | $ | 393,086  |  

No valuation allowance has been recorded against the deferred tax assets.

The effective tax rate differs from the statutory federal income tax rate as follows:

|                                          |   | 2001     |   |   | 2000     |  
|----------------------------------------- | - | -------- | - | - | -------- | -
|                                          |   |          |   |   |          |  
|Statutory rates                           | $ | 767,604  |   | $ | 760,869  |  
|Increase (decrease) from                  |   |          |   |   |          |  
|Tax-exempt interest                       |   | (276,300 | ) |   | (342,900 | )
|Nondeductible interest expense            |   | 37,575   |   |   | 45,207   |  
|Income related to life insurance policies |   | (28,560  | ) |   | (28,849  | )
|Other, net                                |   | 31,761   |   |   | (18,445  | )
|                                          |   |          |   |   |          |  
|Income tax expense                        | $ | 532,080  |   | $ | 415,882  |  
|                                          |   |          |   |   |          |  
|Effective tax rate                        |   | 23.39%   |   |   | 18.58%   |  

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 10 - EARNINGS PER SHARE

The factors used in the earnings per share computation follow.

|                                           |   | 2001      |  |   | 2000     
|------------------------------------------ | - | --------- |  | - | ---------
|Basic                                      |   |           |  |   |          
|Net income                                 | $ | 1,725,579 |  | $ | 1,821,967
|Weighted average common shares outstanding |   | 946,551   |  |   | 942,825  
|                                           |   |           |  |   |          
|Basic earnings per common share            | $ | 1.82      |  | $ | 1.93     
|                                           |   |           |  |   |          
|Diluted                                    |   |           |  |   |          
|Net income                                 | $ | 1,725,579 |  | $ | 1,821,967
|                                           |   |           |  |   |          
|Weighted average common shares outstanding |   |           |  |   |          
|for basic earnings per common share        |   | 946,551   |  |   | 942,825  
|Add: Dilutive effect of assumed            |   |           |  |   |          
|exercises of stock options                 |   | 2,341     |  |   | 2,056    
|                                           |   |           |  |   |          
|Average shares and dilutive potential      |   |           |  |   |          
|common shares                              |   | 948,892   |  |   | 944,881  
|                                           |   |           |  |   |          
|Diluted earnings per common share          | $ | 1.82      |  | $ | 1.93     

Stock options for 4,704 and 4,600 shares of common stock were not considered in computing diluted earnings per common share for 2001 and 2000 because they were antidilutive.

NOTE 11 - EMPLOYEE BENEFIT PLANS

The Corporation maintains a profit sharing 401(k) plan for substantially all employees ("Plan"). Under the Plan, employees may make voluntary contributions based on a percentage of compensation. The Plan also allows the Corporation, at the discretion of the board of directors, to provide an annual contribution. The Corporation's profit sharing contribution to the Plan was $165,000 and $158,000 in 2001 and 2000, respectively. Additionally, the Corporation made 401(k) matching contributions to the Plan of $52,000 and $48,000 in 2001 and 2000, respectively.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 12 - STOCK INCENTIVE PLAN

A stock incentive plan was established during 1998 for directors, officers, and other key employees of the Corporation and its subsidiaries. The plan authorizes the issuance of up to 45,000 shares in the form of stock options and restricted stock awards.

Stock options for nonemployee directors are granted at the market price on the date of grant. Stock options awarded to nonemployee directors are fully vested on the date of grant and expire five years from the date of grant. During 2000, the Corporation amended the vesting period for restricted stock awards, which vest 20 percent per year, beginning the year following the date of grant. Prior to 2000, half of the restricted stock awards were vested at the date of grant with the remainder vesting in five equal annual installments from the date of grant.

A summary of the activity in the plan is as follows:

|                                                  |            |   | Stock Options |   | Restricted Stock
|------------------------------------------------- | ---------- | - | ------------- | - | ----------------
|                                                  | Authorized |   | Options       |   |                 
|Balance outstanding                               |            |   |               |   |                 
|January 1, 2000                                   | 27,551     |   | 3,780         |   | $               
|                                                  |            |   |               |   |                 
|Granted                                           | (7,270     | ) | 5,244         |   |                 
|Exercised                                         |            |   | (1,106        | ) |                 
|Forfeited                                         | 30         |   |               |   |                 
|                                                  |            |   |               |   |                 
|Balance outstanding                               |            |   |               |   |                 
|December 31, 2000                                 | 20,311     |   | 7,918         |   |                 
|                                                  |            |   |               |   |                 
|Granted                                           | (7,400     | ) | 5,374         |   |                 
|Exercised                                         |            |   | (2,650        | ) |                 
|Forfeited                                         | 23         |   |               |   |                 
|                                                  |            |   |               |   |                 
|Balance outstanding                               |            |   |               |   |                 
|December 31, 2001                                 | 12,934     |   | 10,642        |   | $               
|                                                  |            |   |               |   |                 
|Options exercisable and
  restricted stock vested |            |   |               |   |                 
|at year-end                                       |            |   | 10,642        |   | $               

Compensation expense related to restricted stock awards was $27,999 and $15,202 for 2001 and 2000, respectively.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 12 - STOCK INCENTIVE PLAN (Continued)

The following proforma information presents net income and basic and diluted earnings per share had the fair value method been used to measure compensation cost for stock option plans. The exercise price of options granted is equivalent to the market value of underlying stock at the grant date. No compensation cost was actually recognized for stock options.

