SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 10549

                                   FORM 10-KSB

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (fee required) for the fiscal year ended December 31, 1998 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (no fee required) for the transition period from _____ to _____

                        Commission File Number 0-19181

                          HURON NATIONAL BANCORP, INC.
             (Exact name of registrant as specified in its charter)

                                    MICHIGAN
          (State or other jurisdiction of incorporation or organization)

                                   38-2855012
                        (IRS Employer Identification No.)

                200 East Erie Street, Rogers City, Michigan 49779
           (Address of principal executive offices including zip code)
                                 (517) 734-4734
              (Registrant's telephone number, including area code)

               Securities registered pursuant to 12(b) of the Act:

       Title of each class            Name of each exchange on which registered
              NONE                                      NONE  
          Securities Registered Pursuant to Section 12(g) of the Act:
                    Common Stock, par value $10.00 per share
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months  (or for such  shorter  period if 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 [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not 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 aggregate market value of the voting stock held by  "non-affiliates"  of the
Registrant  (for this purpose only, the  affiliates of the Registrant  have been
assumed to be the executive  officers and directors of the  Registrant and their
associates) as of March 12, 1999, was approximately $1,790,160,  based on market
price of $40.00 per share.

As of March 12, 1999, there were  outstanding  62,500 shares of the registrant's
common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions  of  the  Registrant's  Proxy  Statement  for  its  Annual  Meeting  of
Shareholders  to be held April 28, 1999 which shall be filed with the Commission
no later than April 30, 1999 (the "1999 Proxy  Statement"),  are incorporated by
reference into Part III of this Form 10-KSB Report.
<PAGE>
                                     PART-I

ITEM 1 - BUSINESS

GENERAL

The Registrant,  Huron National Bancorp,  Inc.  (hereinafter  referred to as the
"Registrant"),  is a one-bank holding company  registered under the Bank Holding
Company Act of 1956, as amended.  The  Registrant  was formed for the purpose of
enabling Huron National Bank  (hereinafter  referred to as the "Bank") to form a
one-bank  holding  company.  The Bank became a  wholly-owned  subsidiary  of the
Registrant on May 8, 1990. The  Registrant's  only  subsidiary  and  significant
asset as of December 31, 1998 is the Bank.  The  Registrant  and its  subsidiary
operate in the Banking  industry,  which accounts for substantially all of their
assets, revenues and operating income.

The  Bank  was  organized  in 1980  under  the laws of the  United  States.  Its
deposits,  to the extent  allowed by law,  are  insured by the  Federal  Deposit
Insurance  Corporation.  The  Bank's  main  office is  located  at 200 East Erie
Street, Rogers City, Michigan.

Further  discussion  of the  Registrant's  business is presented in the Business
section on page 9 in the 1998 Annual Report to Shareholders, incorporated herein
by reference.

REGULATION

The  Registrant  is  subject to  supervision  by the Board of  Governors  of the
Federal Reserve System. The Board of Governors must grant prior approval for the
acquisition by a banking  holding company of more than 5% of the voting stock or
substantially  all the assets of any bank or bank  holding  company or  non-bank
company.

In approving  proposed  acquisitions by the  Registrant,  the Board of Governors
considers a number of factors including  expected benefits to the public such as
greater  convenience,  increased  competition  or gains in  efficiency,  weighed
against the risk of possible  adverse  effects  such as undue  concentration  of
resources,  decreased or unfair competition,  conflicts of interest,  or unsound
banking  practices.  The Board of Governors  is empowered to give these  factors
different  weight in the case of  activities  commenced  de novo than it does in
considering the acquisition of a going concern.

The Bank is subject to regulation,  supervision  and regular  examination by the
Officer of the  Comptroller  of the  Currency.  The  regulations  of this agency
affect most aspects of the Bank's business and prescribed  permissible  types of
loans and investments, requirements for branch offices, the permissible scope of
the Bank's activities and impose various other requirements.

A holding  company,  and any of its subsidiary  banks,  are also prohibited from
engaging in certain  tie-in  arrangements  in  connection  with the extension of
credit or supplying of property or services. For example, the Bank generally may
not extend  credit on the  condition  that the customer  obtain some  additional
service from the Bank or the  Registrant or refrain from  obtaining such service
from a competitor.

The Bank is subject to certain  restrictions  imposed by the Federal Reserve Act
on "covered  transactions"  with the  Registrant or a  subsidiary.  The "covered
transactions"  that an insured bank and its subsidiaries are permitted to engage
in with their nonbank  affiliates are limited to the following  amounts:  (i) in
the  case  of  any  one  such  affiliate,   the  aggregate  amount  of  "covered
transactions" of the insured bank and its subsidiaries  cannot exceed 10% of the
capital  stock and  surplus  of the  insured  bank;  and (ii) in the case of all
affiliates,  the aggregate amount of all "covered  transactions"  of the insured
bank and its subsidiaries  cannot exceed 20% of the capital stock and surplus of
the insured  bank.  "Covered  transactions"  are defined by statute to include a
loan or extension of credit to the affiliate, a purchase of securities issued by
an affiliate, a purchase of assets from the affiliate (unless otherwise exempted
by the Federal Reserve), the acceptance of securities issued by the affiliate as
collateral for a loan, and the issuance of a guaranty,  acceptance, or letter of
credit  for the  benefit  of an  affiliate.  Covered  transactions  must also be
collateralized. The Federal Reserve Act
<PAGE>
PART-I    ITEM 1 - BUSINESS

REGULATION (continued)

further requires that (i) "covered  transactions"  with  affiliates;  (ii) asset
sales to  affiliates;  (iii)  contractual  arrangements  with  affiliates;  (iv)
transactions  in which an  affiliate  acts as an  agent or  broker;  and (v) any
transaction in which an affiliate has a financial  interest or is a participant,
must be made: (x) on terms and under circumstances,  including credit standards,
that are  substantially  the same as those prevailing at the time for comparable
transactions  with or involving  other  nonaffiliated  companies;  or (y) in the
absence of comparable transactions, on terms and under circumstances,  including
credit  standards,  that in good faith  would be offered  to, or would apply to,
nonaffiliated companies. Certain limitations and reporting requirements are also
placed on extensions  of credit by the Bank to its  directors  and officers,  to
directors  and  officers of the  Registrant,  to principal  shareholders  of the
Registrant, and to "related interests" of such directors, officers and principal
shareholders. In addition, such legislation and regulations may affect the terms
upon which any person  becoming a director or officer of the  Registrant  or the
Bank or a principal  shareholder  of the Registrant may obtain credit from banks
with which the Bank maintains a correspondent relationship.

On July 10,  1995,  the FDIC,  the  Office of Thrift  Supervision,  the  Federal
Reserve  and the  Office of the  Comptroller  of the  Currency  published  final
guidelines  implementing the Federal Deposit Insurance  Corporation  Improvement
Act (FDICIA) requirement that the federal banking agencies establish operational
and  managerial  standards  to promote  the safety and  soundness  of  federally
insured depository institutions.  The guidelines, which took effect on August 9,
1995, establish standards for internal controls,  information systems,  internal
audit systems, loan documentation,  credit underwriting, interest rate exposure,
asset growth, and compensation,  fees and benefits.  In general,  the guidelines
prescribe  the  goals to be  achieved  in each  area,  and each  institution  is
responsible  for  establishing  its own procedures to achieve those goals. If an
institution  fails  to  comply  with  any  of the  standards  set  forth  in the
guidelines,   the  institution's  primary  federal  regulator  may  require  the
institution  to submit a plan for  achieving  and  maintaining  compliance.  The
preamble  to the  guidelines  states  that the  agencies  expect  to  require  a
compliance  plan from an  institution  whose  failure to meet one or more of the
standards  is of such  severity  that it  could  threaten  the  safe  and  sound
operation of the institution.  Failure to submit an acceptable  compliance plan,
or  failure  to  adhere  to a  compliance  plan  that has been  accepted  by the
appropriate regulator,  would constitute grounds for further enforcement action.
The federal  banking  agencies have also  published for comment  proposed  asset
quality and earnings  standards which, if adopted,  would be added to the safety
and soundness guidelines.  This proposal, like the final guidelines,  would make
each depository  institution  responsible for establishing its own procedures to
meet such goals.

The Registrant and the Bank are currently in compliance with the minimum capital
requirements  applicable  to such  institutions.  Prompted by the  enactment  of
FDICIA,  the FDIC has  established  a system  of  risk-based  deposit  insurance
premiums.  Based on the  Bank's  prevailing  capital  ratios,  the Bank has been
paying the minimum rate of FDIC insurance since the assessment period that began
January 1, 1996.

LENDING ACTIVITIES

The Bank is actively  engaged in originating  within the Bank's market area real
estate mortgage loans,  commercial loans and installment  loans. The Bank's loan
portfolio  totaled  $23,557,972 at December 31, 1998. This represents  67.83% of
its total assets.  At that date, 56.60% consisted of real estate mortgage loans,
30.09% consisted of installment loans and 13.31 % consisted of commercial loans.

Residential  Mortgage  Loans:  The Bank offers  residential  mortgage loans with
fixed rates of interest and loans with provision for periodic adjustments to the
interest rate with three-year balloon  provisions.  The Bank policy is to invest
in residential  mortgage loans in an original principal amount not to exceed 80%
of  the  market  value  of  the  mortgaged  real  estate  (referred  to  as  the
"loan-to-value ratio").
<PAGE>
PART-I ITEM 1 - BUSINESS (continued)

In the appraisal process, the Bank assesses both the borrower's ability to repay
the loan and the adequacy of the proposed security. In connection therewith, the
Bank obtains an appraisal of the secured property and information concerning the
income, financial condition, employment and credit history of the applicant. The
Bank  requires  title  insurance  insuring the priority of its lien and fire and
extended coverage  casualty  insurance in order to protect the property securing
its real estate loans.

Commercial  Mortgage  Loans:  The Bank makes mortgage  loans on commercial  real
estate  properties  such  as  office  buildings,   vacant  land  and  industrial
buildings, most of which are located in Presque Isle County.

In its underwriting of commercial  property real estate loans, the Bank may lend
up to 80% of the  securing  property's  appraised  value,  although  the  Bank's
loan-to-value  ratio on income producing property real estate loans is generally
75% or less.

Commercial real estate lending is generally  considered to involve a higher risk
than single family residential lending due to the financial  sensitivity of real
estate projects and developers to general  economic  conditions.  In originating
such real estate loans, the Bank endeavors to reduce the risk by considering the
credit of the borrower,  the location of the real estate, and the quality of the
management, construction and administration of the property.

Installment Loans: The Bank makes various types of installment loans,  including
automobile loans, marine loans,  recreational  vehicle loans, home equity loans,
loans to depositors secured by their deposit accounts, and secured and unsecured
personal loans.  The maturity of installment  loans varies depending on the type
of loan. Home equity, marine and recreational vehicle maturities can be up to 15
years.  Most other types of installment loans have maturities of less than eight
years. The interest rate o the majority of installment loans is fixed.

