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                      [ST. JOSEPH CAPITAL CORPORATION LOGO]





                        2001 ANNUAL REPORT ON FORM 10-KSB



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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[x]    Annual report under Section 13 or 15(d) of the Securities Exchange Act
       of 1934 For the fiscal year ended December 31, 2001
                                         -----------------

[ ]    Transition report under Section 13 or 15(d) of the Securities Exchange
       Act of 1934 For the transition period from              to
                                                  ------------    ------------

Commission file number     333-06581
                       ---------------------

                         ST. JOSEPH CAPITAL CORPORATION
                         ------------------------------
                 (Name of Small Business Issuer in Its Charter)

                  Delaware                                 35-1977746
--------------------------------------------     ------------------------------
(State or Other Jurisdiction of Incorporation           (I.R.S. Employer
or Organization)                                       Identification No.)

3820 Edison Lakes Parkway, Mishawaka, Indiana                 46545
---------------------------------------------    ------------------------------
(Address of Principal Executive Offices)                    (Zip Code)

                                 (574) 273-9700
                (Issuer's Telephone Number, Including Area Code)

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

         Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Issuer was required to file such
reports), and (2) has been subject to such filing requirements for past 90 days.
                                  Yes [x] No [ ]

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

         The Issuer's revenues for its most recent fiscal year were $13,081,953.

         The aggregate market value of the voting stock held by non-affiliates
of the Issuer as of February 28, 2002 was approximately $21,032,648. As of said
date, the Issuer had 1,679,105 shares of Common Stock issued and outstanding.

                      Documents incorporated by reference:
    Part III of Form 10-KSB - Portions of the Proxy Statement for the annual
                meeting of stockholders to be held May 23, 2002.

   Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]

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                         ST. JOSEPH CAPITAL CORPORATION
                        2001 ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS

                                     PART I

ITEM                                                                     PAGE

1.       Description of Business.                                        1
2.       Description of Property.                                        23
3.       Legal Proceedings.                                              24
4.       Submission of Matters to a Vote of Security Holders.            24

                                     Part II

5.       Market for Common Equity and Related Stockholder Matters.       24
6.       Management's Discussion and Analysis or Plan of Operation.      25
7.       Financial Statements.                                           36
8.       Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure.                                       60

                                    Part III

9.       Directors, Executive Officers, Promoters and Control Persons,
         Compliance With Section 16(a) of the Exchange Act.              60
10.      Executive Compensation.                                         60
11.      Security Ownership of Certain Beneficial Owners and Management. 60
12.      Certain Relationships and Related Transactions.                 60
13.      Exhibits and Reports on Form 8-K.                               60

         Signatures



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PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

         We are a bank holding company that owns the St. Joseph Capital Bank, a
full-service commercial banking institution located in Mishawaka, Indiana. The
Bank provides a broad range of banking products and services, including credit,
cash management, deposit and asset management to its targeted client base of
executive and professionals and small to medium-sized businesses. Our market
area encompasses a substantial portion of the Indiana communities of Mishawaka,
South Bend, Notre Dame, Granger, Osceola and Elkhart, as well as certain
Michigan communities, including Niles, Edwardsburg and Cassopolis. Due to the
overlap of this metropolitan area over state lines, this region is often
referred to as "Michiana." At December 31, 2001, we had total assets of $214.8
million, loans of $147.0 million and deposits of $153.3 million.

         We started our banking operations on February 13, 1997 with the goal of
building a locally owned and managed financial institution to meet the banking
needs of our targeted clients. As part of our operating strategy, we strive to
offer clients a high level of service on a consistent basis. Our rapid growth
since 1997 has largely been a product of our success in attracting targeted
individuals and businesses to become clients coupled with our ability to recruit
and retain a community-oriented management team with significant commercial
banking experience in the Michiana area. We have also taken advantage of the
client disruption caused by the acquisition of a number of the area's other
locally owned financial institutions by large and super-regional bank holding
companies.

         Our rapid growth, coupled with our desire to take advantage of
additional opportunities to increase our market share, lead us to increase the
capital in during 1999 to support additional growth, which we have realized.
This growth, as well as continued growth, will eventually allow us to take
advantage of the operating leverage available to larger financial institutions.

         An increase in the bank's capital also allowed us to increase our
lending limit, which will enable us to compete more effectively in our
marketplace. Increasing our client base allows us to spread our fixed costs over
a larger universe of clients thereby improving our operating efficiency.

         A hallmark of our operations has been our commitment to operate out of
a single location as a way of keeping tight control on our fixed, overhead
expenses. The delivery of our banking services is accomplished through our
headquarters facility, a courier service program, our ATM/debit card product,
our postage paid bank-by-mail program, telephone banking and computer banking.
The diversity of our delivery systems enables our clients to choose the method
of banking which is most convenient for them. While no plans currently exist, we
may also expand our product offerings, move into new markets or make strategic
acquisitions of other financial institutions in the future. We intend to
continue to pursue an aggressive growth strategy focused on the addition of
experienced banking personnel in the Michiana area, while also maintaining
strong asset quality and enhancing our profitability.



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         We have and will continue to price our loan products and deposit
products competitively. The net interest income generated by the lending and
deposit-gathering activities of the Bank should continue to increase as the
overall size of the Bank increases.

         We currently maintain our office at 3820 Edison Lakes Parkway,
Mishawaka, Indiana, 46545. Our telephone number is (574) 273-9700.

BUSINESS STRATEGY

         We expect to establish and maintain a high standard of quality in each
service we provide, and our employees are expected to emphasize service in their
dealings with clients. We believe that the use of state-of-the-art technology
will permit each employee to devote more time and attention to personal service,
respond more quickly to a client's requests and deliver services in the most
timely manner possible.

         Our goal is to create and maintain a "client-driven" organization
focused on providing high value to clients by promptly delivering products and
services matched directly to their needs. Furthermore, we expect to gain market
share by developing strong ties to our community. In this regard, most of our
directors currently hold, and have held in the past, leadership positions in a
number of community organizations, and intend to continue this active
involvement in future years. Members of the senior management team are also in
leadership positions in a variety of community organizations and intend to
continue this active involvement in future years. Additionally, all employees
are encouraged to be active in the civic, charitable and social organizations
located in the Michiana area.

         The Bank offers a broad range of deposit services, including checking
accounts, money market accounts, savings accounts and time deposits of various
types, as well as a full range of short to intermediate term personal and
commercial loans. Commercial loans include lines of credit to finance accounts
receivable and inventory, term loans to finance machinery and equipment, as well
as commercial mortgages to finance land and buildings. The Bank makes personal
loans directly to its clients for various purposes, including purchases of
automobiles, boats and other recreational vehicles, home improvements, education
and personal investments. The Bank also makes residential mortgage loans and
substantially all of them are retained by the Bank and consist of balloon
payment, adjustable and fixed rate mortgages. The Bank offers other services,
including credit cards, cashier's checks, traveler's checks and automated teller
access.

LENDING ACTIVITIES

         We provide a broad range of commercial and retail lending services to
corporations, partnerships and individuals. The Bank actively markets its
services to qualified borrowers. Lending officers actively solicit the business
of new borrowers entering our market area as well as long-standing members of
the local business community. The Bank has established lending policies, which
include a number of underwriting factors to be considered in making a loan,
including location, loan to value ratio, cash flow, interest rate and the credit
history of the borrower.



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         Our legal lending limit is approximately $3,000,000. The board of
directors, however, has established an "in-house" limit of $2,200,000. The board
may from time to time raise or lower the "in-house" limit, as it deems
appropriate to comply with safe and sound banking practices and respond to
overall economic conditions.