|                                                  |   | 2001      |  |   | 2000     
|------------------------------------------------- | - | --------- |  | - | ---------
|                                                  |   |           |  |   |          
|Net income as reported                            | $ | 1,725,579 |  | $ | 1,821,967
|Pro forma net income                              |   | 1,706,716 |  |   | 1,806,994
|                                                  |   |           |  |   |          
|Basic earnings per share as reported              |   | 1.82      |  |   | 1.93     
|Pro forma basic earnings per share                |   | 1.80      |  |   | 1.92     
|                                                  |   |           |  |   |          
|Diluted earnings per share as reported            |   | 1.82      |  |   | 1.93     
|Pro forma diluted earnings per share              |   | 1.80      |  |   | 1.91     
|                                                  |   |           |  |   |          
|Weighted-average grant-date fair value per option |   | 3.44      |  |   | 3.41     

The pro forma effects are computed using option pricing models, using the following weighted-average assumptions as of grant date:

|                                | 2001    |  | 2000   
|------------------------------- | ------- |  | -------
|                                |         |  |        
|Risk-free interest rate         | 4.59%   |  | 6.67%  
|Expected option life            | 4 years |  | 4 years
|Expected stock price volatility | 14.1%   |  | 14.1%  
|Dividend yield                  | 2.74%   |  | 2.67%  

NOTE 13 - DIRECTOR DEFERRED COMPENSATION PLAN

The Corporation instituted a Director Deferred Compensation Plan in 1994, whereby directors may periodically defer a portion of current compensation. The Corporation has committed to pay to the directors, or the directors' designated beneficiaries or survivors, the total amount of deferred compensation plus accumulated interest at or following retirement. The interest is added to the accumulated deferred compensation liability at a periodic compound rate. The agreement also addresses termination, disability or death prior to retirement. The portion of the compensation expense deferred for 2001 and 2000 was $115,454 and $126,740, respectively. The accrued deferred compensation liability was $1,105,935 and $919,394 as of December 31, 2001 and 2000, respectively, and is included in other liabilities.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 14 - RELATED PARTIES

Certain directors and executive officers of the Corporation, including their immediate families and companies in which they are principal owners, were loan customers of the Corporation. At December 31, 2001 and 2000, the Corporation had approximately $2,457,000 and $2,494,000, respectively, in outstanding loans to directors and executive officers. New loans and repayments were $690,000 and $727,000, respectively, during 2001.

Related party deposits totaled approximately $1,049,000 and $1,102,000 at year-end 2001 and 2000, respectively.

NOTE 15 - COMMITMENTS, OFF-BALANCE-SHEET RISK AND CONTINGENCIES

There are various contingent liabilities that are not reflected in the consolidated financial statements, including claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material effect on the Corporation's financial condition or results of operations.

Some financial instruments are used to meet customer financing needs and to reduce exposure to interest rate changes. These financial instruments include commitments to extend credit and standby letters of credit. These involve, to varying degrees, credit and interest-rate risk in excess of the amount reported in the financial statements.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment, and generally have fixed expiration dates. Standby letters of credit are conditional commitments to guarantee a customer's performance to a third party. Exposure to credit loss if the other party does not perform is represented by the contractual amount for commitments to extend credit and standby letters of credit. Collateral or other security is normally not obtained for these financial instruments prior to their use, and many of the commitments were expected to expire without being used.

Commitments at year-end are as follows:

|                                  |   | 2001       |  |   | 2000      
|--------------------------------- | - | ---------- |  | - | ----------
|                                  |   |            |  |   |           
|Commitments to make loans         | $ | 2,974,000  |  | $ | 1,653,000 
|Commercial unused lines of credit |   | 12,426,000 |  |   | 14,371,000
|Consumer unused lines of credit   |   | 2,133,000  |  |   | 1,862,000 
|Standby letters of credit         |   | 0          |  |   | 104,000   

Substantially all of the commitments to make loans at December 31, 2001 were made at fixed rates ranging from 7.50% to 8.25%. These commitments generally have termination dates of one year or less and may require a fee. Since many of the above commitments expire without being used, the above amounts do not necessarily represent future cash commitments. No losses are anticipated as a result of these transactions.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments at year-end were as follows, in thousands:

|                                |   | 2 0 0 1        |  |   | 2 0 0 0  
|------------------------------- | - | -------------- |  | - | ---------
|                                |   | CarryingAmount |  |   | FairValue
|Financial assets                |   |                |  |   |          
|Cash and due from banks         | $ | 8,130          |  | $ | 8,130    
|Securities available for sale   |   | 27,444         |  |   | 27,444   
|Other securities                |   | 1,502          |  |   | 1,502    
|Loans held for sale             |   | 933            |  |   | 933      
|Loans, net                      |   | 121,342        |  |   | 122,834  
|Accrued interest receivable     |   | 973            |  |   | 973      
|                                |   |                |  |   |          
|Financial liabilities           |   |                |  |   |          
|Deposits                        |   | 123,585        |  |   | 124,283  
|Accrued interest payable        |   | 235            |  |   | 235      
|Short-term borrowings           |   | 4,353          |  |   | 4,353    
|Federal Home Loan Bank advances |   | 22,000         |  |   | 20,467   

The following methods and assumptions were used to estimate fair values for financial instruments. The carrying amount is considered to estimate fair value for cash and due from banks, demand deposits, short-term borrowings, accrued interest, and variable rate loans or deposits that reprice frequently and fully. Securities fair values are based on quoted market prices or, if no quotes are available, on the rate and term of the security and on information about the issuer. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, the fair value is estimated by discounted cash flow analysis using current market rates for the estimated life and credit risk. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Fair value of loans held for sale is based on market estimates. The fair value of debt is based on currently available rates for similar financing. The fair value of loan commitments and other off-balance-sheet items are based on the current fees or cost that would be charged to enter into or terminate such arrangements, and are considered to have nominal value at year-end 2001 and 2000.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 17 - REGULATORY MATTERS

The Corporation and Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative and qualitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.