Commercial  Loans:  The Bank  makes  commercial  loans  (other  than  commercial
mortgage  loans) to  manufacturers,  retailers,  and farmers for the purchase of
equipment,  for working capital and for renovations.  Commercial loans generally
have a higher degree of risk than do mortgage  loans.  While  mortgage loans are
secured  by real  estate  property  the  value  of  which  tends  to be  readily
ascertainable,  commercial  loans  typically  are  made  on  the  basis  of  the
borrower's  ability to make repayment from the cash flow of the business and are
either  unsecured or secured by business  assets,  such as accounts  receivable,
equipment  and  inventory.  As a  result,  the  availability  of  funds  for the
repayment of commercial loans may be substantially dependent upon the success of
the business itself.

COMPETITION

The Bank's primary  market area consists of Presque Isle County,  Michigan where
its sole office is located.  The Bank encounters strong  competition both in the
attraction  of  deposits  and the making of real estate and other  loans.  Huron
National Bank is the smaller of two banks located in Rogers City.  The other was
purchased by a bank holding company and converted into a branch office. The Bank
also competes for loans and deposits with a savings and loan institution and two
credit  unions.  In addition,  a total of three other Banks operate  branches in
Presque Isle County.  Money market funds also compete for deposits in the Bank's
service area. The principal methods used by the Bank to attract deposit accounts
include the variety of  services  offered,  the  interest  rate  offered and the
convenience of office location. The Bank's competition for real estate and other
loans comes from these same financial institutions.  The Bank competes for loans
through interest rates,  loan  maturities,  loan fees and the quality of service
extended to borrowers.

In addition to the  financial  institutions  which have  offices in Presque Isle
County,  the Bank competes with several  commercial  banks and savings and loans
institutions in surrounding counties, many of which are larger than the Bank.

Further  discussion  of the  Registrant's  business is presented in the Business
section on page 9 in the 1998 Annual Report to Shareholders  incorporated herein
by reference.
<PAGE>
PART-I ITEM 1 - BUSINESS (continued)

COMPETITION (continued)

I.      STATISTICAL DISCLOSURE

     (A)  Distribution of Assets, Liabilities and Shareholders' Equity;

     (B)  Interest Rates and Interest Differential

A  table  and  discussion  of  the  Distribution  of  Assets,   Liabilities  and
Shareholders'  Equity  and  Interest  Rates  and  Interest  Differential  is  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  on pages 3 through 5 under  Analysis of Net Interest  Income in the
1998 Annual Report to Shareholders.  Such information is incorporated  herein by
reference.

II.      INVESTMENT PORTFOLIO

     (A)  A table of book values of the investment  portfolio as of December 31,
          1998 and 1997 is set  forth in Note 3 on  pages  18 and 19 of the 1998
          Annual Report to Shareholders. Such information is incorporated herein
          by reference.

     (B)  The following table shows the relative  maturities and weighted yields
          of investments in debt securities at December 31, 1998:
<TABLE>
                                                             1 Year or Less            1 Year - 5 Years     5 Years - 10 Years
                                                          Amount           Yield   Amount         Yield    Amount          Yield
    <S>                                                  <C>               <C>     <C>            <C>     <C>              <C>
    U.S. Treasury securities and obligations of U.S.
      Government, Corporations and Agencies               $501,457         6.13%     300,103      5.75%   $ 511,771        5.19%
    States and Municipals (1)                              644,851         6.93%   2,019,439      8.59%     291,307        6.31%
    Mortgage-backed                                         88,620         6.21%
    Corporate                                              450,566         6.66%     736,155      6.21%
                 Totals                                  1,685,494         6.59%   3,055,697      7.74%   $ 803,078        5.60%
</TABLE>

(1)  Weighted  average  yield  adjusted  to a taxable  equivalent  basis using a
federal income tax rate of 34%.

III.     LOAN PORTFOLIO

     (A)  A table and discussion  of the loan  portfolio as of December 31, 1998
          and 1997  is  in  Management's   Discussion  and Analysis of Financial
          Condition  and  Results  of Operations  on page 8 under Loans and Loan
          Review Process and in  Notes 1 and 4 on pages 17 and 19, respectively,
          in  the  1998 Annual  Report to  Shareholders,  incorporated herein by
          reference.

     (B)  The  following  table sets forth the remaining maturity of  commercial
          loans  at December  31,  1998  according  to  scheduled  repayments of
          principal.
<TABLE>
                                                     1 Year or Less      1 - 3 Years           Total
           <S>                                         <C>                 <C>               <C>
           Commercial loans(l)                         $3,056,110          $79,420           $3,135,530
</TABLE>
               (1) These  loans are  disclosed  at their  contractual  maturity,
               however,  a  significant  number  of  loans  are  rolled  over at
               maturity.  These rollovers occur because contractual  maturity is
               short-term  and  provides  management  the ability to  frequently
               review the customers' credit worthiness.
<PAGE>
PART-I ITEM 1 - BUSINESS (continued)

III.     LOAN PORTFOLIO (continued)

      (C)   (1) Nonaccrual, Past Due and Restructured Loans

     The following table sets forth non-performing loans at December 31:
<TABLE>
                                                                    1998          1997
<S>                                                              <C>            <C>
Loans accounted for on a nonaccrual basis                         $28,855        $9,500
Aggregate amount of loans ninety days or more past due
 (excludes loans on nonaccrual status above)                          479        23,518
Troubled debt restructuring where terms have been
 renegotiated to provide a reduction or deferral of interest
 or principal because of a deterioration in the financial
 position of the borrower (excludes nonaccrual and loans
 past due ninety days or more above)                              135,484        18,333
                                                                 --------       -------
Total non-performing loans                                       $164,818       $51,351
                                                                 ========       =======
Ratio for allowance for loan losses to non-performing loans         1.09x         3.52x
</TABLE>

The accrual of interest is  discontinued  at the point in time at which  serious
doubt exists as to the  collectibility of loan principal or interest.  Each loan
is  evaluated  on  its  own  merits;  therefore,  loans  are  not  automatically
classified as nonaccrual based upon standardized criteria.

          (2)  There  are  no  material  loans  that  are  current  as to  which
          management  has serious  doubts as to the  ability of the  borrower to
          comply with the loan  repayment  terms,  or which are expected to need
          adjustments in their repayment terms, or which are believed to require
          additional provisions for loan losses.

          (3) There were no foreign  loans  outstanding  as of December 31, 1998
          and 1997.

          (4) There are no  concentrations of loans exceeding 10% of total loans
          which are not already disclosed as a category at December 31, 1998.

     (D) As of December 31, 1998,  there were no other  interest-bearing  assets
     that would be  required to be  disclosed  under Item III,  Parts  (C)(1) or
     (C)(2) of the Loan Portfolio listing if such assets were loans.

IV.      SUMMARY OF LOAN LOSS EXPERIENCE

     (A) The following  table sets forth  balances and summarizes the changes in
     the allowance for loan losses for each of the years ended December 31:
<TABLE>
                                                                             1998           1997
<S>                                                                        <C>            <C>
Balance of allowance for loan losses at the beginning of year:             $180,631       $174,955
Charge-offs:        Commercial loans                                         16,873         27,428
                    Real estate loans                                             0          3,000
                    Installment loans                                         7,843          4,801
                                                                           --------       --------
                         Total charge-offs                                   24,716         35,229

Recoveries:         Commercial loans                                          1,208          1,974
                    Real estate loans                                             0              0
                    Installment loans                                         1,124          2,931
                                                                           --------       --------
                         Total recoveries                                     2,332          4,905
</TABLE>
<PAGE>
PART-I ITEM 1 - BUSINESS (continued)

IV.      SUMMARY OF LOAN LOSS EXPERIENCE (continued)
<TABLE>
                                                                      1998            1997
<S>                                                              <C>            <C>
Net loans charged-off                                               22,384         30,324
Additions to allowance charged to operating expense                 21,000         36,000
                                                                 ---------      ---------
Balance at end of year                                            $179,247       $180,631
                                                                ==========     ==========
Average gross loans outstanding                                 21,680,000     19,744,000
Percent of net charge-offs during the period to average
gross loans outstanding                                              0.10%          0.15%
</TABLE>

Further  discussion  of the  provision  and allowance for loan losses as well as
non-performing  loans is presented in  "Management's  Discussion and Analysis of
Financial  Condition and Results of  Operations"  on page 8 under Loans and Loan
Review Process and in Notes 1, 4 and 5 on pages 16, 19 and 20 in the 1998 Annual
Report to Shareholders, incorporated herein by reference.

     (B) The  following  table  presents an allocation of the allowance for loan
     losses to the various loan categories for each year ended December 31:
<TABLE>
                                                         1998                                          1997
                                              Allowance          % of Loans to            Allowance        % of Loans to
                                               Amount            Total Loans                Amount         Total Loans
          <S>                                <C>                 <C>                      <C>              <C>
          Commercial                          $22,975             13.31%                    $17,932         13.96%
          Real estate                          25,949             56.60%                     18,637         53.32%
          Installment                          11,295             30.09%                     18,618         32.72%
          Unallocated                         119,028                                       125,444
                                             --------            -------                  ---------        -------
             Total                           $179,247            100.00%                   $180,631        100.00%
                                             ========            =======                  =========        =======
</TABLE>
V. DEPOSITS

     (A) The  following  table  sets  forth  average  deposit  balances  and the
     weighted average rate paid for the years ended December 31:
<TABLE>
                                                                             1998                                    1997
                                                                            Average                                 Average
                                                                   Balance          Rate                       Balance      Rate
               <S>                                             <C>                  <C>                     <C>             <C>
               Demand Deposits                                  $3,936,969          0.00%                     $3,684,452    0.00%
               Interest-bearing
                demand deposits                                  3,968,654          2.84%                      4,021,178    2.80%
               Savings                                           6,705,744          2.50%                      6,545,513    2.56%
               Time deposits under $100,000                     13,375,154          5.49%                     12,311,297    5.51%
               Time deposits over $100,000                       1,927,264          5.33%                      1,812,760    5.79%
                                                              ------------          -----                    -----------    -----
                  Total                                        $29,913,785          3.74%                    $28,375,200    3.75%
                                                              ============          =====                    ===========    =====
</TABLE>
<PAGE>
PART-I ITEM 1 - BUSINESS (continued)

     (B) The following table  summarizes  carrying  balances of time deposits in
     amounts  of $100,000  or more  by time  remaining  until  maturity  as of
     December 31, 1998:
<TABLE>
                                <S>                                                     <C>
                                Three months or less                                    $ 1,550,000
                                Over three months through six months                        339,000
                                Six months through one year                                       0
                                Over one year                                               100,000
                                                                                       ------------
                                    Total                                                 1,989,000
                                                                                       ============
</TABLE>
<TABLE>
                                                                                1998          1997
                    <S>                                                        <C>           <C>
                    Net Income to average assets                                1.15%         1.08%
                    Net Income to average shareholders' equity                 13.28%        13.56%
                    Cash dividend payout ratio                                 29.59%        29.59%
                    Average shareholders' equity to average total assets        8.66%         7.98%
</TABLE>

VII.       SHORT TERM BORROWING

             NONE

VIII.      ADDITIONAL ITEM - EXECUTIVE OFFICERS

     Executive officers of the Registrant are appointed annually by the Board of
     Directors  at the  meeting of  Director  following  the  Annual  Meeting of
     Shareholders. There are no family relationships among these officers and/or
     Directors of the Registrant nor any  arrangement or  understanding  between
     any officer and any other person pursuant to which the officer was elected.