         As part of the loan monitoring activity at the bank, the officers' loan
committee meets weekly to review loan portfolio dynamics. Loan review officer's
present detailed reports on the loan portfolio to the board during board
meetings. Management has attempted to identify problem loans at an early stage
and to aggressively seek a resolution of these situations.

         COMMERCIAL LOANS. We are an active commercial lender in the Michiana
area. Our areas of emphasis include, but are not limited to, loans to
manufacturers, building contractors, developers and business services companies.
We also provide a wide range of operating loans, including lines of credit for
working capital and operational purposes, as well as term loans for the
acquisition of equipment and other purposes. Collateral for these loans
generally includes accounts receivable, inventory, equipment and real estate. In
addition, the Bank has taken personal guarantees to help assure payment when
appropriate. Terms of commercial business loans generally range from one to five
years. A significant portion of our commercial business loans has floating
interest rates or re-price within one year. We also make commercial real estate
loans, which are generally secured by the underlying real estate and
improvements. However, we may also require additional assets of the borrower as
collateral.

         RESIDENTIAL REAL ESTATE MORTGAGE LOANS. The main focus of our lending
activity continues to be on the commercial side and we have viewed residential
mortgages primarily as a way to attract and service targeted clients. We offer a
variety of adjustable rate products as well as traditional 15-year fixed rate
loans. The growth in the residential loan portfolio has been a result of
refinancing activities, acquisition and construction of existing or new homes.
The Bank has retained substantially all real estate loans in its portfolio.

         CONSUMER LENDING. We provide all types of consumer loans including
motor vehicles, home improvement, home equity, signature loans and small
personal credit lines. The Bank has no indirect lending, and intends to actively
seek to increase its personal lines of credit and home equity loans.

COMPETITION

         Our market area is competitive. We compete for loans principally
through the range and quality of service we provide and interest rates. We
believe that our reputation in the communities we serve and personal service
philosophy enhances our ability to compete favorably in attracting and retaining
individual and business clients. We actively solicit deposits by offering
clients personal attention, professional service and competitive rates.

         There are other commercial banks, savings and loans and credit unions,
along with other financial institutions that operate in our primary market area.
In addition, many other financial institutions based in the communities
surrounding these areas also actively compete for clients within these market
areas. We also face competition from finance companies, insurance companies,
mortgage companies, securities brokerage firms, money market mutual funds, loan
production offices and other providers of financial services.



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         Under the Gramm-Leach-Bliley Act of 1999, securities firms and
insurance companies that elect to become financial holding companies may acquire
banks and other financial institutions. The Gramm-Leach-Bliley Act may
significantly change the competitive environment in which we conduct business.
The financial services industry is also likely to become more competitive as
further technological advances enable more companies to provide financial
services. These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.

MARKET AREA

         We offer a full range of commercial and consumer banking services
primarily within a fifteen-mile radius of our main office located in Mishawaka,
Indiana. This area encompasses a substantial portion of the Indiana communities
of Mishawaka, South Bend, Notre Dame, Granger, Osceola and Elkhart, and certain
Michigan communities, including Niles, Edwardsburg and Cassopolis. Due to the
overlap of this metropolitan area over state lines, this region is often
referred to as "Michiana."

         The local economy is diversified among manufacturing, retail and
wholesale trades and service industries. The area's retail, distribution,
convention and tourism, health care and services sectors have expanded to offset
the decrease in manufacturing jobs, which has occurred in recent years. The
University of Notre Dame is the area's largest employer and contributes to the
stability of the local economy. South Bend is also home to other colleges and
technical schools providing additional stability and access to a skilled work
force.

         Memorial Hospital and St. Joseph's Medical Center are the two largest
health care providers in the Michiana area. Bosch Braking Systems Corp.,
Honeywell and A M General Corp. are three of the region's largest manufacturers,
and the area is also home to a number of smaller manufacturing, retail and
service businesses. Many major manufacturing companies are also located in
adjacent Elkhart County, including Coachmen Industries, CTS Corporation and
Skyline Corporation. We believe this diverse commercial base provides
significant potential for business banking services, together with personal
banking services for owners and employees of these entities.

EMPLOYEES

         We have 46 full-time equivalent employees. None of our employees are
covered by a collective bargaining agreement with St. Joseph or the bank. We
consider our employee relations to be excellent.

SUPERVISION AND REGULATION

GENERAL

         Financial institutions and their holding companies are extensively
regulated under federal and state law. As a result, the growth and earnings
performance of the Company can be affected not only by management decisions and
general economic conditions, but also by the requirements of applicable state
and federal statutes and regulations and the policies of various governmental
regulatory authorities, including the Indiana Department of Financial
Institutions (the "DFI"), the Board of Governors of the Federal Reserve System
(the "Federal Reserve"), the Federal Deposit


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Insurance Corporation (the "FDIC"), the Internal Revenue Service and state
taxing authorities and the Securities and Exchange Commission (the "SEC"). The
effect of applicable statutes, regulations and regulatory policies can be
significant, and cannot be predicted with a high degree of certainty.

         Federal and state laws and regulations generally applicable to
financial institutions, such as the Company and the Bank, regulate, among other
things, the scope of business, investments, reserves against deposits, capital
levels relative to operations, the nature and amount of collateral for loans,
the establishment of branches, mergers, consolidations and dividends. The system
of supervision and regulation applicable to the Company and the Bank establishes
a comprehensive framework for their respective operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and the
depositors, rather than the shareholders, of financial institutions.

         The following is a summary of the material elements of the regulatory
framework that applies to the Company and the Bank. It does not describe all of
the statutes, regulations and regulatory policies that apply to the Company and
the Bank, nor does it restate all of the requirements of the statutes,
regulations and regulatory policies that are described. As such, the following
is qualified in its entirety by reference to the applicable statutes,
regulations and regulatory policies. Any change in applicable law, regulations
or regulatory policies may have a material effect on the business of the Company
and the Bank.

RECENT REGULATORY DEVELOPMENTS

         The terrorist attacks in September, 2001, have impacted the financial
services industry and have already led to federal legislation that attempts to
address certain related issues involving financial institutions. On October 26,
2001, President Bush signed into law the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (the "USA PATRIOT Act"). Among its other provisions, the USA PATRIOT Act
requires each financial institution: (i) to establish an anti-money laundering
program; (ii) to establish due diligence policies, procedures and controls with
respect to its private banking accounts and correspondent banking accounts
involving foreign individuals and certain foreign banks; and (iii) to avoid
establishing, maintaining, administering or managing correspondent accounts in
the United States for, or on behalf of, foreign banks that do not have a
physical presence in any country. The USA PATRIOT Act also requires the
Secretary of the Treasury to prescribe, by regulations to be issued jointly with
the federal banking regulators and certain other agencies, minimum standards
that financial institutions must follow to verify the identity of clients, both
foreign and domestic, when a client opens an account. In addition, the USA
PATRIOT Act contains a provision encouraging cooperation among financial
institutions, regulatory authorities and law enforcement authorities with
respect to individuals, entities and organizations engaged in, or reasonably
suspected of engaging in, terrorist acts or money laundering activities. At this
time, the Company is unable to determine whether the provisions of the USA
PATRIOT Act will have a material impact on the business of the Company and the
Bank.