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

Actual capital levels and minimum required levels (in millions) for the Corporation and the Bank were:

|                                         | Actual |        |  | Minimum Required
For CapitalAdequacy Purposes |   |  | Minimum Required
To Be Well
Capitalized Under
Prompt CorrectiveAction Regulations |       
|---------------------------------------- | ------ | ------ |  | --------------------------------------------- | - |  | --------------------------------------------------------------------------------- | ------
|                                         |        | Amount |  | Ratio                                         |   |  |                                                                                   | Amount
|2001                                     |        |        |  |                                               |   |  |                                                                                   |       
|Total capital (to risk weighted assets)  |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             | $      | 18.4   |  | 14.9                                          | % |  | $                                                                                 | 9.9   
|Bank                                     |        | 18.0   |  | 14.6                                          |   |  |                                                                                   | 9.9   
|Tier 1 capital (to risk weighted assets) |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             |        | 17.2   |  | 13.9                                          |   |  |                                                                                   | 4.9   
|Bank                                     |        | 16.8   |  | 13.6                                          |   |  |                                                                                   | 4.9   
|Tier 1 capital (to average assets)       |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             |        | 17.2   |  | 10.1                                          |   |  |                                                                                   | 6.8   
|Bank                                     |        | 16.8   |  | 9.9                                           |   |  |                                                                                   | 6.8   
|                                         |        |        |  |                                               |   |  |                                                                                   |       
|2000                                     |        |        |  |                                               |   |  |                                                                                   |       
|Total capital (to risk weighted assets)  |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             | $      | 17.6   |  | 14.3                                          | % |  | $                                                                                 | 9.8   
|Bank                                     |        | 17.2   |  | 14.1                                          |   |  |                                                                                   | 9.8   
|Tier 1 capital (to risk weighted assets) |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             |        | 16.1   |  | 13.1                                          |   |  |                                                                                   | 4.9   
|Bank                                     |        | 15.7   |  | 12.8                                          |   |  |                                                                                   | 4.9   
|Tier 1 capital (to average assets)       |        |        |  |                                               |   |  |                                                                                   |       
|Consolidated                             |        | 16.1   |  | 9.6                                           |   |  |                                                                                   | 6.7   
|Bank                                     |        | 15.7   |  | 9.4                                           |   |  |                                                                                   | 6.7   

The Corporation and the Bank were categorized as well capitalized at year-end 2001 and 2000.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 18 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components and related taxes were as follows.

|                                            |   | 2001     |   |   | 2000      |  
|------------------------------------------- | - | -------- | - | - | --------- | -
|                                            |   |          |   |   |           |  
|Unrealized holding gains and losses on      |   |          |   |   |           |  
|available-for-sale securities               | $ | 421,291  |   | $ | 1,014,745 |  
|Less reclassification adjustments for gains |   |          |   |   |           |  
|later recognized in income                  |   | (396,082 | ) |   | (5,050    | )
|Net unrealized gains                        |   | 25,209   |   |   | 1,009,695 |  
|Tax effect                                  |   | (8,571   | ) |   | (343,296  | )
|                                            |   |          |   |   |           |  
|Other comprehensive income                  | $ | 16,638   |   | $ | 666,399   |  

NOTE 19 - VALLEY RIDGE FINANCIAL CORP. (PARENT COMPANY ONLY)
  CONDENSED FINANCIAL STATEMENTS

Following are condensed parent company only financial statements.

CONDENSED BALANCE SHEETS

|                                           |   | December 31,
|------------------------------------------ | - | ------------
|                                           |   | 2001        
|ASSETS                                     |   |             
|Cash                                       | $ | 240,961     
|Investment in subsidiaries                 |   | 17,150,146  
|Other assets                               |   | 172,736     
|                                           |   |             
|Total assets                               | $ | 17,563,843  
|                                           |   |             
|LIABILITIES AND SHAREHOLDERS' EQUITY       |   |             
|Liabilities                                | $ | 21,013      
|Shareholders' equity                       |   | 17,542,830  
|                                           |   |             
|Total liabilities and shareholders' equity | $ | 17,563,843  

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001 and 2000

---

NOTE 19 - VALLEY RIDGE FINANCIAL CORP. (PARENT COMPANY ONLY)
  CONDENSED FINANCIAL STATEMENTS (Continued)

CONDENSED STATEMENTS OF INCOME

|                                                   |   | Years ended December 31,
|-------------------------------------------------- | - | ------------------------
|                                                   |   | 2001                    
|Income                                             |   |                         
|Dividends from subsidiary                          | $ | 682,500                 
|Other                                              |   | 0                       
|Total income                                       |   | 682,500                 
|                                                   |   |                         
|Expenses                                           |   |                         
|Other operating expenses                           |   | 46,787                  
|                                                   |   |                         
|                                                   |   |                         
|Income before income tax and equity in             |   |                         
|undistributed net income of subsidiaries           |   | 635,713                 
|                                                   |   |                         
|Equity in undistributed net income of subsidiaries |   | 1,089,866               
|                                                   |   |                         
|                                                   |   |                         
|Net income                                         | $ | 1,725,579               