     The  following  sets  forth  certain   information   with  respect  to  the
     Registrant's executive officers as of December 31, 1998:
<TABLE>
                                                                                                       First Elected
                    Name (age)                           Position with Registrant               Officer of the Registrant
                    <S>                                  <C>                                             <C>
                    Ervin Nowak (67)                     Chairman                                         1990
                    Michael L. Cahoon (65)               President and Chief Executive Officer            1990
                    Paulette D. Kierzek (49)             Chief Financial Officer                          1990
</TABLE>

Mr. Nowak is a Director of the Registrant and Chairman of the Board of Directors
of Huron National Bank, a position he has held for more than five years.

Mr.  Cahoon is a  Director  of the  Registrant,  President  and Chief  Executive
Officer.  He is also and has been a  Director,  President  and  Chief  Executive
Officer of the Bank since 1984.

Mrs.  Kierzek is the Chief  Financial  Officer of the Registrant and Cashier and
Secretary to the Board of Directors of Huron  National  Bank, a position she has
held for more than five years.
<PAGE>
ITEM 2 - DESCRIPTION OF PROPERTY

     The Bank owns the land and building on which the Bank's  office is located,
     200  East  Erie  Street,  Rogers  City.  Michigan.  There  are no  liens or
     mortgages on the above property.

     The  Registrant  operates  its  business at the same  address as the Bank's
     office. No other properties are owned by the Registrant.

ITEM 3 - PENDING LEGAL PROCEEDINGS

     NONE

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters  submitted to a vote of security  holders  during the
     quarter ended December 31, 1998.

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Information  for this item  appears on page 2 of the 1998 Annual  Report to
     Shareholders and is incorporated herein by reference.

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

     Information  for this item  appears on pages 3 through 9 of the 1998 Annual
     Report to Shareholders and is incorporated herein by reference.

ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following  consolidated financial statements appear on pages 11 to 25 in the
Annual  Report to  Shareholders  for the year ended  December  31,  1998 and are
incorporated herein by reference:

                     Report of Independent Auditors
                     Consolidated Balance Sheets
                     Consolidated Statements of Income
                     Consolidated Statements of Changes in Shareholders' Equity
                     Consolidated Statements of Cash Flows
                     Notes to the Consolidated Financial Statements

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

     NONE
<PAGE>
                                    PART-III

ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  for this item appears under the headings  "Election of  Directors";
"List of Directors and Nominees for Election as Directors";  and  "Committees of
the Board of Directors"  in the  Registrant's  1999 Proxy  Statement to be filed
with the Commission, incorporated herein by reference. In addition, reference is
made to "Additional Item" under Part I of this Form 10-KSB Report on page 6.

ITEM 10 - EXECUTIVE COMPENSATION

Information  for this item  appears  under the heading of "Summary  Compensation
Table" in the Registrant's 1999 Proxy Statement to be filed with the Commission,
incorporated herein by reference.

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  for this item appears under the headings of  "Principal  Holders of
Securities";  and "Voting  Securities and Beneficial  Ownership of Directors and
Officers"  in the  Registrant's  1999  Proxy  Statement  to be  filed  with  the
Commission, incorporated herein by reference.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information for this item appears under the heading of "Other  Transactions"  in
the  Registrant's  1999  Proxy  Statement  to  be  filed  with  the  Commission,
incorporated  herein by reference.  In addition,  reference is made to Note 4 of
the Companys' Financial Statements filed under Item 7 of this Report.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

        3. Exhibits
               Reference is made to the Exhibit Index on page 10 of this report.

(b) Report on Form 8-K 
    No reports on Form 8-K were filed during the last quarter of the year
    covered by this report.
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 15, 1999.


                          HURON NATIONAL BANCORP, INC.




Michael L. Cahoon                                    Paulette D. Kierzek
President and Chief Executive Officer                Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed by the  following  persons in the  capacities  indicated on
March 15, 1999.


Ervin Nowak                                          Lynwood Lamb
Chairman of the Board                                Director


Marvin Beatty                                        Leon Delekta
Vice Chairman of the Board                           Director



Eugene McLean                                        Michael L. Cahoon
Director                                             Director, President and CEO



Donald Hampton                                       Louis Dehring
Director                                             Director



John Tierney
Director



Dale L. Bauer                                         Paulette D. Kierzek
Vice President                                        Cashier
<PAGE>
                                INDEX TO EXHIBITS



The following  exhibits are filed or  incorporated  by reference as part of this
report:

     3(i)      Articles of  Incorporation  of the  Registrant  as  currently  in
               effect  and  any  amendments  thereto   (incorporated  herein  by
               reference   to  exhibit  3(A)  of  the   Registrant's   Form  S-4
               Registration Statement dated March 13, 1990, No. 33-33874).

     3(ii)     Bylaws  of  the   Registrant  as  currently  in  effect  and  any
               amendments thereto  (incorporated  herein by reference to exhibit
               3(B) of the Registrant's  Form S-4  Registration  Statement dated
               March 13, 1990, No. 33-33874).

     13        Annual Report for the year ended December 31, 1998.

               The consolidated  financial  statements and notes related thereto
               appear on pages 11 - 25, and the other  financial  information on
               page 1 in the Annual Report to Shareholders  are  incorporated by
               reference in this Form 10-KSB Report. With the exception of these
               statements and information, the Annual Report to Shareholders for
               the year ended  December 31, 1998, is not deemed filed as part of
               this Form 10-KSB Report.

     21        List of Subsidiary on page 11.

     27        Financial Data Schedule on page 12.
<PAGE>
EXHIBIT 13
                                      HNB

                          Huron National Bancorp, Inc.





                                  ANNUAL REPORT

                                      1998
<PAGE>
                          HURON NATIONAL BANCORP, INC.

                                    CONTENTS


SELECTED FINANCIAL DATA..................................................      1


TWO YEAR SUMMARY OF COMMON STOCK DATA BY QUARTER ........................      2



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
  CONDITION AND RESULTS OF OPERATIONS....................................      3



BUSINESS.................................................................      9

DIRECTORS AND EXECUTIVE OFFICERS.........................................     10

CONSOLIDATED FINANCIAL STATEMENTS:

     Report of Independent Auditors......................................     11

     Consolidated Balance Sheets.........................................     12

     Consolidated Statements of Income...................................     13

     Consolidated Statements of Changes in Shareholders' Equity..........     14

     Consolidated Statements of Cash Flows...............................     15

     Notes to the Consolidated Financial Statements......................  16-25
<PAGE>
                          HURON NATIONAL BANCORP, INC.
                             SELECTED FINANCIAL DATA
<TABLE>
                                                                        For the Year Ended December 31,
    SUMMARY OF OPERATIONS                                        1998              1997             1996              1995

        <S>                                               <C>               <C>              <C>            <C>              
        Total interest income                             $ 2,445,180       $ 2,308,579      $ 2,195,890    $ 1,990,838   $1,823,975
        Total interest expense                              1,151,318         1,117,854        1,075,226        870,052      713,398
        Net interest income                                 1,293,862         1,190,725        1,120,664      1,120,786    1,110,577
        Provision for loan losses                              21,000            36,000           36,000         33,500       30,000
        Net interest income after provision
        for loan losses                                     1,272,862         1,154,725        1,084,664      1,087,286    1,080,577
        Noninterest income                                    132,034           135,432          147,347        181,258      119,869
        Noninterest expense                                   865,599           818,870          786,566        823,719      793,527

        Income before income tax                              539,297           471,287          445,445        444,825      406,919
        Provision for income tax                              159,097           133,356          138,507        138,618      135,375

         NET INCOME                                          $380,200          $337,931         $306,938       $306,207     $271,544

    AVERAGE SHARES OUTSTANDING                                 62,500            62,500           62,500         62,500       62,500

    PER SHARE DATA

        Basic earnings                                          $6.08             $5.41            $4.91          $4.90        $4.34
        Cash dividends                                           1.80              1.60             1.50           1.25         1.00
        Book value, end of year                                 47.25             42.85            39.03          35.76        31.81

    TOTAL AVERAGE EQUITY (000's)                               $2,864            $2,493           $2,363         $2,141       $1,909

    TOTAL AVERAGE ASSETS (000's)                              $33,061           $31,238          $29,661        $26,395      $25,431

    RATIOS

        Return on average total assets                          1.15%             1.08%            1.03%          1.16%        1.07%
        Average shareholders' equity to average
        total assets*                                           8.66%             7.98%            7.97%          8.11%        7.51%
        Return on average shareholders' equity*                13.28%            13.56%           12.99%         14.30%       14.22%
        Dividend payout ratio (dividends divided
        by net income)                                         29.59%            29.59%           30.54%         25.51%       23.02%

    PERIOD END TOTALS (000's)

        Total assets                                          $34,729           $31,615          $30,292        $27,752      $25,549
        Total loans                                            23,558            19,854           19,186         17,721       17,031
        Total deposits                                         31,455            28,712           27,594         25,277       23,280
        Shareholders' equity                                    2,953             2,678            2,440          2,235        1,988
</TABLE>
  Average  shareholders'  equity  includes net average  unrealized  gain/loss on
  securities available for sale.
<PAGE>
                TWO YEAR SUMMARY OF COMMON STOCK DATA BY QUARTER

There is no established trading market in the Company's common stock. Such sales
as there are  generally  occur in Presque Isle County,  Michigan.  The following
table  summarizes  sales the Company has knowledge of occurring  during the last
two years. Where known, the average sales price is given. Because the shares are
sold infrequently and not on any exchange,  the numbers shown cannot necessarily
be considered to be an accurate reflection of true market value.
<TABLE>

                                               1998                                        1997
                                   Number of            Average Price           Number of        Average Price
                                    Shares                Per Share              Shares            Per Share
<S>                                <C>                 <C>                      <C>                 <C>
First Quarter                      50                  Price Unknown              100                 $32.00

Second Quarter                     25                     $40.00                   26                 $32.00
                                  150                     $39.00

Third Quarter                      12                     $38.00                   50                 $34.00
                                                                                  150                 $36.00

Fourth Quarter                     10                     $40.00                 None
</TABLE>


As of December 31, 1998, the Company's shareholder list reflected  approximately
631  shareholders  of record and there were 62,500 shares of common stock issued
and outstanding.

Dividends  declared  per  share  were  $1.80  and  $1.60  during  1998 and 1997,
respectively.
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


This section presents  information  relevant to understanding  and assessing the
consolidated  financial  condition and results of  operations of Huron  National
Bancorp,  Inc.  and its  wholly-owned  subsidiary,  Huron  National  Bank.  This
discussion  should  be read  in  conjunction  with  the  consolidated  financial
statements and related footnotes contained elsewhere in this report.