THE COMPANY

         GENERAL. The Company, as the sole shareholder of the Bank, is a bank
holding company. As a bank holding company, the Company is registered with, and
is subject to regulation by, the Federal Reserve under the Bank Holding Company
Act, as amended (the "BHCA"). In accordance


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with Federal Reserve policy, the Company is expected to act as a source of
financial strength to the Bank and to commit resources to support the Bank in
circumstances where the Company might not otherwise do so. Under the BHCA, the
Company is subject to periodic examination by the Federal Reserve. The Company
is also required to file with the Federal Reserve periodic reports of the
Company's operations and such additional information regarding the Company and
the Bank as the Federal Reserve may require. The Company is also subject to
regulation by the DFI under Indiana law.

         INVESTMENTS AND ACTIVITIES. Under the BHCA, a bank holding company must
obtain Federal Reserve approval before: (i) acquiring, directly or indirectly,
ownership or control of any voting shares of another bank or bank holding
company if, after the acquisition, it would own or control more than 5% of the
voting shares of the other bank or bank holding company (unless it already owns
or controls the majority of such shares); (ii) acquiring all or substantially
all of the assets of another bank; or (iii) merging or consolidating with
another bank holding company. Subject to certain conditions (including certain
deposit concentration limits established by the BHCA), the Federal Reserve may
allow a bank holding company to acquire banks located in any state of the United
States without regard to whether the acquisition is prohibited by the law of the
state in which the target bank is located. In approving interstate acquisitions,
however, the Federal Reserve is required to give effect to applicable state law
limitations on the aggregate amount of deposits that may be held by the
acquiring bank holding company and its insured depository institution affiliates
in the state in which the target bank is located (provided that those limits do
not discriminate against out-of-state depository institutions or their holding
companies) and state laws which require that the target bank have been in
existence for a minimum period of time (not to exceed five years) before being
acquired by an out-of-state bank holding company.

         The BHCA also generally prohibits the Company from acquiring direct or
indirect ownership or control of more than 5% of the voting shares of any
company which is not a bank and from engaging in any business other than that of
banking, managing and controlling banks or furnishing services to banks and
their subsidiaries. This general prohibition is subject to a number of
exceptions. The principal exception allows bank holding companies to engage in,
and to own shares of companies engaged in, certain businesses found by the
Federal Reserve to be "so closely related to banking ... as to be a proper
incident thereto." Under current regulations of the Federal Reserve, this
authority would permit the Company to engage in a variety of banking-related
businesses, including the operation of a thrift, sales and consumer finance,
equipment leasing, the operation of a computer service bureau (including
software development), and mortgage banking and brokerage. Additionally, bank
holding companies that meet certain eligibility requirements prescribed by the
BHCA and elect to operate as financial holding companies may engage in, or own
shares in companies engaged in, a wider range of nonbanking activities,
including securities and insurance activities and any other activity that the
Federal Reserve, in consultation with the Secretary of the Treasury, determines
by regulation or order is financial in nature, incidental to any such financial
activity or complementary to any such financial activity and does not pose a
substantial risk to the safety or soundness of depository institutions or the
financial system generally. The BHCA generally does not place territorial
restrictions on the domestic activities of non-bank subsidiaries of bank holding
companies or financial holding companies. As of the date of this filing, the
Company has not applied for nor received approval to operate as a financial
holding company.



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         Federal law also prohibits any person or company from acquiring
"control" of a bank or bank holding company without prior notice to the
appropriate federal bank regulator. "Control" is defined in certain cases as the
acquisition of 10% or more of the outstanding shares of a bank or bank holding
company.

         CAPITAL REQUIREMENTS. Bank holding companies are required to maintain
minimum levels of capital in accordance with Federal Reserve capital adequacy
guidelines. If capital falls below minimum guideline levels, a bank holding
company, among other things, may be denied approval to acquire or establish
additional banks or non-bank businesses.

         The Federal Reserve's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: (i) a
risk-based requirement expressed as a percentage of total risk-weighted assets;
and (ii) a leverage requirement expressed as a percentage of total assets. The
risk-based requirement consists of a minimum ratio of total capital to total
risk-weighted assets of 8%, and a minimum ratio of Tier 1 capital to total
risk-weighted assets of 4%. The leverage requirement consists of a minimum ratio
of Tier 1 capital to total assets of 3% for the most highly rated companies,
with a minimum requirement of 4% for all others. For purposes of these capital
standards, Tier 1 capital consists primarily of permanent stockholders' equity
less intangible assets (other than certain loan servicing rights and purchased
credit card relationships). Total capital consists primarily of Tier 1 capital
plus certain other debt and equity instruments which do not qualify as Tier 1
capital and a portion of the company's allowance for loan losses.

         The risk-based and leverage standards described above are minimum
requirements. Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual banking organizations.
For example, the Federal Reserve's capital guidelines contemplate that
additional capital may be required to take adequate account of, among other
things, interest rate risk, or the risks posed by concentrations of credit,
nontraditional activities or securities trading activities. Further, any banking
organization experiencing or anticipating significant growth would be expected
to maintain capital ratios, including tangible capital positions (i.e., Tier 1
capital less all intangible assets), well above the minimum levels.

         As of December 31, 2001, the Company had regulatory capital in excess
of the Federal Reserve's minimum requirements.

         DIVIDENDS. The Delaware General Corporation Law (the "DGCL") allows the
Company to pay dividends only out of its surplus (as defined and computed in
accordance with the provisions of the DGCL) or if the Company has no such
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Additionally, the Federal Reserve has
issued a policy statement with regard to the payment of cash dividends by bank
holding companies. The policy statement provides that a bank holding company
should not pay cash dividends which exceed its net income or which can only be
funded in ways that weaken the Bank holding company's financial health, such as
by borrowing. The Federal Reserve also possesses enforcement powers over bank
holding companies and their non-bank subsidiaries to prevent or remedy actions
that represent unsafe or unsound practices or violations of applicable statutes
and regulations. Among these powers is the ability to proscribe the payment of
dividends by banks and bank holding companies.



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         FEDERAL SECURITIES REGULATION. The Company's common stock is not
registered with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Consequently, the Company is not subject to the
information, proxy solicitation, insider trading and other restrictions and
requirements of the SEC under the Exchange Act. As a result of the filing by the
Company of a registration statement with the SEC in 1996, the Company was
subject to the periodic reporting requirements of the Securities Act of 1933.
Although these reporting obligations were suspended at the end of 1996, the
Company has voluntarily continued filing periodic reports with the SEC.

THE BANK

         GENERAL. The Bank is an Indiana-chartered bank, the deposit accounts of
which are insured by the FDIC's Bank Insurance Fund ("BIF"). As a BIF-insured,
Indiana-chartered bank, the Bank is subject to the examination, supervision,
reporting and enforcement requirements of the DFI, as the chartering authority
for Indiana banks, and the FDIC, which under federal law is designated as the
primary federal regulator of state-chartered, FDIC-insured banks that are not
members of the Federal Reserve System.

         DEPOSIT INSURANCE. As an FDIC-insured institution, the Bank is required
to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance premiums based upon
their respective levels of capital and results of supervisory evaluations.
Institutions classified as well capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of substantial
supervisory concern pay the highest premium. The FDIC makes risk classification
of all insured institutions for each semi-annual assessment period.

         During the year ended December 31, 2001, BIF assessments ranged from 0%
of deposits to 0.27% of deposits. For the semi-annual assessment period
beginning January 1, 2002, BIF assessment rates will continue to range from 0%
of deposits to 0.27% of deposits.