CONDENSED STATEMENTS OF CASH FLOWS

|                                                 |   | Years ended December 31, |  
|------------------------------------------------ | - | ------------------------ | -
|                                                 |   | 2001                     |  
|Operating activities                             |   |                          |  
|Net income                                       | $ | 1,725,579                |  
|Adjustments to reconcile net income to           |   |                          |  
|net cash from operating activities               |   |                          |  
|Equity in undistributed net income of subsidiary |   | (1,089,866               | )
|Change in other assets and liabilities           |   | (43,335                  | )
|Net cash from operating activities               |   | 592,378                  |  
|                                                 |   |                          |  
|Financing activities                             |   |                          |  
|Dividends paid                                   |   | (711,028                 | )
|Repurchase of common stock                       |   | 0                        |  
|Stock options exercised                          |   | 61,680                   |  
|Net cash from financing activities               |   | (649,348                 | )
|                                                 |   |                          |  
|Net change in cash                               |   | (56,970                  | )
|                                                 |   |                          |  
|Cash at beginning of year                        |   | 297,931                  |  
|                                                 |   |                          |  
|Cash at end of year                              | $ | 240,961                  |  

---

Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Part III

|Item 9. | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
|------- | ----------------------------------------------------------------------------------------------------------------

The Corporation's board of directors is divided into three classes, which are as nearly equal in number as possible. Each director is a member of a class that has a term of office of three years, with the term of office of one class expiring at the annual meeting of shareholders in each successive year.

All directors of the Corporation also have been directors of the Bank since the Consolidation. Directors who were directors of Community before the Merger also concurrently served as directors of Grant from the date of their election or appointment as a director of Community until the Consolidation. Directors who were not directors of Community also concurrently served as directors of Kent City from the date of their election or appointment as a director of the Corporation until the Consolidation.

Except as otherwise indicated, all of the named individuals have had the same principal employment for over five years. Executive officers are appointed annually and serve at the pleasure of the board of directors of the Corporation.

Directors With Terms Expiring in 2002

Michael E. McHugh (age 52) has been a director of the Corporation and/or Kent City since 1989. Mr. McHugh is Secretary, Treasurer and Chief Financial Officer of the Corporation. Mr. McHugh has also been Executive Vice President of the Bank (and, before the Consolidation, Kent City) since 1987.

Dennis C. Nelson (age 53) has been a director of the Corporation since the Merger and was a director of Community and/or Grant from 1985 until the Merger. Mr. Nelson is a dentist practicing in Grant, Michigan.

John J. Niederer (age 66) has been a director of the Corporation and/or Kent City since 1993. Mr. Niederer retired in 2000. Before his retirement, he had been President and sole shareholder of Greenridge Fruit, Inc., a distributor of fruit, since 1990. Prior to that, Mr. Niederer was Vice President of Wm. Bolthouse Farms, Inc., a producer and distributor of vegetables.

Donald Swanson (age 67) has been a director of the Corporation and/or Kent City since 1981. Mr. Swanson is Chairman and a majority shareholder of Swanson Pickle Co., Inc., a producer and distributor of pickles.

Donald VanSingel (age 58) has been Vice Chairman and a director of the Corporation since the Merger and was Chairman of Community and/or Grant from 1982 until the Merger and a director of Community and/or Grant from 1973 until the Merger. Mr. VanSingel has been a consultant for Governmental Consultant Services, Inc. since 1993. Prior to that, Mr. VanSingel served in the Michigan House of Representatives.

---

Directors With Terms Expiring in 2003

Jerome B. Arends (age 57) has been a director of the Corporation and/or Kent City since 1987. Mr. Arends was Chief Executive Officer and President of Ravenna Farm Equipment, Inc., a distributor of farm implements and equipment, until early 1999. Mr. Arends was Store Manager and a salesman for Kent Power Equipment, Inc., a distributor of farm equipment, from 1999 until his retirement in 2000.

K. Timothy Bull (age 54) has been a director of the Corporation and/or Kent City since 1993 and was also a director of the Corporation from 1988 until 1991. Mr. Bull is President and sole shareholder of Moon Lake Orchards, Inc., a producer of fruit.

Richard L. Edgar (age 57) has been a director of the Corporation and/or Kent City since 1974. Mr. Edgar has been President and Chief Executive Officer of the Corporation since 1988, and President and Chief Executive Officer of the Bank (and, before the Consolidation, Kent City) since 1987. Prior to that, Mr. Edgar served Kent City in various management and other capacities since 1963. Mr. Edgar is also a director of West Shore Computer Services, Inc., a data processing company in which the Bank is a 20% shareholder.

Paul K. Spoelman (age 66) has been a director of the Corporation and/or Kent City since 1994. Mr. Spoelman is an accountant with and founder of Spoelman, Hovingh & Feldt, Inc., an accounting firm.

Directors With Terms Expiring in 2004

Gary Gust (age 57) has been a director of the Corporation and/or Kent City since 1991. Mr. Gust is President and sole shareholder of Gust Construction Company, a general contractor.

Ronald L. Hansen (age 57) has been a director of the Corporation since the Merger and was a director of Community from 1990 until the Merger. Mr. Hansen has been Vice President of the Corporation since the Merger and a Senior Vice President of the Bank since the Consolidation. Prior to that, Mr. Hansen was Secretary of Community from 1994 until the Merger, President and Chief Executive Officer of Grant from 1994 until the Consolidation, a director of Grant from 1982 until the Consolidation and Vice President and Cashier of Grant from 1982 until 1994. Prior to that, Mr. Hansen served Grant in various management and other capacities since 1973.

Robert C. Humphreys (age 63) has been a director of the Corporation and/or Kent City since 1988. Mr. Humphreys has been Chairman of the Board of the Corporation and the Bank (and, before the Consolidation, Kent City) since 1993. Mr. Humphreys owns and operates Humphreys Orchards, a producer of fruit.

Ben J. Landheer (age 66) has been a director of the Corporation since the Merger and was a director of Community and/or Grant from 1991 until the Merger. Mr. Landheer owns and operates Landheer Insurance Agency, an agent for insurance companies offering a broad range of insurance products.