SUMMARY Net income of $380,200  was  reported in 1998  compared to net income of
$337,931 in 1997 and  $306,938 in 1996.  Basic  earnings  per share was $6.08 in
1998  compared to $5.41 in 1997 and $4.91 in 1996.  For 1998,  return on average
assets and average equity equaled 1.15% and 13.28%, respectively.  This compares
to 1.08% and 13.56% in 1997 and 1.03% and 12.99% in 1996.

As of year-end,  total assets were  $34,728,679,  an increase of  $3,113,541  or
9.85% over December 31, 1997.  This increase  followed an increase of $1,322,868
in 1997's total assets over 1996's. Total loans increased $3,704,271 at December
31,  1998 when  compared  to  December  31,  1997,  while  securities  decreased
$1,070,462  and cash and cash  equivalents  increased  by $529,552  for the same
period.  These increases were funded by growth in customer  deposits.  In total,
the Bank's deposits  increased from  $28,712,049 in 1997 to $31,454,714 in 1998,
with time  deposits  growth  of  $1,892,983  and  interest  bearing  transaction
accounts of $661,871. Customers are now committing funds for extended periods of
time.

Shareholders'  equity as a percent of assets  increased to 8.50% at December 31,
1998  compared  to 8.47%  for  December  31,  1997.  This is the  result  of the
Company's earnings keeping pace with asset growth.


RESULTS OF OPERATIONS

Analysis of Net Interest Income
The  difference  between  interest  generated by the Bank's  earning  assets and
interest paid on  liabilities  is referred to as net interest  income,  the most
significant component of the Bank's earnings. In 1998, net interest income, on a
fully tax equivalent basis increased by $100,000  compared to 1997. The increase
in the level of deposits  partially  offset the positive  impact on net interest
income from the increase in interest earning assets.

The following table summarizes the increases in net interest income.
<TABLE>
   Net Interest Income
     (in thousands; fully taxable equivalent basis)               1998             1997              1996
   <S>                                                          <C>              <C>                <C>
   Interest Income                                              $2,487           $2,354             $2,222

   Interest Expense                                              1,151            1,118              1,076

   Net Interest Income                                          $1,336           $1,236             $1,146

   Increase in Net Interest Income                                $100              $90                $13
    Percent Increase of Net Interest Income                       8.00%            7.88%              1.16%
</TABLE>
<PAGE>
The two variables that have the most significant effect on the change in the net
interest  income are volume and rate.  Below is a chart  which  illustrates  the
impact of changes in these two important variables for 1998 and 1997.
<TABLE>

Change in Net                                              1998 Over 1997                         1997 Over 1996
Interest Income (1)                                         Change Due to:                        Change Due to:
(In thousands; fully taxable equivalent basis     Volume         Rate       Total        Volume       Rate        Total
   <S>                                            <C>            <C>        <C>          <C>          <C>         <C>
   Interest Income
       Loans                                      $177           $(31)       $146         $126          $(6)       $120
       Taxable securities                          (28)             2         (26)         (47)          (5)        (52)
       Tax-exempt securities                       (15)             3         (12)          60            0          60
       Federal funds sold and other                 25              0          25            2            2           4
           Total Interest Income                   159            (26)        133          141           (9)        132

   Interest Expense
       Interest bearing DDA                         (2)            (4)         (6)           3           (8)         (5)
       Savings                                       4             (5)         (1)           4          (12)         (8)
       Time deposits                                69            (29)         40           38           17          55
            Total Interest Expense                  71            (38)         33           45           (3)         42

    Net Interest Income                            $88            $12        $100           96          $(6)         90
</TABLE>
           (i) For purposes of these  tables,  changes in interest due to volume
           and rate were determined as follows:

               Volume  Variance-change  in  volume  multiplied  by the  previous
               year's rate.

               Rate  Variance-change  in rate  multiplied by the previous year's
               volume.

               Rate/Volume Variance-change in volume multiplied by the change in
               rate.  This  variance was  allocated to volume  variance and rate
               variance in proportion to the relationship of the absolute dollar
               amount of the change in each.


Analysis  of the  Bank's net yield on  earning  assets is also used to  evaluate
changes  in net  interest  income.  The net yield on earning  assets  employs an
effective  cost  of  funds  by   recognizing   interest-free   liabilities   and
shareholders'  equity which fund earning assets, and is computed by dividing net
interest income by earning assets.
<PAGE>
The  table  below   summarizes   the  Company's   average   balances,   interest
income/expense,  interest rates, net yield on earning assets,  and interest rate
spread.
<TABLE>
        Interest Rate Spread and Net
         Yield on Earning Assets                          1998                        1997                      1996
         (In Thousands)                     Average                      Average                     Average
        Assets                              Balance    Interest  Rate    Balance    Interest  Rate   Balance  Interest  Rate
         <S>                                <C>         <C>      <C>     <C>        <C>       <C>    <C>      <C>       <C>
           Loans                             21,662     $1,991   9.19%   $19,744    $1,845    9.35%  $18,386  $1,725    9.38%
         Taxable securities                   4,384        270   6.15%     4,837       296    6.13%    5,602     348    6.22%
         Tax-exempt securities (fully
           taxable equivalent basis)          1,750        123   7.02%     1,974       135    6.84%    1,101      75    6.85%
         Federal funds sold                   1,853        101   5.46%     1,387        76    5.44%    1,342      72    5.27%
         Other                                   38          2   6.00%        38         2    6.00%       38       2    6.00%
           Total interest earning            29,687      2,487   8.38%    27,980     2,354    8.41%   26,469   2,222    8.39%
         Cash and due from banks              2,725                        2,635                       2,642
         Other assets, net                      649                          623                         550
             Total Assets                   $33,061                     $ 31,238                    $ 29,661
                                            =======                     ========                    ========
        Liabilities
         Interest bearing DDA's              $3,968        107   2.70%    $4,021       113    2.80%   $3,930     118    2.99%
         Savings                              6,706        166   2.48%     6,546       167    2.56%    6,368     175    2.75%
         Time deposits                       15,329        878   5.73%    14,124       838    5.93%   13,472     783    5.81%
           Total interest bearing            26,003      1,151   4.43%    24,691     1,118    4.53%   23,770   1,076    4.52%
         DDA's                                3,911                        3,684                       3,260
         Other liabilities                      283                          370                         268
         Shareholders' equity                 2,864                        2,493                       2,363
             Total liabilities and equity   $33,061                       31,238                    $ 29,661
                                            =======                       ======                    ========
             Net Interest Income (fully                $ 1,336                     $ 1,236                   $ 1,146
               taxable equivalent basis)               =======                     =======                   =======

             Net yield on interest earning assets                4.50%                        4.42%                     4.33%
                                                                 =====                        =====                     =====
             Net interest spread                                 3.95%                        3.89%                     3.87%
                                                                 =====                        =====                     =====
             Interest earning assets/
               interest bearing liabilities                      1.14x                        1.13x                     1.11x
</TABLE>
<PAGE>
Non-Interest Income

The Company  recorded  noninterest  income of $132,034,  a decrease of $3,398 or
(2.51)% from $135,432 in 1997. This decrease was  attributable to a reduction in
service charges on returned checks,  non-sufficient funds and other service fees
in 1998.

Non-Interest Expense

During 1998, noninterest expense increased by $46,729 or 5.71 % from $818,870 in
1997 to $865,599 in 1998. The increases  included $27,470 in salaries & benefits
which  included  contributions  to the SEP  Plan  and  the  normal  increase  in
salaries. The other increases include $6,275 in Premises & Equipment and $14,173
in Other Operating Expenses.

Provision for Income Taxes

The  provision  for income  taxes was  $159,097 in 1998  compared to $133,356 in
1997,  an  increase of $25,741 or 19.30%.  The  effective  tax rate,  derived by
dividing  applicable  income tax expense by income before taxes, was 30% in 1998
and 28% in 1997.


FINANCIAL CONDITION

Liquidity and Interest Rate Sensi

The  Bank's  principal   asset/liability   management   objectives  include  the
maintenance  of adequate  liquidity and  appropriate  interest rate  sensitivity
while maximizing net interest income.

Liquidity  is generally  defined as the ability to meet cash flow  requirements.
For a bank,  meeting cash flow  requirements  means  having  funds  available to
satisfy  customer  credit  needs  as  well as  having  funds  available  to meet
depositor  withdrawal requests.  For the parent company,  liquidity means having
funds available to pay cash dividends and other operating expenses.

The Bank's primary sources of short-term  liquidity are its securities available
for sale and ability to raise money through federal funds purchased.  Its longer
term sources of liquidity are maturities of securities, loan repayments,  normal
deposit growth and  negotiable  certificates  of deposit.  The primary source of
funds for the parent company is the upstream of dividends from the Bank.

Management  believes  the Bank has  adequate  sources of  liquidity  to meet its
anticipated requirements.

As previously noted,  interest income and interest expense are also dependent on
changing  interest rates. The relative impact of changing  interest rates on net
interest  income  depends  on  the  rate  sensitivity  to  such  changes.   Rate
sensitivity generally depends on maturity structures, call provisions, repayment
penalties etc. of the respective financial  instruments.  The Bank's exposure or
sensitivity to changing interest rates is measured by the ratio of ratesensitive
assets to rate-sensitive  liabilities.  Management believes that the Bank's rate
sensitive position is adequate in a normal interest rate movement environment.
<PAGE>
GAP Analysis

The following  table as of December 31, 1998 reflects how management has matched
assets  to  liabilities  that  mature  or have the  ability  to  reprice  in the
following time frame:
<TABLE>
    Assets                           0-90 Days         91-365 Days       1 - 3 Years     3 - 5 Years        5 Years +     Total
    <S>                             <C>                <C>               <C>            <C>               <C>           <C>
    Loans                           $1,674,000         $3,007,000        $4,284,000     $ 8,317,000       $6,276,000    $ 23,558,000

    Investments                        296,000          1,410,000         2,473,000         573,000          810,000       5,562,000
    Federal Funds                    1,700,000                  0                 0               0                0       1,700,000
      Total                          3,670,000          4,417,000         6,757,000       8,890,000        7,086,000      30,820,000

    Liabilities
    Interest-bearing
      transaction accounts           4,534,000                                                                             4,534,000
    Savings                          6,856,000                                                                             6,856,000
    Certificates of Deposit          4,881,000          4,572,000         4,408,000       2,347,000                       16,208,000
      Total                         16,271,000          4,572,000         4,408,000       2,347,000                0      27,598,000

    Asset/(Liabilities) GAP        (12,601,000)          (155,000)        2,349,000       6,543,000        7,086,000       3,222,000
                                  ============      =============     ==============    ===========       ==========     ===========
    Cumulative GAP                $(12,601,000)     $ (12,756,000)    $ (10,407,000)    $(3,864,000)      $3,222,000
                                  ============      =============     =============     ===========       ==========
</TABLE>

Interest-bearing transaction and savings accounts are classified as repricing in
0-90 days as these instruments  provide management with the discretion to adjust
their rates.  Further,  because this category has no maturity  schedule or early
withdrawal penalty, depositors are free to move their funds based on rate alone.
Therefore, management recognizes that these categories, although generally lower
costing funds, are rate sensitive to the extent of interest rate movements.