         The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution: (i)
has engaged or is engaging in unsafe or unsound practices; (ii) is in an unsafe
or unsound condition to continue operations; or (iii) has violated any
applicable law, regulation, order or any condition imposed in writing by, or
written agreement with, the FDIC. The FDIC may also suspend deposit insurance
temporarily during the hearing process for a permanent termination of insurance
if the institution has no tangible capital. Management of the Bank is not aware
of any activity or condition that could result in termination of the deposit
insurance of the Bank.

         FICO ASSESSMENTS. Since 1987, a portion of the deposit insurance
assessments paid by members of the FDIC's Savings Association Insurance Fund
("SAIF") has been used to cover interest payments due on the outstanding
obligations of the Financing Corporation ("FICO"). FICO was created in 1987 to
finance the recapitalization of the Federal Savings and Loan Insurance
Corporation, the SAIF's predecessor insurance fund. As a result of federal
legislation enacted in 1996, beginning as of January 1, 1997, both SAIF members
and BIF members became subject to assessments to cover the interest payments on
outstanding FICO obligations until the final maturity


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of the outstanding FICO obligations in 2019. During the year ended December 31,
2001, the FICO assessment rate for BIF and SAIF members was approximately 0.02%
of deposits.

         SUPERVISORY ASSESSMENTS. All Indiana banks are required to pay
supervisory assessments to the DFI to fund the operations of the DFI. During the
year ended December 31, 2001, the Bank paid supervisory assessments to the DFI
totaling $15,042.

         CAPITAL REQUIREMENTS. The FDIC has established the following minimum
capital standards for state-chartered insured nonmember banks, such as the Bank:
(i) a leverage requirement consisting of a minimum ratio of Tier 1 capital to
total assets of 3% for the most highly-rated banks with a minimum requirement of
at least 4% for all others; and (ii) a risk-based capital requirement consisting
of a minimum ratio of total capital to total risk-weighted assets of 8%, and a
minimum ratio of Tier 1 capital to total risk-weighted assets of 4%. For
purposes of these capital standards, Tier 1 capital and total capital consist of
substantially the same components as Tier 1 capital and total capital under the
Federal Reserve's capital guidelines for bank holding companies (see "--The
Company--Capital Requirements").

         The capital requirements described above are minimum requirements.
Higher capital levels will be required if warranted by the particular
circumstances or risk profiles of individual institutions. For example, the
regulations of the FDIC provide that additional capital may be required to take
adequate account of, among other things, interest rate risk or the risks posed
by concentrations of credit, nontraditional activities or securities trading
activities. Further, federal law and regulations provide various incentives to
financial institutions to maintain regulatory capital at levels in excess of
minimum regulatory requirements. For example, a financial institution that is
"well-capitalized" may qualify for exemptions from prior notice or application
requirements otherwise applicable to certain types of activities and may qualify
for expedited processing of other required notices or applications.
Additionally, one of the criteria that determines a bank holding company's
eligibility to operate as a financial holding company is a requirement that all
of its financial institution subsidiaries be "well-capitalized." Under the
regulations of the FDIC, in order to be "well-capitalized" a financial
institution must maintain a ratio of total capital to total risk-weighted assets
of 10% or greater, a ratio of Tier 1 capital to total risk-weighted assets of 6%
or greater and a ratio of Tier 1 capital to total assets of 5% or greater.

         Federal law also provides the federal banking regulators with broad
power to take prompt corrective action to resolve the problems of
undercapitalized institutions. The extent of the regulators' powers depends on
whether the institution in question is "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized," in each case as defined by regulation. Depending upon the
capital category to which an institution is assigned, the regulators' corrective
powers include: (i) requiring the institution to submit a capital restoration
plan; (ii) limiting the institution's asset growth and restricting its
activities; (iii) requiring the institution to issue additional capital stock
(including additional voting stock) or to be acquired; (iv) restricting
transactions between the institution and its affiliates; (v) restricting the
interest rate the institution may pay on deposits; (vi) ordering a new election
of directors of the institution; (vii) requiring that senior executive officers
or directors be dismissed; (viii) prohibiting the institution from accepting
deposits from correspondent banks; (ix) requiring the institution to divest
certain subsidiaries; (x) prohibiting the payment of principal or interest on
subordinated debt; and (xi) ultimately, appointing a receiver for the
institution.


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         As of December 31, 2001: (i) the Bank was not subject to a directive
from the FDIC to increase its capital to an amount in excess of the minimum
regulatory capital requirements; (ii) the Bank exceeded its minimum regulatory
capital requirements under FDIC capital adequacy guidelines; and (iii) the Bank
was "well-capitalized," as defined by FDIC regulations.

         DIVIDENDS. Indiana law prohibits the Bank from paying dividends in an
amount greater than its undivided profits. The Bank is required to obtain the
approval of the DFI for the payment of any dividend if the total of all
dividends declared by the Bank during the calendar year, including the proposed
dividend, would exceed the sum of the retained net income for the year to date
combined with its retained net income for the previous two years. Indiana law
defines "retained net income" to mean the net income of a specified period,
calculated under the consolidated report of income instructions, less the total
amount of all dividends declared for the specified period.

         The payment of dividends by any financial institution or its holding
company is affected by the requirement to maintain adequate capital pursuant to
applicable capital adequacy guidelines and regulations, and a financial
institution generally is prohibited from paying any dividends if, following
payment thereof, the institution would be undercapitalized. As described above,
the Bank exceeded its minimum capital requirements under applicable guidelines
as of December 31, 2001. As of January 1, 2002, approximately $2.2 million plus
Bank earnings generated in 2002 is available to be paid as dividends to the
Company by the Bank. Notwithstanding the availability of funds for dividends,
however, the FDIC may prohibit the payment of any dividends by the Bank if the
FDIC determines such payment would constitute an unsafe or unsound practice.

         INSIDER TRANSACTIONS. The Bank is subject to certain restrictions
imposed by the Federal Reserve Act on extensions of credit by the Company, on
investments in the stock or other securities of the Company and the acceptance
of the stock or other securities of the Company as collateral for loans. 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
Company, to principal stockholders of the Company, and to "related interests" of
such directors, officers and principal stockholders. In addition, federal law
and regulations may affect the terms upon which any person becoming a director
or officer of the Company or a principal stockholder of the Company may obtain
credit from banks with which the Bank maintains a correspondent relationship.

         SAFETY AND SOUNDNESS STANDARDS. The federal banking agencies have
adopted guidelines that establish operational and managerial standards to
promote the safety and soundness of federally insured depository institutions.
The guidelines set forth standards for internal controls, information systems,
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits, asset quality and
earnings.

         In general, the safety and soundness 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. If an institution fails to submit an acceptable
compliance plan, or fails in any material respect to implement a compliance plan
that has been accepted by its primary federal regulator, the regulator is
required to issue an order directing the institution to cure the deficiency.
Until the



                                       10


<PAGE>


deficiency cited in the regulator's order is cured, the regulator may restrict
the institution's rate of growth, require the institution to increase its
capital, restrict the rates the institution pays on deposits or require the
institution to take any action the regulator deems appropriate under the
circumstances. Noncompliance with the standards established by the safety and
soundness guidelines may also constitute grounds for other enforcement action by
the federal banking regulators, including cease and desist orders and civil
money penalty assessments.

         BRANCHING AUTHORITY. Indiana banks, such as the Bank, have the
authority under Indiana law to establish branches anywhere in Indiana, subject
to receipt of all required regulatory approvals.

         Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Riegle-Neal Act"), both state and national banks are allowed to
establish interstate branch networks through acquisitions of other banks,
subject to certain conditions, including certain limitations on the aggregate
amount of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of new interstate branches
or the acquisition of individual branches of a bank in another state (rather
than the acquisition of an out-of-state bank in its entirety) is allowed by the
Riegle-Neal Act only if specifically authorized by state law. The legislation
allowed individual states to "opt-out" of certain provisions of the Riegle-Neal
Act by enacting appropriate legislation prior to June 1, 1997. Indiana permits
interstate mergers subject to certain conditions, including a prohibition
against interstate mergers involving Indiana banks that have been in existence
and continuous operation for fewer than five years. Additionally, Indiana law
allows out-of-state banks to acquire individual branch offices in Indiana and to
establish new branches in Indiana subject to certain conditions, including a
requirement that the laws of the state in which the out-of-state bank is
headquartered grant Indiana banks authority to acquire and establish branches in
such state.

         STATE BANK ACTIVITIES. Under federal law and FDIC regulations, FDIC
insured state banks are prohibited, subject to certain exceptions, from making
or retaining equity investments of a type, or in an amount, that are not
permissible for a national bank. Federal law and FDIC regulations also prohibit
FDIC insured state banks and their subsidiaries, subject to certain exceptions,
from engaging as principal in any activity that is not permitted for a national
bank or its subsidiary, respectively, unless the Bank meets, and continues to
meet, its minimum regulatory capital requirements and the FDIC determines the
activity would not pose a significant risk to the deposit insurance fund of
which the Bank is a member. These restrictions have not had, and are not
currently expected to have, a material impact on the operations of the Bank.

         FEDERAL RESERVE SYSTEM. Federal Reserve regulations, as presently in
effect, require depository institutions to maintain non-interest earning
reserves against their transaction accounts (primarily NOW and regular checking
accounts), as follows: for transaction accounts aggregating $41.3 million or
less, the reserve requirement is 3% of total transaction accounts; and for
transaction accounts aggregating in excess of $41.3 million, the reserve
requirement is $1.239 million plus 10% of the aggregate amount of total
transaction accounts in excess of $41.3 million. The first $5.7 million of
otherwise reservable balances are exempted from the reserve requirements. These
reserve requirements are subject to annual adjustment by the Federal Reserve.
The Bank is in compliance with the foregoing requirements.

                                       11





<PAGE>


STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES

                      SELECTED CONSOLIDATED FINANCIAL DATA


The following selected consolidated financial data of St. Joseph Capital
Corporation and its subsidiary is qualified in its entirety by, and should be
read in conjunction with, the consolidated financial statements, including notes
thereto.
<TABLE>
<CAPTION>

                                                                           At December 31
                                                                           (In thousands)
SUMMARY OF FINANCIAL CONDITION:                      2001          2000         1999         1998         1997
                                                     ----          ----         ----         ----         ----
<S>                                              <C>          <C>          <C>          <C>           <C>
Total assets                                     $   214,804  $   177,071  $   130,932  $    96,604   $    50,839
Total cash and cash equivalents                       20,021       19,543       13,266       15,719         4,535
Interest-bearing time deposits in
  other financial institutions                             -            -            -            -           500
Securities available for sale                         45,172       23,172       29,676       31,066        22,351
Loans receivable, net of allowance for
  loan losses                                        144,688      129,841       85,054       48,011        21,991
Total deposits                                       153,308      122,432       98,241       76,390        34,916
FHLB advances                                         30,570       27,570        7,500        2,000             -
Total shareholders' equity                            20,015       18,561       16,799       11,611        11,257
Average shareholders' equity                          19,545       17,480       13,345       11,296        11,628
Average total assets                                 191,590      147,817      108,773       71,232        31,283

                                                    Years Ended December 31, 2001, 2000, 1999, 1998 and 1997
                                                                         (In thousands)
Summary of Operating Results:                         2001        2000         1999         1998         1997
                                                      ----        ----         ----         ----         ----

Total interest and dividend income               $    12,414  $    11,072  $     7,370  $     4,790   $     2,022
Total interest expense                                 6,600        6,290        3,847        2,699           942
                                                 -----------  -----------  -----------  -----------   -----------
     Net interest income                               5,814        4,782        3,523        2,091         1,080
Provision for loan losses                                422          582          518          392           360
Total noninterest income                                 668          205           98          158             4
Total noninterest expense                              4,066        3,170        2,592        2,086         1,486
                                                 -----------  -----------  -----------  -----------   -----------
Income (loss) before income taxes                      1,994        1,235          511         (229)         (762)
Income tax expense                                       719          213            -            -             -
                                                 -----------  -----------  -----------  -----------   -----------
     Net income (loss)                           $     1,275  $     1,022  $       511  $      (229)  $      (762)
                                                 ===========  ===========  ===========  ===========   ===========

Supplemental Data:
Return on average total assets                           .67%         .69%         .47%        (.32)%       (2.44)%
Return on average shareholders' equity                  6.52         5.85         3.83        (2.03)        (6.55)
Net interest rate spread(1)                             2.60         2.49         2.68         2.09          1.61
Net yield on average interest-earning assets(2)         3.23         3.43         3.46         3.15          3.72
Net interest income to operating
  expenses(3)                                         142.99       150.85       135.92       100.24         72.68
Average shareholders' equity to average
  total assets                                         10.20        11.83        12.27        15.86         37.17
Average interest-earning assets to average
  interest-bearing liabilities                        117.03       120.11       120.30       126.52        165.02
Nonperforming assets to total assets                       -            -            -            -             -
Nonperforming loans to total loans
  receivable                                               -            -            -            -             -
Allowance for loan losses to total loans
   receivable                                           1.55         1.41         1.47         1.54          1.61
Allowance for loan losses to non-performing
  loans receivable                                         -            -            -            -             -
Basic income (loss) per common share             $       .76         $      .61   $      .37   $       (.18)$
(.60)
Diluted income (loss) per common share           $       .75   $      .60   $      .36   $     (.18)   $    (.60)
Dividends declared per common share              $         -   $        -   $        -   $        -    $        -
Book value per common share                      $     11.93   $    11.08   $    10.03   $     9.08    $    8.87
Number of offices                                          1            1            1            1             1
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Interest rate spread is calculated by subtracting average interest rate
     cost from average interest rate earned.
(2)  Net interest income divided by average interest-earning assets.
(3)  Operating expenses consist of other expenses less income taxes.


                                       12



<PAGE>


ITEM 1.  BUSINESS-STATISTICAL DISCLOSURE

I.  DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
    INTEREST RATES AND INTEREST DIFFERENTIAL

    A. The following are the average balance sheets for the years ending
       December 31:
<TABLE>
<CAPTION>

                                                       ----------------------------2001------------------------
                                                                                   ----
                                                          Average                                       Average
                                                          Balance                Interest                Rate
                                                          -------                --------                ----
                                                                          (Dollars in thousands)
<S>                                                    <C>                      <C>                       <C>
    ASSETS
    Interest-earning assets
      Federal funds sold                               $     6,309              $      255                4.04%
      Interest-earning deposits in other
        financial institutions                               4,771                     142                2.98
      Securities available for sale (1)                     26,155                   1,401                5.36
      FHLB stock                                             1,574                     117                7.43
      Loans receivable (2)                                 141,020                  10,499                7.45
                                                       -----------              ----------
       Total interest-earning assets (1)                   179,829                  12,414                6.90%

    Noninterest-earning assets
      Cash and due from banks                               10,893
      Allowance for loan losses                             (2,094)
      Premises and equipment, net                            1,359
      Accrued interest receivable and
        other assets                                         1,603
                                                       -----------