Executive Officers Who Are Not Directors

Robert L. Karpinski (age 61) is Senior Vice President of the Bank and has served the Bank in various executive capacities since January 1985.

As of the date of this Form 10-KSB, directors and officers of the Corporation and persons who beneficially own more than 10% of the outstanding shares of Valley Ridge Common Stock were not subject

---

Item 10.  Executive Compensation.

The following table shows certain information concerning the compensation for services rendered during each of the three years in the period ended December 31, 2001, of the Chief Executive Officer of the Corporation and each executive officer of the Corporation who earned annual salary and bonus compensation in excess of $100,000 during 2001. Messrs. Edgar, McHugh and Hansen were compensated by the Bank in the capacities indicated in the table.

SUMMARY COMPENSATION TABLE

|                           |      |                     |  | Long-Term
Compensation |  |                          
|-------------------------- | ---- | ------------------- |  | ---------------------- |  | -------------------------
|                           |      | Annual Compensation |  | Awards                 |  |                          
|Name and
PrincipalPosition | Year | Salary(1)           |  | Bonus(2)               |  | Restricted
StockAwards(3)
|                           |      |                     |  |                        |  |                          
|Richard L. Edgar           | 2001 | $  153,412          |  | $   25,000             |  | $  10,080                
|Director, President        | 2000 | 147,950             |  | --                     |  | 16,002                   
|and Chief Executive        | 1999 | 142,250             |  | 23,000                 |  | 28,000                   
|Officer of the Corporation |      |                     |  |                        |  |                          
|and the Bank               |      |                     |  |                        |  |                          
|                           |      |                     |  |                        |  |                          
|Michael E. McHugh          | 2001 | $  107,188          |  | $   10,000             |  | $  7,364                 
|Director, Secretary,       | 2000 | 103,500             |  | 20,000                 |  | 12,002                   
|Treasurer and Chief        | 1999 | 98,450              |  | 11,500                 |  | 21,000                   
|Financial Officer of the   |      |                     |  |                        |  |                          
|Corporation and Director   |      |                     |  |                        |  |                          
|and Executive Vice         |      |                     |  |                        |  |                          
|President of the Bank      |      |                     |  |                        |  |                          
|                           |      |                     |  |                        |  |                          
|Ronald L. Hansen           | 2001 | $  94,165           |  | $  7,500               |  | $   5,656                
|Director and               | 2000 | 90,970              |  | 15,000                 |  | 9,014                    
|Vice President             | 1999 | 87,450              |  | 7,125                  |  | 15,750                   
|of the Corporation         |      |                     |  |                        |  |                          
|and Director and           |      |                     |  |                        |  |                          
|Senior Vice President      |      |                     |  |                        |  |                          
|of the Bank                |      |                     |  |                        |  |                          

____________________________

|(1) | Includes compensation deferred under the Corporation's Profit Sharing/401(k) Plan and director fees paid by the Bank.
|--- | ---------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                      
|(2) | Includes compensation deferred under the Corporation's Profit Sharing/401(k) Plan.                                   

---

|(3) | The values of restricted stock awards reported in this column are calculated using the market price of Valley Ridge Common Stock on the date of grant. At December 31, 2001, each of the named executive officers held shares of restricted stock. Dividends will be paid on shares of restricted stock at the same rate dividends are paid on Valley Ridge Common Stock. The number of shares of restricted stock held by each named individual and the aggregate value of those shares (based on the market price of Valley Ridge Common Stock on December 31, 2001) at the end of the Corporation's fiscal year are set forth below:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |            | Number ofShares | AggregateValue | 
| | ---------- | --------------- | -------------- | 
| |            |                 |                | 
| | Mr. Edgar  | 1,680           | $  47,040      | 
| | Mr. McHugh | 1,245           | 34,860         | 
| | Mr. Hansen | 947             | 26,516         | 

|    | Awards of restricted stock vest as follows: for awards made in 1999, 50% of the shares vest on the date of grant and 10% of the shares vest on each anniversary of the date of grant thereafter; for awards made in 2000 and 2001, 20% of the shares vest on each anniversary of the date of grant. In 2001, 2000, and 1999, respectively, Mr. Edgar was awarded 600, 600, and 1,200 shares of restricted stock; Mr. McHugh was awarded 450, 450, and 900 shares of restricted stock; and Mr. Hansen was awarded 338, 338, and 675 shares of restricted stock.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4) | All other compensation for 2001 includes: (i) contributions by the Corporation under the Profit Sharing/401(k) Plan; and (ii) amounts paid by the Bank for life insurance. The amounts included for each such factor for 2001 are:                                                                                                                                                                                                                                                                                                                            

| |            | (i)      |  | (ii) |      
| | ---------- | -------- |  | ---- | -----
| | Mr. Edgar  | $ 22,411 |  | $    | 1,067
| | Mr. McHugh | 17,172   |  |      | 376  
| | Mr. Hansen | 14,785   |  |      | 613  

The following tables set forth information regarding stock options granted to the named executive officers during the last fiscal year and stock options held by them at the end of the last fiscal year. No named executive officer exercised any stock options during 2001.