The Bank's  cumulative  1 year GAP  position  increased  from  ($11,137,000)  at
December  31,  1997 to  ($12,756,000)  at  December  31,  1998 as a result  of a
decrease of asset  maturities in the investment area.  Management  believes that
the GAP  overstates  true  interest  sensitivity.  Interest  exposure  is not as
significant  as  expressed  in the above  schedule as rates on  interest-bearing
transaction  and  savings  accounts  may  not  reprice  on an  "instant  basis".
Management  believes  liabilities  do not need to be  repriced  as soon as rates
begin to move which  gives them a "lag time" in the market and for the assets to
reprice.  It is also their  belief  that they are in a  sufficient  position  to
minimize  any adverse  effect to the Bank's  financial  position due to interest
rate changes.

Capital

Management  attempts to maintain  sufficient capital to take advantage of market
opportunities, yet provide a fair return to its shareholders.

The National Bank Act places  limitations  on the ability of the Bank to declare
and pay dividends.  As a general matter,  the Bank may not pay dividends greater
than the  total of the  Bank's  net  profits  for that  year  combined  with its
retained net profits of the two preceding years. Further, the Comptroller of the
Currency may prohibit the payment of cash  dividends  where it deems the payment
to be an unsafe and unsound banking practice.  Under the most restrictive of the
dividend  restrictions,  in 1999 the Bank  could  pay  additional  dividends  of
approximately $516,000 plus 1999 net income to the Holding Company.
<PAGE>
Management believes that a strong capital position is paramount to its continued
profitability and continued depositor and investor confidence.  It also provides
Huron National Bank flexibility to take advantage of growth opportunities and to
accommodate larger Bank loan customers. Regulators have established "risk-based"
capital  guidelines  for  banks  and  bank  holding  companies.  Because  of the
Company's and Bank's size,  regulatory  capital  requirements  apply only to the
Bank.

Under the guidelines,  minimum capital levels are established for risk based and
total  assets.  For the  risk  based  computation,  the  ratio  is  based on the
perceived risk in asset categories and certain off-balance-sheet items, such as
standby  letters of credit.  The  guidelines  define  Tier 1 capital  and Tier 2
capital.  Tier 1 capital  includes  common  shareholders'  equity,  while Tier 2
Capital adds the allowance for loan losses.  Tier 1 Capital cannot exceed Tier 2
Capital.  Banks are  required to have ratios of Tier 1 Capital to risk  weighted
assets of 4% and total capital (Tier 1 plus Tier 2) of 8%. At December 31, 1998,
Huron  National  Bank had  capital  ratios  well  above the  minimum  regulatory
guidelines as noted within footnote 14 of the Consolidated Financial Statements.

Loans and Loan Review Process

Maintaining  high asset  quality  is a key  determinant  of the Bank's  success.
Therefore,   Management   continually  monitors  impaired,   non-performing  and
delinquent loans and reports them monthly to the Board of Directors.

Non-accrual and loans past due 90 days or more approximated  $29,334 or 0.12% of
total loans at December 31, 1998  compared to  approximately  $33,018 or 0.17% a
year earlier.

The  provision for loan losses was $21,000 in 1998 and $36,000 in 1997 and 1996.
For the same years,  charge-offs,  net of recoveries,  were $22,384, $30,324 and
$5,145, respectively.

The allowance for loan losses is at $179,247 or 0.76% of total loans at December
31, 1998  compared to  $180,631 or 0.91 % of total loans at year-end  1997.  The
allowance is consistent  with  Management's  recognition  of problem loans along
with Management's  strategy to emphasize the quality of the loan portfolio.  The
allowance  is  considered  adequate  by  Management.  (See  also  Note  1 to the
Consolidated Financial Statements)

Effects of Inflation

Inflation  can have a  significant  affect on the reported  financial  operating
results of all  industries.  This is especially  true in industries  with a high
proportion of fixed assets and inventory.  Inflation has an impact on the growth
of total assets in the banking  industry and the need to maintain a proper level
of equity capital.

Interest rates are significantly  affected by inflation,  but it is difficult to
assess the impact since  neither the timing nor the  magnitude of the changes in
the consumer price index coincide with changes in interest  rates.  There is, of
course, an impact on longer-term earning assets;  however, this effect continues
to diminish as investment  maturities are shortened and interest-earning  assets
and   interest-bearing   liabilities   shift  from   fixed-rate   long-term   to
rate-sensitive short-term.
<PAGE>
BUSINESS

Huron National  Bancorp,  Inc.,  along with its wholly-owned  subsidiary,  Huron
National  Bank,  provides its customers  with a full line of commercial  banking
services  with its only  office  located in Rogers  City,  Michigan.  The Bank's
customer base consists of individuals, agricultural concerns, resort and related
businesses and small to medium-sized manufacturing companies. The Bank's service
area consists  primarily of Presque Isle County in the  northeastern  portion of
Michigan's lower peninsula.

Huron  National  Bank is the largest of two banks  located in Rogers  City.  The
other was  purchased  by a bank  holding  company  and  converted  into a branch
office.  The Bank also  competes for loans and deposits  with a savings and loan
institution,  and two credit unions.  In addition,  a total of three other Banks
operate branches in Presque Isle County, and money market funds also compete for
deposits in the Bank's service area.

The Bank regularly makes  commitments for secured term loans and commitments for
lines of credit.  These lines of credit are  reviewed on an annual  basis by the
Bank's  Board of  Directors.  However,  these  commitments  are firm only to the
extent that the respective  borrower maintains a satisfactory credit history and
does not  represent  any  unusual  credit  risk.  The Bank  had  $2,308,200  and
$1,832,000 as of December 31, 1998 and 1997 in  outstanding  lines of credit and
commitments to make loans of which  $1,041,940 and $770,142 were still available
to the respective borrower.  Furthermore,  the Bank had issued letters of credit
totaling $199,571 as of December 31, 1998.

A  portion  of  the  Bank's  deposits  are  obtained  from  and  loans  made  to
agricultural  concerns  and resort and  related  businesses.  There are no other
material  concentrations  of credit to, nor have other material  portions of the
deposits been received from, a single person, persons, industry or group.

The economy of the market area served by the Bank is significantly influenced by
the seasonal effects of the tourist and agricultural industries. The business of
the Bank  has  been  only  mildly  affected  by the  seasonal  aspects  of these
components of the local economy.

As of  December  31,  1998,  the  Bank  did not  have  any  foreign  sources  or
applications of funds.

Compliance with federal, state, and local statutes and/or ordinances relating to
the protection of the  environment  is not expected to have any material  effect
upon the Bank's capital expenditures, earnings, or competitive position.

The Bank employed 14 full-time  employees and 4 part-time  employees at December
31, 1998. The Bank does not offer commercial, consumer, international, trust, or
municipal trading services.
<PAGE>
                        DIRECTORS AND EXECUTIVE OFFICERS

ERVIN R. NOWAK                             EUGENE MCLEAN
Chairman of the Board of:                  Director of:
  Huron National Bancorp, Inc. and           Huron National Bancorp, Inc.
  Huron National Bank                        Huron National Bank
President of Builders Mart, Inc.           Retired Shipping Captain

MARVIN C. BEATTY                           LYNWOOD LAMB
Vice-Chairman of:                          Director of:
  Huron National Bancorp, Inc.               Huron National Bancorp, Inc.
  Huron National Bank                        Huron National Bank
Owner StateWide Real Estate                Investment Advisor

LOUIS DEHRING                              MICHAEL L. CAHOON
Director of:                               President and Chief Executive Officer
  Huron National Bancorp, Inc.             and Director of:
  Huron National Bank                        Huron National Bancorp, Inc.
Owner Paull Investments                      Huron National Bank

DONALD A. HAMPTON                          LEON DELEKTA
Director of:                               Director of:
  Huron National Bancorp, Inc.               Huron National Bancorp, Inc.
  Huron National Bank                        Huron National Bank
President of The Buoy, Inc. and            Retired Potato Farmer and
Hampton IGA, Inc.                           Truck Transportation

JOHN A. TIERNEY                            PAULETTE D. KIERZEK
Director of:                               Cashier of Huron National Bank
  Huron National Bancorp, Inc.             Chief Financial Officer of:
  Huron National Bank                        Huron National Bancorp, Inc.
Owner of Tierney & Williams, Inc.,         Secretary to the Board of:
President of 211 Bar & Restaurant;           Huron National Bancorp, Inc.
Partner of Knost Cottages; and Secretary-    Huron National Bank
Treasurer of Aurora Gas Company

DALE L. BAUER
Vice-President of:
  Huron National Bank
<PAGE>
HURON NATIONAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
         ASSETS                                                                             1998                        1997
         <S>                                                                            <C>                         <C>
             Cash and due from banks                                                    $ 3,220,603                 $ 2,391,051
             Federal funds sold                                                           1,700,000                   2,000,000
                Total Cash and cash equivalents                                           4,920,603                   4,391,051
             Securities available for sale                                                2,054,141                   1,979,375
             Securities held to maturity
               (Fair value of $3,577,000 in 1998
                and $4,693,000 in 1997)                                                   3,508,157                   4,653,385

             Loans                                                                       23,557,972                  19,853,701
               Allowance for loan losses                                                  (179,247)                   (180,631)
                Net loans                                                                23,378,725                  19,673,070

           Bank premises and equipment - net                                                471,895                     516,773
           Accrued interest receivable                                                      267,182                     270,662
           Other real estate owned                                                           21,448                      23,448
           Other assets                                                                     106,528                     107,374

                  Total Assets                                                          $34,728,679                $ 31,615,138
                                                                                        ===========                ============

         LIABILITIES AND SHAREHOLDERS' EQUITY
         Liabilities
             Deposits
               Non interest-bearing transaction accounts                                $ 3,856,217                 $ 3,865,667
               Interest-bearing transaction accounts                                      4,534,327                   3,872,456
               Savings                                                                    6,856,482                   6,659,221
               Time                                                                      16,207,688                  14,314,705
                  Total deposits                                                         31,454,714                  28,712,049
           Accrued interest payable                                                          73,729                      62,289
             Other liabilities                                                              247,039                     162,950
                  Total liabilities                                                      31,775,482                  28,937,288

         Shareholders' Equity

             Common stock, $10 par value: 100,000 shares
             authorized and 62,500 outstanding                                              625,000                     625,000
           Additional paid in capital                                                       625,000                     625,000
           Retained earnings                                                              1,691,297                   1,423,597
           Other comprehensive income, net of tax
             of ($6,129) in 1998 and ($2,190) in 1997                                        11,900                       4,253
                  Total shareholders' equity                                              2,953,197                   2,677,850

                    Total liabilities and shareholders' equity                         $ 34,728,679                $ 31,615,138
                                                                                       ============                ============
</TABLE>
See accompanying notes
<PAGE>
HURON NATIONAL BANCORP, INC.