                                                       $   191,590
                                                       ===========
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Interest-bearing liabilities
      Savings, NOW and money markets                   $    66,338              $    2,258                3.40%
      Certificates of deposit                               47,929                   2,354                4.91
      Federal funds purchased                                  472                      25                5.30
      Securities sold under agreements
        to repurchase                                        8,016                     222                2.77
      FHLB advances                                         30,910                   1,741                5.63
                                                       -----------              ----------
       Total interest-bearing liabilities                  153,665                   6,600                4.30%
                                                                                ----------

    Noninterest-bearing liabilities
      Demand deposits                                       18,094
      Accrued interest payable and
        other liabilities                                      286
                                                       -----------
                                                           172,045

    Shareholders' equity                                    19,545
                                                       -----------

                                                       $   191,590
                                                       ===========

    Net interest income/spread                                                  $    5,814                2.60%
                                                                                ==========

    Net interest income as a percent
      of average interest earning assets (1)                                                              3.23%
                                                                                                          ====
--------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Securities balances represent daily average balances for the fair value of
     securities. The average rate is calculated based on the daily average
     balance for the amortized cost of securities. Tax exempt interest income is
     not presented on a tax equivalent basis.
(2)  Includes fees on loans. The inclusion of loan fees does not have a material
     effect on the average interest rate.


                                       13


<PAGE>


    I.  DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
        INTEREST RATES AND INTEREST DIFFERENTIAL (Continued)
<TABLE>
<CAPTION>

                                                       ----------------------------2000------------------------
                                                                                   ----
                                                          Average                                       Average
                                                          Balance                Interest                Rate
                                                          -------                --------                 ----
                                                                          (Dollars in thousands)
<S>                                                    <C>                      <C>                       <C>

    ASSETS
    Interest-earning assets
      Federal funds sold                               $     3,398              $      212                6.24%
      Interest-bearing deposits in other
        financial institutions                                 126                       5                3.97
      Securities available for sale (1)                     25,287                   1,544                5.95
      FHLB stock                                               684                      57                8.33
      Loans receivable (2)                                 109,457                   9,254                8.45
                                                       -----------              ----------
       Total interest-earning assets (1)                   138,952                  11,072                7.93%

    Noninterest-earning assets
      Cash and due from banks                                7,712
      Allowance for loan losses                             (1,598)
      Premises and equipment, net                            1,454
      Accrued interest receivable and
        other assets                                         1,297
                                                       -----------

                                                       $   147,817
                                                       ===========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Interest-bearing liabilities
      Savings, NOW and money markets                   $    56,023              $    2,858                5.10%
      Certificates of deposit                               38,759                   2,312                5.97
      Federal funds purchased                                  626                      42                6.71
      Securities sold under agreements
        to repurchase                                        6,998                     311                4.44
      FHLB advances                                         13,278                     767                5.78
                                                       -----------              ----------
       Total interest-bearing liabilities                  115,684                   6,290                5.44%
                                                                                ----------

    Noninterest-bearing liabilities
      Demand deposits                                       14,396
      Accrued interest payable and
        other liabilities                                      257
                                                       -----------
                                                           130,337

    Shareholders' equity                                    17,480
                                                       -----------

                                                       $   147,817
                                                       ===========

    Net interest income/spread                                                  $    4,782                2.49%
                                                                                ==========

    Net interest income as a percent
      of average interest earning assets (1)                                                              3.43%
                                                                                                          ====


--------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Securities balances represent daily average balances for the fair value of
     securities. The average rate is calculated based on the daily average
     balance for the amortized cost of securities. Tax exempt interest income is
     not presented on a tax equivalent basis.
(2)  Includes fees on loans. The inclusion of loan fees does not have a material
     effect on the average interest rate.

                                       14


<PAGE>




I.  DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
    INTEREST RATES AND INTEREST DIFFERENTIAL (Continued)
<TABLE>
<CAPTION>
                                                       ----------------------------1999------------------------
                                                                                   ----
                                                          Average                                       Average
                                                          Balance                Interest                Rate
                                                          -------                --------                ----
                                                                          (Dollars in thousands)
<S>                                                    <C>                      <C>                       <C>
    ASSETS
    Interest-earning assets
      Federal funds sold                               $     4,449              $      228                5.12%
      Interest-bearing deposits in other
        financial institutions                                 109                       8                7.34
      Securities available for sale (1)                     28,959                   1,726                5.94
      FHLB stock                                               375                      24                6.40
      Loans receivable (2)                                  67,884                   5,384                7.93
                                                       -----------              ----------
       Total interest-earning assets (1)                   101,776                   7,370                7.23%

    Noninterest-earning assets
      Cash and due from banks                                5,954
      Allowance for loan losses                               (970)
      Premises and equipment, net                            1,214
      Accrued interest receivable and
        other assets                                           799
                                                       -----------

                                                       $   108,773
                                                       ===========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Interest-bearing liabilities
      Savings, NOW and money markets                   $    44,707              $    1,943                4.35%
      Certificates of deposit                               26,673                   1,341                5.03
      Federal funds purchased                                   74                       4                5.41
      Securities sold under agreements
        to repurchase                                        8,980                     366                4.07
      FHLB advances                                          4,167                     193                4.63
                                                       -----------              ----------
       Total interest-bearing liabilities                   84,601                   3,847                4.55%
                                                                                ----------

    Noninterest-bearing liabilities
      Demand deposits                                       10,460
      Accrued interest payable and
        other liabilities                                      367
                                                       -----------
                                                            95,428

    Shareholders' equity                                    13,345
                                                       -----------

                                                       $   108,773
                                                       ===========

    Net interest income/spread                                                  $    3,523                2.68%
                                                                                ==========                ====

    Net interest income as a percent
       of average interest earning assets (1)                                                             3.46%
                                                                                                          ====

--------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Securities balances represent daily average balances for the fair value of
     securities. The average rate is calculated based on the daily average
     balance for the amortized cost of securities. Tax exempt interest income is
     not presented on a tax equivalent basis.

(2)  Includes fees on loans. The inclusion of loan fees does not have a material
     effect on the average interest rate.


                                       15


<PAGE>



I.  DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
     INTEREST RATES AND INTEREST DIFFERENTIAL (Continued)

    B.  The following tables set forth the effect of volume and rate changes
        on interest income and expense for the periods indicated. 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.

<TABLE>
<CAPTION>

                                         Total                                  Total
                                       Variance    Variance Attributable To   Variance     Variance Attributable To
                                                   ------------------------                ------------------------
                                       2001/2000     Volume        Rate       2000/1999      Volume         Rate
                                       ---------     ------        ----       ---------      ------         ----
                                                                   (In thousands)
<S>                                    <C>          <C>          <C>          <C>           <C>          <C>
INTEREST INCOME
   Federal funds sold                  $      43    $     136    $     (93)   $     (16)    $    (60)    $       44
   Interest-bearing deposits in other
     financial institutions                  137          139           (2)          (3)           1             (4)
   Securities available for sale            (143)          52         (195)        (182)        (180)            (2)
   FHLB stock                                 60           67           (7)          33           24              9
   Loans receivable                        1,245        2,443       (1,198)       3,870        3,494            376
                                       ---------    ---------    ----------   ---------     --------     ----------
                                           1,342        2,837       (1,495)       3,702        3,279            423