OPTION GRANTS IN LAST FISCAL YEAR

|Name              |  | Number of Securities
Underlying
Options Granted |  | Percent of Total
Options Granted
to Employees in
Fiscal Year |  | Exercise Price |  | Expiration Date
|----------------- |  | ----------------------------------------------- |  | ------------------------------------------------------------ |  | -------------- |  | ---------------
|                  |  |                                                 |  |                                                              |  |                |  |                
|Richard L. Edgar  |  | 600                                             |  | 30%                                                          |  | $ 28           |  | July 1, 2011   
|Michael E. McHugh |  | 450                                             |  | 22                                                           |  | 28             |  | July 1, 2011   
|Ronald L. Hansen  |  | 337                                             |  | 17                                                           |  | 28             |  | July 1, 2011   

|(1) | Each option is an incentive stock option with an exercise price equal to the market price of Valley Ridge Common Stock on the date of grant. Each option is immediately exercisable in full. Each option remains outstanding for ten years from the date it was granted and is non-transferable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | Options terminate, with certain limited exercise provisions, upon death or termination of employment. The Compensation Committee of the Corporation's board of directors may provide for cash settlements of the options upon a change in control of the Corporation.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FISCAL YEAR-END OPTION VALUES

|                  |  | Number of
Securities Underlying Unexercised
Options at Fiscal Year-End |  |               | Value of Unexercised
In-the-Money Options at
Fiscal Year-End(1)
|----------------- |  | ---------------------------------------------------------------------- |  | ------------- | ---------------------------------------------------------------
|Name              |  | Exercisable                                                            |  | Unexercisable |                                                                
|                  |  |                                                                        |  |               |                                                                
|Richard L. Edgar  |  | 1,200                                                                  |  | --            |                                                                
|Michael E. McHugh |  | 900                                                                    |  | --            |                                                                
|Ronald L. Hansen  |  | 674                                                                    |  | --            |                                                                
|                  |  |                                                                        |  |               |                                                                

|(1) | Based on a market value of $27.50 per share at December 31, 2001, adjusted to reflect stock splits.
|--- | ---------------------------------------------------------------------------------------------------

During 2001, the Bank compensated its directors at the rate of $4,600 per year and $400 per regular board meeting attended, except that the Chairman of the Board was paid $500 per meeting attended. Directors who were not executive officers of the Corporation or the Bank also received $125 per committee meeting attended. The Corporation has entered into deferred compensation agreements with some of its directors under which payments will be made to the directors after their retirement. In addition, all nonemployee directors who are serving on the applicable date automatically receive annually, on the later of the date of the close of the annual meeting of shareholders or the date on which the Corporation receives the appraisal of Valley Ridge Common Stock for purposes of contributions to the Corporation's Employee Stock Ownership Plan (the "Appraisal"), a stock option to purchase a number of shares of Valley Ridge Common Stock equal to the sum of (i) the annual cash retainer fees payable to a director in effect on the date of grant and (ii) the amount of the normal meeting fees payable to a director for attendance at a regular monthly meeting of the board of directors in effect on the date of grant multiplied by 12, divided by the per share value of Valley Ridge Common Stock set forth in the Appraisal.

Effective January 1, 1997, the Bank entered into Executive Employee Salary Continuation Agreements (the "Agreements") with each of the named executive officers. Under the Agreements, an executive officer is eligible to receive payment of a monthly retirement benefit from the Bank for 180 months following the normal retirement date (age 65). An executive officer may retire early, after age 60, and receive a reduced benefit, or retire after age 65 and receive an increased benefit. If an executive officer terminates employment prior to early retirement, a vested benefit is payable. Vesting is based on five years of employment commencing January 1, 1997, with 100% vesting given upon death, disability or other involuntary termination of employment for reasons other than "cause." If a named executive officer dies before receiving the entire benefit, remaining payments will be made to a beneficiary. If the officer is terminated prior to early retirement, without "cause" but following a "change in control" of the Bank (as these terms are defined in the Agreements), the officer will receive the vested benefit plus payment of one year's salary. The monthly normal retirement benefit for each executive officer is $3,275 for Mr. Edgar; $758 for Mr. McHugh; and $1,825 for Mr. Hansen.

Mr. Edgar and Mr. McHugh have employment agreements with the Corporation under which Mr. Edgar serves as President and Chief Executive Officer of the Corporation and the Bank, and Mr. McHugh serves as Secretary, Treasurer and Chief Financial Officer of the Corporation and as Executive Vice President of the Bank. Mr. Edgar's agreement provides for a minimum annual salary of $116,761, or any increased amount authorized by the board of directors, and Mr. McHugh's agreement provides for a

---

|Item 11. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

The following table sets forth information concerning the number of shares of Valley Ridge Common Stock held as of December 31, 2001 by each shareholder who is known to the Corporation's management to have been the beneficial owner of more than 5% of the outstanding shares of Valley Ridge Common Stock as of that date:

---

|                                                                                                                            | Amount and Nature of Beneficial Ownership of
Valley Ridge Common Stock (1) |  |                                       | 
|--------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- |  | ------------------------------------- | 
|                                                                                                                            |                                                                            |  |                                       | 
|Name and Address of
  Beneficial Owner                                                                                      | Sole
Voting and
Dispositive
Power                                          |  | Shared
Voting or
Dispositive
Power(2) | 
|Robert C. Humphreys
     17660 Westbrook Drive
     Casnovia, MI 49318                                                      | 35,579                                                                     |  | 30,985                                | 
|                                                                                                                           
|Valley Ridge
Profit Sharing Plan Trust(4)
     c/o Valley Ridge Bank
     450 West Muskegon Avenue
     Kent City, MI 49330 | --                                                                         |  | 86,595                                | 
|                                                                                                                           
|Richard L. Edgar(3)(4)
     450 West Muskegon Avenue
     Kent City, MI 49330                                               | 53,635                                                                     |  | --                                    | 