STATEMENTS OF INCOME
December 31, 1998, 1997, and 1996
<TABLE>
                                                      1998                    1997                     1996
Interest Income
<S>                                               <C>                      <C>                      <C>
     Loans, including fees                        $1,990,859               $1,845,367               $1,724,683
     Federal funds sold                              101,184                   75,557                   70,650
     Securities:    
          Taxable                                    269,853                  296,320                  348,479
          Tax exempt                                  81,034                   89,085                   49,828
          Other                                        2,250                    2,250                    2,250
               Total interest income               2,445,180                2,308,579                2,195,890

Interest Expense
     Deposits                                      1,151,318                1,117,854                1,075,226

Net Interest Income                                1,293,862                1,190,725                1,120,664

Provision for Loan Losses                             21,000                   36,000                   36,000

Net Interest Income After
     Provision for Loan Losses                     1,272,862                1,154,725                1,084,664

Non-Interest Income
     Service charges                                  87,855                   89,426                  101,577
     Other                                            44,179                   46,006                   45,770
          Total non-interest income                  132,034                  135,432                  147,347

Non-Interest Expense
     Salaries and benefits                           435,478                  408,008                  387,299
     Premises and equipment                          132,960                  126,685                  118,462
     Legal and accounting fees                        56,726                   57,915                   49,752
     Other operating expense                         240,435                  226,262                  231,053
          Total non-interest expense                 865,599                  818,870                  786,566

Income Before Income Tax                             539,297                  471,287                  445,445

Provision for Income Tax                             159,097                  133,356                  138,507

Net Income                                         $ 380,200                $ 337,931                $ 306,938
                                                  ==========                =========                =========
Basic Earnings Per Share                               $6.08                    $5.41                    $4.91
                                                  ==========                =========                =========
</TABLE>
<PAGE>
HURON NATIONAL BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended December 31, 1998, 1997, and 1996
<TABLE>
                                                                                                            Other
                                                                                                        Comprehensive
                                                                       Additional                          Income,         Total
                                                           Common       Paid In           Retained            Net      Shareholders'
                                                            Stock       Capital           Earnings          Of Tax         Equity
      <S>                                               <C>            <C>                <C>              <C>         <C>   
      BALANCE AT JANUARY 1, 1996                        $ 625,000      $ 625,000          972,478          $ 12,444    $ 2,234,922
        Net income for the year                                                           306,938                          306,938
         Other comprehensive income:
           Unrealized gain (loss) on securities
           available for sale, net of tax                                                                   (8,437)         (8,437)
             Total comprehensive income                                                                                    298,501
         Cash dividends ($1.50 per share)                                                 (93,750)                         (93,750)

      BALANCE AT DECEMBER 31, 1996                        625,000        625,000        1,185,666             4,007      2,439,673
        Net income for the year                                                           337,931                          337,931
         Other comprehensive income:
           Unrealized gain (loss) on securities
           available for sale, net of tax                                                                       246            246
             Total comprehensive income                                                                                    338,177
         Cash dividends ($1.60 per share)                                                (100,000)                        (100,000)

      BALANCE AT DECEMBER 31, 1997                        625,000        625,000        1,423,597             4,253      2,677,850
        Net income for the year                                                           380,200                          380,200
         Other comprehensive income:
           Unrealized gain (loss) on securities
           available for sale, net of tax                                                                     7,647          7,647
             Total comprehensive income                                                                                    387,847
         Cash dividends ($1.80 per share)                                                (112,500)                        (112,500)

      BALANCE AT DECEMBER 31, 1998                      $ 625,000      $ 625,000      $ 1,691,297            11,900    $ 2,953,197
                                                        =========      =========      ===========            ======     ==========
</TABLE>
See accompanying notes
<PAGE>
HURON NATIONAL BANCORP, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS For the
                  years ended December 31, 1998, 1997, and 1996
<TABLE>
      CASH FLOWS FROM OPERATING ACTIVITIES                                                 1998                1997            1996
      <S>                                                                             <C>                  <C>            <C>
        Net income                                                                    $ 380,200            $337,931       $ 306,938
         Adjustments to reconcile net income to net cash
         from operating activities
           Depreciation and amortization                                                 54,291              45,815          40,233
           Net premium amortization and discount accretion on securities                144,832             133,489          50,399
           Provision for loan losses                                                     21,000              36,000          36,000
           Increase/(decrease) in cash from change in assets and liabilities:
               Interest receivable                                                        3,480             (36,030)         (7,355)
               Other assets and other real estate                                        24,294             (36,968)         39,187
               Interest payable                                                          11,440                (927)          7,648
               Other liabilities                                                         80,150             (32,548)         15,654
                Net cash from operating activities                                      719,687             446,762         488,704

      CASH FLOWS FROM INVESTING ACTIVITIES
         Available-for-sale securities:
           Purchases                                                                 (1,070,932)           (988,751)       (989,086)
           Maturities                                                                 1,000,000             750,000       1,000,000
         Held-to-maturity securities: 
           Purchases                                                                   (501,852)         (1,216,735)     (3,437,776)
           Maturities                                                                 1,510,000           1,839,000       1,783,000
        Net increase in loans                                                        (3,748,103)           (721,289)     (1,470,426)
         Purchases of property and equipment                                             (9,413)            (73,990)       (107,323)
                Net cash used in investing activities                                (2,820,300)           (411,765)     (3,221,611)

      CASH FLOWS FROM FINANCING ACTIVITIES
         Net increase in deposit accounts                                             2,742,665           1,118,039       2,316,945
         Dividends paid                                                                (112,500)           (100,000)        (93,750)
                Net cash from financing activities                                    2,630,165           1,018,039       2,223,195

      NET INCREASE/(DECREASE) IN CASH AND
        CASH EQUIVALENTS                                                                529,552           1,053,036        (509,712)
      CASH AND CASH EQUIVALENTS AT:
        BEGINNING OF PERIOD                                                           4,391,051           3,338,015       3,847,727
        END OF PERIOD                                                               $ 4,920,603         $ 4,391,051     $ 3,338,015
                                                                                   ============         ===========     ===========
      SUPPLEMENTAL DISCLOSURES OF
      CASH FLOW INFORMATION
         Cash paid during the period for:
         Interest                                                                   $ 1,137,543       $ 1,118,781       $ 1,067,578
         Federal income tax                                                              79,304           169,413            91,025
</TABLE>
Non cash investing activities
Loans in the amount of $21,448 and $23,448 were transferred to other real estate
in 1998 and 1997.

See accompanying notes
<PAGE>
HURON NATIONAL BANCORP, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1998, 1997, and 1996

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

     NATURE OF OPERATIONS - The consolidated  financial  statements  include the
accounts of Huron National  Bancorp,  Inc. (the "Company") and its  wholly-owned
subsidiary, Huron National Bank (the "Bank"). All material intercompany balances
and transactions are eliminated in consolidation.

     The Company is engaged in the business of  commercial  and retail  banking,
with operations  conducted through its office located in Rogers City,  Michigan.
The surrounding communities are the source of substantially all of the Company's
deposit and loan  activities.  The majority of the  Company's  income is derived
from  commercial and retail lending  activities.  Primarily all  installment and
residential loans are secured by real and personal  property.  Approximately 90%
of commercial loans are secured by real estate.

     USE OF  ESTIMATES - To prepare  financial  statements  in  conformity  with
generally  accepted  accounting  principles,   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 the
fair value of financial instruments are particularly subject to change.

     SECURITIES - Securities  are  classified as held to maturity and carried at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  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 net of tax, as a component of
other comprehensive  income.  Securities are classified as trading when held for
short term  periods in  anticipation  of market  gains,  and are carried at fair
value. Securities are written down to fair value when a decline in fair value is
not temporary.

Gains and  losses  on sales  are  determined  using  the  amortized  cost of the
specific  security  sold.  Interest  income  includes  amortization  of purchase
premiums and discounts.

     ALLOWANCE  FOR LOAN LOSSES - Because  some loans may not be repaid in full,
an  allowance  for loan  losses is  recorded.  Increases  to the  allowance  are
recorded by a provision for loan losses charged to expense.  Estimating the risk
of  loss  and  the  amount  of  loss  on any  loan  is  necessarily  subjective.
Accordingly,  the allowance is  maintained  by management at a level  considered
adequate  to cover  losses  that are  currently  anticipated  based on past loss
experience,  general economic  conditions,  information  about specific borrower
situations  including their financial  position and collateral values, and other
factors and estimates  which are subject to change over time.  While  management
may  periodically  allocate  portions of the allowance for specific problem loan
situations,  the whole allowance is available for any charge-offs  that occur. A
loan is  charged-off  against the  allowance by management as a loss when deemed
uncollectible,  although  collection  efforts may continue and future recoveries
may occur.

Loans are  considered  impaired if full  principal or interest  payments are not
anticipated.  Impaired  loans are carried at the present  value of expected cash
flows discounted at the loan's  effective  interest rate or at the fair value of
the collateral if the loan is collateral  dependent.  A portion of the allowance
for loan losses may be allocated to impaired loans.

Smaller-balance  homogeneous  loans are evaluated for impairment in total.  Such
loans include  residential  first mortgage  loans secured by one-to-four  family
residences,  residential  construction  loans,  and automobile,  home equity and
second  mortgage  loans.  Commercial  loans and mortgage  loans secured by other
properties are evaluated individually for impairment.  When analysis of borrower
operating results and financial  condition  indicates that underlying cash flows
of  the  borrower's   business  are  not  adequate  to  meet  its  debt  service
requirements, the loan is evaluated for impairment.

Often this is  associated  with a delay or  shortfall  in payments of 30 days or
more.  Loans are generally moved to nonaccrual  status when 90 days or more past
due. These loans are often also considered impaired. Impaired loans, or portions
thereof, are charged off when deemed  uncollectable.  This typically occurs when
the loan is 120 days or more past due.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     LOANS - Loans are reported at the  principal  balance  outstanding,  net of
deferred loan fees and costs,  the allowance for loan losses,  and  charge-offs,
net of  recoveries.  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  payments are past due over 120 days.  Payments  received on such loans are
reported as principal reductions.

     BANK  PREMISES AND  EQUIPMENT - Bank  premises and  equipment are stated at
cost  less  accumulated  depreciation.   Depreciation  is  computed  using  both
straight-line  and  accelerated  methods  over  their  estimated  useful  lives.
Maintenance,  repairs and minor alterations are charged to current operations as
expenditures  occur, and major  improvements  are capitalized.  These assets are
reviewed for  impairment  when events  indicate  the carrying  amount may not be
recoverable.

     OTHER  REAL  ESTATE  - Real  estate  acquired  in  settlement  of  loans is
initially reported at estimated fair value at acquisition.  After acquisition, a
valuation  allowance  reduces  the  reported  amount to the lower of the initial
amount  or fair  value  less  costs to  sell.  Expenses,  gains  and  losses  on
disposition,  and changes in the valuation allowance are reported in net loss on
other real estate.

     INCOME TAXES - Income tax expense is the sum of the current year income tax
due or  refundable  and 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.

     STATEMENT OF CASH FLOWS - Cash and cash  equivalents  is defined to include
cash on hand,  demand  deposits in other  institutions  and federal  funds sold.
Federal  funds are  generally  sold for one day  periods.  The  Company  reports
customer loan transactions and deposit transactions on a net cash flow basis.

     EARNINGS  PER  SHARE - Basic  earnings  per  share is  computed  using  the
weighted average number of shares outstanding.  The number of shares used in the
computation of basic earnings per share was 62,500 for all years presented.  The
Bank did not have any dilutive shares at December 31, 1998, 1997, or 1996.