INTEREST EXPENSE
   Savings, NOW and money markets           (600)         464       (1,064)         915          542            373
   Certificates of deposit                    42          492         (450)         971          688            283
   Federal funds purchased                   (17)          (9)          (8)          38           37              1
   Securities sold under agreements
     to repurchase                           (89)          40         (129)         (55)         (86)            31
   FHLB advances                             974          994          (20)         574          516             58
                                       ---------    ---------    ----------   ---------     --------     ----------
                                             310        1,981       (1,671)       2,443        1,697            746
                                       ---------    ---------    ----------   ---------     --------     ----------

NET INTEREST INCOME                    $   1,032    $     856    $     176    $   1,259     $  1,582     $     (323)
                                       =========    =========    =========    =========     ========     ==========
</Table>



                                       16


<PAGE>


17

II. INVESTMENT PORTFOLIO

    A.  The carrying value of securities available for sale as of December
        31 are summarized as follows:

<TABLE>
<CAPTION>

                                                        2001             2000            1999
                                                        ----             ----            ----
                                                                   (In thousands)
<S>                                                 <C>             <C>              <C>
        U.S. Government and federal agencies        $     29,353    $     20,280     $     26,255
        Obligations of states and
          political subdivisions                           4,980           2,759            3,345
        Corporate bonds                                    5,135               -                -
        Mortgage backed securities                         5,661               -                -
        Marketable equity securities                          43             133               76
                                                    ------------    ------------     ------------

                                                    $     45,172    $     23,172     $     29,676
                                                    ============    ============     ============
</TABLE>


    B.  The maturity distribution and weighted average interest rates of debt
        securities available for sale at December 31, 2001 are shown in the
        following table. Securities that are not due at a single maturity
        date are not shown.
<TABLE>
<CAPTION>

                             -------------------------------------Maturing-------------------------------------
                                                                  --------
                                                           (Dollars in thousands)

                                                     After One Year      After Five Years
                                    Within             But Within           But Within           After
                                   One Year            Five Years            Ten Years          Ten Years
                                   --------            ----------            ---------          ---------
                               Amount     Rate     Amount      Rate      Amount    Rate     Amount     Rate
                               ------     ----     ------      ----      ------    ----     ------     ----
<S>                          <C>          <C>    <C>          <C>     <C>         <C>     <C>          <C>

    U.S. Government and
      federal agencies       $   9,099    3.46%  $  18,235     4.76%  $   1,027    5.75%  $     992    3.44%
    Obligations of states
      and political
      subdivisions                 250    5.19       2,194     6.29       2,536    6.78           -       -
    Corporate bonds              4,484    4.32           -        -           -       -         651    3.79
                             ---------           ---------            ---------           ---------

                             $  13,833    3.77%  $  20,429     4.92%  $   3,563    6.48%  $   1,643    3.58%
                             =========           =========             ========           =========
</TABLE>



        The weighted average interest rates are based on coupon rates for
        securities purchased at par value and on effective interest rates
        considering amortization or accretion if the securities were
        purchased at a premium or discount.

    C.  Excluding those holdings of the investment portfolio in U.S. Treasury
        securities and other agencies of the U.S. Government, there were no
        securities of any one issuer which exceeded 10% of the shareholders'
        equity of the Company at December 31, 2001.



                                       17



<PAGE>






III.    LOAN PORTFOLIO

        A. Types of Loans - Total loans on the balance sheet are comprised of
           the following classifications at December 31 for the years indicated:
<TABLE>
<CAPTION>

                                             2001           2000            1999            1998           1997
                                             ----           ----            ----            ----           ----
                                                                           (In thousands)
<S>                                     <C>            <C>             <C>             <C>             <C>
           Commercial                   $     96,953   $     89,721    $      56,591   $     33,202    $     14,733
           Residential real estate
             mortgage                         42,583         34,223           26,571         13,925           6,376
           Installment loans to
             individuals                       7,426          7,749            3,161          1,636           1,242
                                        ------------   ------------    -------------   ------------    ------------

                                        $    146,962   $    131,693    $      86,323   $     48,763    $     22,351
                                        ============   ============    =============   ============    ============
</TABLE>

           Concentrations of Credit Risk: The Company grants commercial,
           residential real estate mortgage and installment loans to individuals
           mainly in northern Indiana. Commercial loans include loans
           collateralized by business assets. At December 31, 2001, commercial
           loans make up approximately 65.9% of the loan portfolio and the loans
           are expected to be repaid from cash flow from operations of
           businesses. Commercial loans concentrated in real estate development
           and investment totaled $25.8 million or 17.6% of total loans at
           December 31, 2001. Residential real estate mortgage loans make up
           approximately 29.0% of the loan portfolio and are collateralized by
           residential real estate. Installment loans to individuals make up
           approximately 5.1% of the loan portfolio and are primarily
           collateralized by consumer assets.

       B.  Maturities and Sensitivities of Loans to Changes in Interest Rates -
           The following table shows the amounts of commercial loans outstanding
           as of December 31, 2001, based on remaining scheduled repayments of
           principal, are due in the periods indicated. Also, the amounts have
           been classified according to sensitivity to changes in interest rates
           for commercial loans due after one year. (Variable-rate loans are
           those loans with floating or adjustable interest rates.)

<TABLE>
<CAPTION>

                                                                                        2001
                                                                                   (In thousands)
<S>                                                                <C>             <C>              <C>
           Maturing
           Within one year                                                          $     40,994
           After one year but within five years                                           42,801
           After five years                                                               13,158
                                                                                    ------------

                                                                                    $     96,953
                                                                                    ============

                                                                  Commercial Loan Interest Sensitivity
                                                                                        2001
                                                                                   (In thousands)
                                                                        Fixed         Variable
                                                                        Rate            Rate             Total
           Due after one year but within five years                $      29,516    $     13,285    $     42,801
           Due after five years                                            4,665           8,493          13,158
                                                                   -------------    ------------    ------------

                                                                   $      34,181    $     21,778    $     55,959
                                                                   =============    ============    ============
</TABLE>

                                       18
<PAGE>

III. LOAN PORTFOLIO (Continued)

     C. Risk Elements

          1. Nonaccrual, Past Due, Restructured and Impaired Loans - The
             following schedule summarizes nonaccrual, past due, restructured
             and impaired loans at December 31:

                                               2001   2000   1999   1998   1997
                                               ----   ----   ----   ----   ----
                                                       (In thousands)

             (a) Loans accounted for on
                 a nonaccrual basis            $  -   $  -   $  -   $  -   $  -

             (b) Accruing loans which
                 are contractually past
                 due 90 days or more as
                 to interest or
                 principal payments               -      -      -      -      -

             (c) Loans not included in
                 (a) or (b) which are
                 "Troubled Debt
                 Restructurings" as
                 defined by Statement of
                 Financial Accounting
                 Standards No. 15                 -      -      -      -      -

             (d) Other loans defined as
                 "impaired"                       -      -      -      -      -
                                               ----   ----   ----   ----   ----

                                               $  -   $  -   $  -   $  -   $  -
                                               ====   ====   ====   ====   ====

             Management believes the allowance for loan losses at December 31,
             2001 is adequate to absorb any losses on nonperforming loans, as
             the allowance balance is maintained by management at a level
             considered adequate to cover probable losses incurred 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.