---

The following table shows certain information concerning the number of shares of Valley Ridge Common Stock held as of December 31, 2001, by each of the Corporation's directors, each of the named executive officers and all of the Corporation's directors and executive officers as a group:

|                                                    | Amount and Nature of Beneficial Ownership of
Valley Ridge Common Stock(1) |     |                                      |       
|--------------------------------------------------- | ------------------------------------------------------------------------- | --- | ------------------------------------ | ------
|                                                    |                                                                           |     |                                      |       
|Name ofBeneficial Owner                             | Sole
Voting and
DispositivePower                                          |     | Shared
Voting or
DispositivePower(2) |       
|Jerome B. Arends                                    | 15,320                                                                    |     |                                      | 10,290
|K. Timothy Bull                                     | 25,043                                                                    |     |                                      | 1,452 
|Richard L. Edgar                                    | 52,435                                                                    | (4) |                                      | --    
|Gary Gust                                           | --                                                                        |     |                                      | 36,111
|Ronald L. Hansen                                    | 5,342                                                                     |     |                                      | --    
|Robert C. Humphreys                                 | 35,579                                                                    |     |                                      | 30,985
|Ben J. Landheer                                     | 30,000                                                                    |     |                                      | --    
|Michael E. McHugh                                   | 19,083                                                                    | (4) |                                      | --    
|Dennis C. Nelson                                    | 2,534                                                                     |     |                                      | --    
|John J. Niederer                                    | 6,118                                                                     |     |                                      | 2,035 
|Paul K. Spoelman                                    | 4,279                                                                     |     |                                      | --    
|Donald Swanson                                      | 11,633                                                                    |     |                                      | 3,186 
|Donald VanSingel                                    | 2,295                                                                     |     |                                      | 3,664 
|                                                    |                                                                           |     |                                      |       
|All directors and
  executive officers
  as a group | 211,742                                                                   | (4) |                                      | 87,723

|(1) | The numbers of shares stated are based on information furnished by each person listed and include shares personally owned of record by that person and shares that, under applicable regulations, are considered to be otherwise beneficially owned by that person. Voting power includes the power to vote or direct the voting of the security. Dispositive power includes the power to dispose or direct the disposition of the security. A person is also considered the beneficial owner of a security if the person has a right to acquire beneficial ownership of the security within 60 days.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | These numbers include shares over which the listed person is legally entitled to share voting or dispositive power by reason of joint ownership, trust, or other contract or property right, and shares held by spouses and children over whom the listed person may have influence by reason of relationship.                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(3) | These numbers include shares that may be acquired by the exercise of stock options granted under the Stock Incentive Plan of 1998 within 60 days.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(4) | Mr. Edgar and Mr. McHugh may be considered to have voting and/or dispositive control over 86,595 shares of Valley Ridge Common Stock held by the Valley Ridge Profit Sharing Plan Trust by reason of the capacities in which they serve at the Corporation and the Bank. The number of shares reported                                                                                                                                                                                                                                                                                               

---

| | as beneficially owned by Mr. Edgar excludes, and Mr. Edgar disclaims beneficial ownership of, 53,321 shares of Valley Ridge Common Stock held by the Valley Ridge Profit Sharing Plan Trust. The number of shares reported as beneficially owned by Mr. McHugh excludes, and Mr. McHugh disclaims beneficial ownership of, 72,069 shares of Valley Ridge Common Stock held by the Valley Ridge Profit Sharing Plan Trust.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 12.  Certain Relationships and Related Transactions.

Directors and officers of the Corporation and their associates were customers of and had transactions with the Bank in the ordinary course of business between January 1, 2000, and March 28, 2002. It is anticipated that such transactions will take place in the future in the ordinary course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features.

Item 13.  Exhibits and Reports on Form 8-K.

Exhibits. The following exhibits are filed as part of this Form 10-KSB:

|Number |  | Exhibit                                                                                                                                                                                                                                                                                                                                               
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|3.1    |  | Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to the Corporation's Quarterly Report on Form 10-QSB for the Quarter ended June 30, 1998. Here incorporated by reference.                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|3.2    |  | Bylaws. Previously filed as Exhibit 3(b) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|4.1    |  | Form of Stock Certificate. Previously filed as Exhibit 4(a) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|4.2    |  | Long-Term Debt. The Corporation is a party to several long-term debt agreements which at the time of this report do not exceed 10% of the Corporation's total consolidated assets. The Corporation agrees to furnish copies of the agreements defining the rights of the other parties thereto to the Securities and Exchange Commission upon request.
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.1   |  | Data Processing Agreement. Previously filed as Exhibit 10(a) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.2   |  | Amendment to Data Processing Agreement.                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.3   |  | Directors' Deferred Compensation Plan and Form of Directors' Deferred Compensation Agreement.* Previously filed as Exhibit 10(d) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.4   |  | Employment Agreement with Michael McHugh.* Previously filed as Exhibit 10.6 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                                                                                                                                                                                    

---

|10.5 |  | Employment Agreement with Richard Edgar.* Previously filed as Exhibit 10.7 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                          
|10.6 |  | Form of Salary Continuation Agreement.* Previously filed as Exhibit 10.8 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                          
|     |  |                                                                                                                                                                                          
|10.7 |  | Stock Incentive Plan of 1998.* Previously filed as Exhibit 10.1 to the Corporation's Quarterly Report on Form 10-QSB for the Quarter ended June 30, 1998. Here incorporated by reference.
|     |  |                                                                                                                                                                                          
|21   |  | Subsidiaries of the Registrant.                                                                                                                                                          
|     |  |                                                                                                                                                                                          
|23   |  | Consent of Independent Auditors.                                                                                                                                                         
|     |  |                                                                                                                                                                                          
|24   |  | Powers of Attorney.                                                                                                                                                                      

*Management contract or compensatory plan or arrangement.