     SEGMENTS - Huron National Bancorp, Inc. and its subsidiary,  Huron National
Bank,  provide a broad range of financial  services to individuals and companies
in northern Michigan.  These services include demand, time and savings deposits;
lending; ATM processing; and cash management. While the Company's chief decision
makers monitor the revenue streams of the various Company products and services,
operations are managed and financial  performance is evaluated on a Company-wide
basis.  Accordingly, all of the Company's  banking  operations are considered by
management to be aggregated in one reportable operating segment.

     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, net of taxes,  which is recognized
as a separate  component  of  equity.  The  accounting  standard  that  requires
reporting  comprehensive  income first applies for 1998, with prior  information
restated to be comparable.

     NEW ACCOUNTING PRONOUNCEMENTS - Beginning January 1, 2000, a new accounting
standard  will  require all  derivatives  to be  recorded at fair value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not otherwise recorded. This is not expected to
have a material  effect but the effect will depend on  derivative  holdings when
this standard applies.

     RECLASSIFICATIONS  - Some  items in prior  financial  statements  have been
reclassified to conform with the current presentation.
<PAGE>
NOTE 2 - CASH AND DUE FROM BANKS

     As of December 31, 1998,  the Bank was required to maintain  cash  balances
with the Federal Reserve Bank in the amount of $75,000.

NOTE 3 - SECURITIES

     Securities  have  been  classified  in  the  Consolidated   Balance  Sheets
according to  management's  intent.  The amortized  cost of securities and their
estimated fair values at December 31 were as follows:
<TABLE>
                                                                                    Gross               Gross
                  1998                                         Amortized        Unrealized           Unrealized
               Securities Available for Sale;                       cost             Gains             Losses          Fair Value
               <S>                                            <C>                 <C>                <C>               <C>
                  U.S. Treasury                                 $501,457            $4,559            $                  $506,016
                  U.S. Agency                                    811,874             1,312                (170)           813,016
                  State and Municipal                            249,187             6,188                                255,375
                  Corporate                                      473,594             6,140                                479,734
                                                              $2,036,112           $18,199            $   (170)        $2,054,141
                                                              ==========          ========            =========        ========== 
               Securities Held to Maturity:
                  Mortgage-backed                                $88,620      $        369            $                   $88,989
                  State and Municipal                          2,706,410            60,638                (246)         2,766,802
                  Corporate                                      713,127             7,670                                720,797
                                                              $3,508,157           $68,677            $   (246)        $3,576,588
                                                              ==========          ========            ========         ==========


                                                                                  Gross                Gross
               1997                                            Amortized        Unrealized           Unrealized         Fair
               Securities Available for Sale:                       cost          Gains                Losses           Value
                  U.S. Treasury                               $1,249,810            $4,877           $                $1,254,687
                  U.S. Agency                                    250,343               282                               250,625
                  Corporate                                      472,779             1,284                               474,063

                                                              $1,972,932            $6,443           $                $1,979,375

               Securities Held To Maturity:
                  U.S. Agency                                   $297,005           $   745           $                  $297,750
                  Mortgage-backed                                209,713               889                               210,602
                  State and Municipal                          2,799,246            34,272                             2,833,518
                  Corporate                                    1,347,421             4,443              (1,192)        1,350,672
                                                              $4,653,385           $40,349             $(1,192)       $4,692,542
                                                              ==========          ========           ==========      ===========
</TABLE>
There  were no sales of  securities  during  1998,  1997 or 1996.  There were no
transfers of  securities  classified  as held to maturity  during 1998,  1997 or
1996.

The amortized  cost and estimated fair value of securities at December 31, 1998,
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.
<PAGE>
NOTE 3 - SECURITIES (continued)
<TABLE>
                                                                     Available for Sale                     Held to Maturity
                                                            Amortized Cost        Fair Value       Amortized Cost    Fair Value
                <S>                                            <C>                <C>                <C>            <C>
                Due in one year or less                           $501,457          $506,016         $1,095,416     $ 1,101,025
                Due after one year through five years              773,697           780,485          2,282,001       2,342,144
                Due after five years through ten years             760,958           767,640             42,120          44,430
                    Subtotal                                     2,036,112         2,054,141          3,419,537       3,487,599
                Mortgage-backed securities                                                               88,620          88,989

                      Totals                                   $ 2,036,112        $2,054,141         $3,508,157      $3,576,588
                                                               ==========         ==========        ===========     ===========
</TABLE>

Securities  available for sale with a carrying value of $253,672 at December 31,
1998 were pledged to secure public  deposits and for other purposes  required or
permitted by law.

NOTE 4 - LOANS

         Loans consist of the following at December 31:
<TABLE>
                                                            1998                1997
                 <S>                                      <C>                <C>
                 Commercial loans                         $3,135,530         $2,772,794
                 Real estate loans                        13,333,405         10,585,218
                 Installment loans                         7,089,037          6,495,689
                     Total loans                         $23,557,972        $19,853,701
                                                         ===========        ===========
</TABLE>
Certain directors and executive officers of the Company, including associates of
such  persons,  were also loan  customers.  The  following  is a summary  of the
balance and activity of loans to such parties.
<TABLE>
                                                                    1998     
         <S>                                                     <C>         
         Balance - January 1                                     $260,054
                New loans                                         441,670
                Repayments                                       (101,282)
         Balance - December 31                                   $600,442
                                                                 ========
</TABLE>

NOTE 5 - ALLOWANCE FOR LOAN LOSSES

An analysis of changes in the allowance for loan losses follows:
<TABLE>
                                                                      1998                 1997               1996
            <S>                                                     <C>                 <C>              <C>
            Balance at beginning of year                             $180,631           $174,955          $144,100
             Additions (Deductions)
                Provision for loan losses                              21,000             36,000            36,000
                Recoveries credited to allowance                        2,332              4,905             1,381
                 Loans charged-off                                    (24,716)           (35,229)           (6,526)
             Balance at end of year                                  $179,247           $180,631          $174,955
                                                                    =========          =========          ========
</TABLE>
During the years 1998 and 1997,  the balance of impaired loans was considered to
be immaterial.
<PAGE>
NOTE 6 - BANK PREMISES AND EQUIPMENT - NET

Bank premises and equipment consist of the following at December 31:
<TABLE>
                                                                                                  Accumulated        Carrying
                       1998                                                           Cost       Depreciation           Value
                       <S>                                                        <C>              <C>               <C>
                       Land                                                        $60,000                            $60,000
                       Bank building and improvements                              483,260         $(212,595)         270,665
                       Furniture and equipment                                     446,004          (304,774)         141,230
                           Total                                                  $989,264         $(517,369)        $471,895
                                                                                ==========        ==========        =========
                       1997
                       Land                                                        $60,000                            $60,000
                       Bank building and improvements                              481,509         $(198,915)         282,594
                       Furniture and equipment                                     502,417          (328,238)         174,179
                           Total                                                $1,043,926         $(527,153)        $516,773
                                                                                ==========        ==========        =========
</TABLE>

Provisions for depreciation of $54,291,  $45,815, and $40,233,  were included in
non-interest expense in 1998, 1997 and 1996, respectively.

NOTE 7 - DEPOSITS

The Bank had approximately  $1,989,000 and $2,039,000 in time deposits issued in
denominations   of  $100,000  or  more  as  of  December   31,  1998  and  1997,
respectively.  Interest  expense on time  deposits  issued in  denominations  of
$100,000 or more was  approximately  $103,000,  $103,000,  and $105,000 in 1998,
1997 and 1996, respectively.

At year-end 1998, stated maturities of time deposits were:
<TABLE>
               <S>                                              <C>
               1999                                             $ 9,452,753
               2000                                               2,993,048
               2001                                               1,415,293
               2002                                               1,123,639
               2003                                               1,222,955 
                                                               $ 16,207,688
                                                               ============
</TABLE>

Related party deposits totaled $534,135 and $411,365 at year-end 1998 and 1997.
<PAGE>
NOTE 8 - INCOME TAX

The provision for federal income tax for the years ended December 31 consists of
the following:
<TABLE>
                                                                                     1998            1997            1996
            <S>                                                                    <C>              <C>            <C>
            Current expense                                                         $186,242        $109,543        $171,073
            Deferred expense (benefit)                                              (27,145)          23,813         (32,566)
               Provision for income tax                                             $159,097        $133,356        $138,507
</TABLE>

Included  in other  liabilities  are  deferred  tax  balances  arising  from the
following items:
<TABLE>
                                                                                                           December 31,
                                                                                                      1998           1997
                      <S>                                                                           <C>              <C>     
                      Deferred tax liabilities:                                                  
                       Effects of preparing tax return on a cash basis                              $(48,122)        $ (67,752)
                       Property and equipment                                                       (105,165)         (108,183)
                       Unrealized gain on securities available for sale                               (6,130)           (2,191)
                       Other                                                                          (2,876)           (7,416)
                                                                                                    (162,293)         (185,542)
                      Deferred tax assets:
                       Allowance for loan losses                                                      39,046            39,517
                       Other                                                                             482                54
                                                                                                      39,528            39,517

                             Net deferred tax liability                                           $ (122,765)       $ (145,971)
                                                                                                  ==========       ===========
</TABLE>
The difference between the financial  statement tax expense and amounts computed
by applying the statutory federal tax rate of 34% to pretax income is reconciled
as follows:
<TABLE>
                                                                                                  1998            1997        1996
                                  <S>                                                        <C>              <C>            <C>
                                  Statutory rate applied to income before taxes              $ 183,361        $160,238     $151,451
                                  Add (deduct)
                                    Tax-exempt interest income                                 (27,478)        (20,165)     (12,988)
                                    Surtax exemption and other                                   3,214          (6,717)          44
                                         Provision for income tax                             $159,097        $133,356     $138,507
                                                                                            ==========        ========     ========
</TABLE>
NOTE 9 - OTHER OPERATING EXPENSE

Other  operating  expenses  for the  years  ended  December  31  consist  of the
following:
<TABLE>
                                                                                                 1998           1997          1996
                                  <S>                                                       <C>              <C>           <C>
                                  Office supplies                                             $25,660        $28,827        $28,369
                                  Directors fees                                               52,800         50,400         48,000
                                  General insurance                                            19,282         19,560         18,374
                                  ATM fees                                                     23,929         22,137         22,475
                                  Other expense                                               118,764        105,338        113,835
                                         Total other operating expenses                      $240,435       $226,262       $231,053
                                                                                            =========       ========      =========
</TABLE>
<PAGE>
NOTE 10 - COMMITMENTS AND CONCENTRATIONS OF CREDIT RISK

The Bank is a party to financial  instruments with off-balance sheet risk in the
normal  course of  business  to meet  financing  needs of its  customers.  These
financial  instruments include letters of credit and unused lines of credit. The
Bank's  exposure  to  credit  loss in the event of  nonperformance  by the other
parties to the financial  instruments is presented by the contractual  amount of
those  instruments.  The  Bank  follows  the same  credit  policy  to make  such
financial  instruments  as is followed for those loans recorded in the financial
statements.

As of December 31, the Bank had  outstanding  letters of credit,  commitments to
make loans and unused lines of credit as follows:
<TABLE>
                                                                                     1998               1997
                              <S>                                                <C>                 <C>
                              Outstanding letters of credit                         $199,571         $244,901
                              Commitments to make loans
                                and unused lines of credit                       $ 1,041,940         $770,142

</TABLE>
All commitments above are at fixed rates and carry rates of interest from 8% to
1% and generally expire within 1 year.

Since certain  commitments to make loans and fund lines of credit expire without
being used, the amount does not necessarily represent future cash commitments.

From time to time claims are made  against  the Company in the normal  course of
business. There were no material outstanding claims at December 31, 1998.

The  Company's  loan  and  deposit  relationships  are not  concentrated  in any
particular  industry,  nor is there significant  dependence on any one employer.
Noninterest-bearing  deposits  and  federal  funds  sold and  held by NBD  Bank,
amounted  to  $3,787,817   and   $3,500,591  at  December  31,  1998  and  1997,
respectively.

NOTE 11 - DIVIDENDS

Guidelines with respect to maintenance of capital adopted by federal banking law
limits the amount of cash  dividends the Bank can pay to the Holding  Company to
the extent of net retained  profits (as defined by the regulatory  agencies) for
the current and two preceding  years,  and is further limited by the requirement
that the Bank maintain positive retained earnings. Under the most restrictive of
the  above  regulations,  in 1999  the  Bank is  limited  to  paying  additional
dividends of approximately $516,000 plus 1999 net income.

NOTE 12 - PENSION PLAN

The  Bank  has a  Simplified  Employee  Pension  (SEP)  Plan  that is a  defined
contribution  plan.  Employees  become  eligible to  participate in the SEP Plan
after two years of  service  in the  immediately  preceding  five plan years and
after attaining the age of 21.  In each plan year the Bank may contribute to the
Plan the lesser of $30,000 or a percentage of each participant's compensation as
reported on Form W-2.  The  contribution  is  determined  annually by the Bank's
Board  of  Directors.  Also,  participants  may make  contributions  to the Plan
subject  to  certain  requirements  and  limitations.  In all  cases,  Bank  and
participant contributions may not exceed limitations established by the Internal
Revenue Service.  Expense recognized by the Bank in relation to the SEP Plan for
the year ended December 31, 1998,  1997 and 1996 was $6,653,  $7,348 and $7,314,
respectively.
<PAGE>
NOTE 13 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value.

Carrying  amount is a  reasonable  estimate of fair value for cash  equivalents,
Federal Reserve stock, accrued interest receivable and payable, demand deposits,
savings accounts and money market deposits.

Fair value of other financial instruments is estimated as follows:

Fair values for  securities  are based on quoted market prices or dealer quotes.
If a quoted market price is not available,  fair value is estimated using quoted
market prices for similar instruments.

Fair  value  of fixed  and  variable  rate  loans is  principally  estimated  by
discounting  future cash flows using the current  rates at which  similar  loans
would  be made  to  borrowers  with  similar  credit  ratings  and for the  same
remaining maturities.

The fair  value of  fixed-maturity  certificates  of  deposit  is  estimated  by
discounting  cash flows using the rates  currently offer for deposits of similar
remaining maturities.

The fair value of commitments is estimated  using the fees currently  charged to
enter  similar  agreements,  taking  into  account  the  remaining  terms of the
agreements  and  the  present   creditworthiness  of  the  counterparties.   For
fixed-rate loan  commitments,  fair value also considers the difference  between
current  levels of interest  rates and the  committed  rates.  The fair value of
letters of credit is based on fees currently  charged for similar  agreements or
on the estimated cost to terminate them or otherwise settle the obligations with
the  counterparties  at the reporting  date.  The fair value of  commitments  to
extend  credit and standby  letters of credit were  immaterial  at the reporting
date presented.

The carrying values and fair values of the Company's  financial  instruments (in
thousands) are as follows as of year-end.
<TABLE>
                                                                       1998                          1997
                                                            Carrying             Fair     Carrying           Fair
                                                              Value             Value       Value            Value
                       Financial assets
                       <S>                                    <C>            <C>             <C>          <C>
                           Cash and cash equivalents            $ 4,921        $4,921         $ 4,391     $ 4,391
                           Securities                             5,562         5,631           6,632       6,672
                           Loans, net                            23,379        23,563          19,673      19,743
                           Federal Reserve Stock                     38            38              38          38
                           Interest receivable                      267           267             271         271

                       Financial liabilities
                           Deposits                            (31,455)      (31,539)        (28,712)    (28,718)
                           Interest payable                        (74)          (74)            (62)        (62)

</TABLE>
NOTE 14 - REGULATORY MATTERS

The Company and Bank are subject to regulatory capital requirements administered
by federal banking agencies.  Capital adequacy  guidelines and prompt corrective
action regulations involve  quantitative  measures of assets,  liabilities,  and
certain   off-balance-sheet   items  calculated   under  regulatory   accounting
practices.  Capital amounts and  classifications are also subject to qualitative
judgments by regulators about components, risk weighting, and other factors, and
the  regulators  can lower  classifications  in certain  cases.  Failure to meet
various capital  requirements can initiate  regulatory  action that could have a
direct material effect on the financial statements.
<PAGE>
NOTE 14 - REGULATORY MATTERS (continued)

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.

At year-end, the Bank's actual capital levels (in millions) and minimum required
levels were:
<TABLE>
                                                                                                             Minimum Required To
                                                                                  Minimum Required            Be Well Capitalized
                                                                                     For Capital          Under Prompt Corrective
                                                                  Actual          Adequacy Purposes          Action Regulations
               1998                                         Amount      Ratio      Amount     Ratio          Amount        Ratio
               <S>                                          <C>         <C>        <C>        <C>            <C>           <C>
               Total capital (to risk weighted assets)      $3.1        14.2%      $1.8       8.0%           $2.2          10.0%
               Tier 1 capital (to risk weighted assets)     $2.9        13.4%      $0.9       4.0%           $1.3           6.0%
               Tier 1 capital (to average assets)           $2.9         8.6%      $1.4       4.0%           $1.7           5.0%

               1997
               Total capital (to risk weighted assets)      $2.9        14.4%      $1.6       8.0%           $2.0          10.0%
               Tier 1 capital (to risk weighted assets)     $2.7        13.5%      $0.8       4.0%           $1.2           6.0%
               Tier 1 capital (to average assets)           $2.7         8.6%      $1.2       4.0%           $1.6           5.0%

</TABLE>
The  Bank at year  end  1998  and  1997  was  categorized  as well  capitalized.
Management knows of no events which would change the Bank's classification.

NOTE 15 - HURON NATIONAL BANCORP, INC. (PARENT COMPANY ONLY) CONDENSED FINANCIAL
INFORMATION  Presented below are condensed  financial  statements for the parent
company:
<TABLE>
                                     CONDENSED BALANCE SHEETS
                                                                                                             December 31,
               ASSETS                                                                                    1998            1997
               <S>                                                                                 <C>             <C>
                  Cash and cash equivalents                                                            $1,372          $2,091
                  Investment in Huron National Bank                                                 2,951,825       2,675,759
                      Total Assets                                                                 $2,953,197      $2,677,850
                                                                                                   ==========      ==========
               LIABILITIES                                                                         $        -      $        -

               SHAREHOLDERS' EQUITY                                                                 2,953,197      $2,677,850

                      Total liabilities and shareholders' equity                                   $2,953,197      $2,677,850
                                                                                                   ==========      ==========
</TABLE>
<PAGE>
NOTE 15 - HURON NATIONAL BANCORP, INC. (PARENT COMPANY ONLY)

CONDENSED FINANCIAL INFORMATION (continued)
<TABLE>
                         CONDENSED STATEMENTS OF INCOME
                                                                                                 Years Ended December 31,
                                                                                          1998             1997            1996
             <S>                                                                     <C>               <C>            <C>
             OPERATING INCOME
                Dividends from Huron National Bank                                    $122,500         $100,000       $ 103,750

             OPERATING EXPENSES
                Other expenses                                                          10,719            9,848          15,590

             Income before equity in undistributed
               net income of subsidiary                                                111,781           90,152          88,160

             Equity in undistributed net income of subsidiary                          268,419          247,779         218,778

             NET INCOME                                                               $380,200         $337,931        $306,938
                                                                                   ===========        =========      ==========
</TABLE>
                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
                                                                                                   Years Ended December 31,
                                                                                          1998             1997              1996
             <S>                                                                     <C>              <C>               <C>
             Cash Flows from Operating Activities
                Net income                                                            $380,200         $337,931         $ 306,938
                Adjustments to reconcile net income to
                  cash from operating activities:
                Equity in undistributed net income
                  of subsidiary                                                       (268,419)        (247,779)         (218,778)
                Change in other assets                                                       0                0            28,442
                Change in other liabilities                                                  0                0           (15,537)

             Net Cash From Operating Activities                                        111,781           90,152           101,065

             Cash Flows from Financing Activities
                Dividends paid                                                        (112,500)        (100,000)          (93,750)
                Net Cash from Financing Activities                                    (112,500)        (100,000)          (93,750)

             Net Change in Cash and Cash Equivalents                                      (719)          (9,848)            7,315
             Cash and Cash Equivalents
                Beginning of the Period                                                  2,091           11,939             4,624

                End of the Period                                                       $1,372           $2,091           $11,939
                                                                                      ========         ========           =======
</TABLE>
<PAGE>
                                   EXHIBIT 21




                               LIST OF SUBSIDIARY

         NAME                                  INCORPORATED

1. Huron National Bank                           Michigan
<PAGE>
YEAR 2000 COMPLIANCE

Because many computerized systems use only two digits to record the year in date
fields (for  example,  the year 1998 is recorded as 98), such systems may not be
able to accurately  process dates ending in the year 2000 and after. The effects
of the issue  will vary from  system to  system  and may  adversely  affect  the
ability  of a  financial  institution's  operations  as well as its  ability  to
prepare financial statements.

Corporation  management  has developed and the Board of Directors has approved a
comprehensive  Year 2000  Compliance  Plan.  The plan  consists of five  phases:
awareness,   assessment,   renovation,   validation  and   implementation.   The
Corporation  has an internal  task force to assess Year 2000  compliance  by the
Corporation, its vendors, and major deposit and loan customers. In addition, the
Bank has been  contacting  commercial  borrowers  about Year 2000  compliance to
avoid any negative impact on the quality of the loan portfolio.

To date, the Corporation has spent approximately $10,000 on Year 2000 compliance
and expect to spend an additional $12,000 to complete this work.

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

The Bank's core  processing  applications  are provided by a third party vendor,
Kirchman  Corporation.  The Corporation  receives  regular  correspondence  from
Kirchman  which  documents  the  status  of  their  Year  2000  compliance.  The
Corporation has been advised that Kirchman software has been successfully tested
for Year 2000 compliance.

Although the Corporation  expects its internal systems to be Year 2000 compliant
as  described  above,  the  Corporation  has  prepared a  contingency  plan that
specifies what it plans to do if important  internal or external systems are not
Year 2000 compliant in a timely manner.

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