The Corporation will furnish a copy of any exhibit listed above to any shareholder of the Corporation without charge upon written request to Michael E. McHugh, Secretary, Valley Ridge Financial Corp., 450 West Muskegon Avenue, Kent City, Michigan 49330.

Reports on Form 8-K. No reports on Form 8-K were filed during the fourth quarter of 2001.

---

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|               | VALLEY RIDGE FINANCIAL CORP.
|-------------- | ----------------------------
|               | (Registrant)                
|               |                             
|               |                             
|March 29, 2002 | By                          
|               |                             
|               |                             

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|March 29, 2002  | */s/ Jerome B. Arends                                                                            
|--------------- | -------------------------------------------------------------------------------------------------
|                | Jerome B. Arends
Director                                                                        
|                |                                                                                                  
|                |                                                                                                  
|March 29 , 2002 | */s/ K. Timothy Bull                                                                             
|                | K. Timothy Bull
Director                                                                         
|                |                                                                                                  
|                |                                                                                                  
|March 29, 2002  | /s/ Richard L. Edgar                                                                             
|                | Richard L. Edgar
President, Chief Executive Officer and
   Director (Principal Executive Officer)
|                |                                                                                                  
|                |                                                                                                  
|March 29, 2002  | */s/ Gary Gust                                                                                   
|                | Gary Gust
Director                                                                               
|                |                                                                                                  
|                |                                                                                                  
|March 29, 2002  | */s/ Ronald L. Hansen                                                                            
|                | Ronald L. Hansen
Director and Vice President                                                     
|                |                                                                                                  
|                |                                                                                                  
|March 29, 2002  | */s/ Robert C. Humphreys                                                                         
|                | Robert C. Humphreys
Chairman of the Board and Director                                           
|                |                                                                                                  
|                |                                                                                                  
|March 29, 2002  | */s/ Ben J. Landheer                                                                             
|                | Ben J. Landheer
Director                                                                         

---

|March 29, 2002 | /s/Michael E. McHugh                                                                               
|-------------- | ---------------------------------------------------------------------------------------------------
|               | Michael E. McHugh
Secretary and Treasurer and Director
(Principal Financial and Accounting Officer)
|               |                                                                                                    
|               |                                                                                                    
|March 29, 2002 | */s/ Dennis C. Nelson                                                                              
|               | Dennis C. Nelson
Director                                                                          
|               |                                                                                                    
|               |                                                                                                    
|March 29, 2002 | */s/ John J. Niederer                                                                              
|               | John J. Niederer
Director                                                                          
|               |                                                                                                    
|               |                                                                                                    
|March 29, 2002 | */s/ Paul K. Spoelman                                                                              
|               | Paul K. Spoelman
Director                                                                          
|               |                                                                                                    
|               |                                                                                                    
|March 29, 2002 | */s/ Donald Swanson                                                                                
|               | Donald Swanson
Director                                                                            
|               |                                                                                                    
|               |                                                                                                    
|March 29, 2002 | */s/ Donald VanSingel                                                                              
|               | Donald VanSingel
Director                                                                          
|               |                                                                                                    
|               |                                                                                                    
|               | *By                                                                                                
|               |                                                                                                    

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED PURSUANT TO SECTION 15(d) OF THE
EXHANGE ACT BY NON-REPORTING ISSUERS

No annual report or proxy material has been sent to security holders as of the date of this Annual Report on Form 10-KSB. It is anticipated that an annual report and proxy materials will be sent to security holders after the date of this Annual Report on Form 10-KSB, which will be provided to the Commission when they are sent to security holders.

---

Exhibit Index

|Number |  | Exhibit                                                                                                                                                                                                                                                                                                                                               
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|3.1    |  | Restated Articles of Incorporation. Previously filed as Exhibit 3.1 to the Corporation's Quarterly Report on Form 10-QSB for the Quarter ended June 30, 1998. Here incorporated by reference.                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|3.2    |  | Bylaws. Previously filed as Exhibit 3(b) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|4.1    |  | Form of Stock Certificate. Previously filed as Exhibit 4(a) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|4.2    |  | Long-Term Debt. The Corporation is a party to several long-term debt agreements which at the time of this report do not exceed 10% of the Corporation's total consolidated assets. The Corporation agrees to furnish copies of the agreements defining the rights of the other parties thereto to the Securities and Exchange Commission upon request.
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.1   |  | Data Processing Agreement. Previously filed as Exhibit 10(a) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.2   |  | Amendment to Data Processing Agreement.                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.3   |  | Directors' Deferred Compensation Plan and Form of Directors' Deferred Compensation Agreement.* Previously filed as Exhibit 10(d) to the Corporation's Form S-4 Registration Statement filed January 30, 1996. Here incorporated by reference.                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.4   |  | Employment Agreement with Michael McHugh.* Previously filed as Exhibit 10.6 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.5   |  | Employment Agreement with Richard Edgar.* Previously filed as Exhibit 10.7 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                                                                                                                                                                                     
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.6   |  | Form of Salary Continuation Agreement.* Previously filed as Exhibit 10.8 to the Corporation's Form 10-KSB filed March 31, 1998. Here incorporated by reference.                                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|10.7   |  | Stock Incentive Plan of 1998.* Previously filed as Exhibit 10.1 to the Corporation's Quarterly Report on Form 10-QSB for the Quarter ended June 30, 1998. Here incorporated by reference.                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|21     |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|23     |  | Consent of Independent Auditors.                                                                                                                                                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                                       
|24     |  | Powers of Attorney.                                                                                                                                                                                                                                                                                                                                   

*Management contract or compensatory plan or arrangement.