                                                           2001
                                                      (In thousands)

             Gross interest income that
             would have been recorded in
             2001 on nonaccrual loans
             outstanding at December 31,
             2001 if the loans had been
             current, in accordance with
             their original terms and
             had been outstanding
             throughout the period or
             since origination if held
             for part of the period                        $  -

             Interest income actually
             recorded on nonaccrual
             loans and included in net
             income for the period                            -

                                                           ----

             Interest income not
             recognized during the
             period                                        $  -
                                                           ====


                                       19
<PAGE>

II.  LOAN PORTFOLIO (Continued)

             Discussion of the Nonaccrual Policy

             The accrual of interest income is discontinued when the collection
             of a loan or interest, in whole or in part, is doubtful. When
             interest accruals are discontinued, interest income accrued in the
             current period is reversed. While loans which are past due 90 days
             (180 days for residential real estate loans) or more as to interest
             or principal payments are considered for nonaccrual status,
             management may elect to continue the accrual of interest when the
             estimated net realizable value of collateral, in management's
             judgment, is sufficient to cover the principal balance and accrued
             interest.

          2. Potential Problem Loans

             As of December 31, 2001, in addition to the $-0- of loans reported
             under Item III, C.1., there are approximately $2.0 million of loans
             in other outstanding loans where known information about possible
             credit problems of the borrowers causes management to have serious
             doubts as to the ability of such borrowers to comply with the
             present loan repayment terms and which may result in disclosure of
             such loans pursuant to Item III. C.1 at some future date.
             Consideration was given to loans classified for regulatory purposes
             as loss, doubtful, substandard, or special mention that have not
             been disclosed in Section 1 above. To the extent that such loans
             are not included in the $-0- potential problem loans described
             above, management believes that such loans will not materially
             impact future operating results, liquidity, or capital resources.

          3. Foreign Outstandings

             None

          4. Loan Concentrations

             None, not already disclosed under Item III A.

     D. Other Interest-Bearing Assets

        There are no other interest-bearing assets as of December 31, 2001 which
        would be required to be disclosed under Item III. C.1 or 2 if such
        assets were loans.


                                       20
<PAGE>

IV.  SUMMARY OF LOAN LOSS EXPERIENCE

     A. The following schedule presents an analysis of the allowance for loan
        losses, average loan data and related ratios for the years ended
        December 31:

<TABLE>
<CAPTION>
                                               2001       2000       1999       1998       1997
                                               ----       ----       ----       ----       ----
                                                            (Dollars in thousands)
<S>                                          <C>        <C>        <C>        <C>        <C>
     LOANS
          Loans outstanding at end
            of period                        $146,962   $131,693   $ 86,323   $ 48,763   $ 22,351
                                             ========   ========   ========   ========   ========

          Average loans outstanding
            during period                    $141,020   $109,457   $ 67,884   $ 32,955   $  9,895
                                             ========   ========   ========   ========   ========


     ALLOWANCE FOR LOAN LOSSES
          Balance at beginning of period     $  1,852   $  1,270   $    752   $    360   $      -

          Loans charged-off
              Commercial                            -          -          -          -          -
              Residential real estate
                mortgage                            -          -          -          -          -
              Installment loans to
                individuals                         -          -          -          -          -
                                             --------   --------   --------   --------   --------
                                                    -          -          -          -          -
          Recoveries of loans previously
            charged-off
              Commercial                            -          -          -          -          -
              Residential real estate
                mortgage                            -          -          -          -          -
              Installment loans to
                individuals                         -          -          -          -          -
                                             --------   --------   --------   --------   --------
                                                    -          -          -          -          -
                                             --------   --------   --------   --------   --------

     Net loans charged-off                          -          -          -          -          -

     Provision for loan losses                    422        582        518        392        360
                                             --------   --------   --------   --------   --------

     Balance at end of period                $  2,274   $  1,852   $  1,270   $    752   $    360
                                             ========   ========   ========   ========   ========

     Ratio of net charge-offs during the
       period to average loans outstanding
       during the period                           -%         -%         -%         -%         -%
                                             ========   ========   ========   ========   ========
</TABLE>

        The allowance for loan losses balance and the provision for loan losses
        are judgmentally determined by management based upon periodic reviews of
        the loan portfolio. In addition, as the Company does not have an
        established charge-off history, management considered the level of
        charge-offs on loans experienced by peer financial institutions having
        loan portfolio mix and risk characteristics similar to the Company's
        loan portfolio mix and risk characteristics. Estimating the risk of loss
        and the amount of loss 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


                                       21
<PAGE>

        position and collateral values and other factors and estimates which are
        subject to change over time.

IV.  SUMMARY OF LOAN LOSS EXPERIENCE (Continued)

     B. The following schedule is a breakdown of the allowance for loan losses
        allocated by type of loan and related ratios at December 31:

<TABLE>
<CAPTION>
                       ------------------------Allocation of the Allowance for Loan Losses---------------------------
                                               -------------------------------------------
                               2001                   2000                   1999                   1998
                               ----                   ----                   ----                   ----
                                 Percentage of          Percentage of          Percentage of          Percentage of
                                    Loans In               Loans In               Loans In               Loans In
                                      Each                   Each                   Each                   Each
                                    Category               Category               Category               Category
                       Allowance    to Total   Allowance   to Total   Allowance   to Total  Allowance    to Total
                         Amount       Loans     Amount       Loans     Amount       Loans     Amount       Loans
                         ------       -----     ------       -----     ------       -----     ------       -----
                                                       (Dollars in thousands)
<S>                    <C>       <C>           <C>      <C>           <C>      <C>          <C>       <C>
Commercial               $1,616        65.9%    $1,302        68.1%    $  873        65.5%    $  471        68.1%
Residential real
  estate mortgage           252        29.0        201        26.0        140        30.8         75        28.5
Installment loans to
  individuals               249         5.1        110         5.9         70         3.7         31         3.4
Unallocated                 157           -        239           -        187           -        175           -
                         ------      ------     ------      ------     ------      ------     ------      ------

                         $2,274         100%    $1,852       100.0%    $1,270       100.0%    $  752       100.0%
                         ======      ======     ======      ======     ======      ======     ======      ======
</TABLE>

        While management's periodic analysis of the adequacy of the allowance
        for loan losses may allocate portions of the allowance for specific
        problem loan situations, the entire allowance is available for any loan
        charge-offs that occur.

V.   DEPOSITS

     The average amount of deposits and average rates paid are summarized as
     follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                 2001                    2000                1999
                                                 ----                    ----                ----
                                          Average    Average      Average    Average  Average    Average
                                          Amount       Rate        Amount      Rate    Amount      Rate
                                          ------       ----        ------      ----    ------      ----
                                            (Dollars in thousands)
<S>                                     <C>          <C>         <C>         <C>      <C>        <C>
     Savings,  NOW and money
       markets                          $  66,338      3.40%     $  56,023     5.10%   $44,707     4.35%
     Certificates of deposits              47,929      4.91         38,759     5.97     26,673     5.03
     Demand deposits (noninterest-
       bearing)                            18,094      -            14,396     -        10,460     -
                                        ---------                ---------             -------

                                        $ 132,361                $ 109,178             $81,840
                                        =========                =========             =======
</TABLE>

     Maturities of time certificates of deposit and other time deposits of
     $100,000 or more outstanding at December 31, 2001 are summarized as
     follows:

                                                                 2001
                                                                Amount
                                                            (In thousands)

        Three months or less                                 $     10,776
        Over three months and through six months                    5,621
        Over six months and through twelve months                   9,162
        Over twelve months                                          4,362
                                                             ------------

                                                             $     29,921
                                                             ============



                                       22
<PAGE>

VI.  RETURN ON EQUITY AND ASSETS

     The ratio of net income (loss) to average shareholders' equity and average
     total assets and certain other ratios are as follows:

                                                  2001       2000       1999
                                                  ----       ----       ----
                                                    (Dollars in thousands)

     Average total assets                       $191,590   $147,817   $108,773
                                                ========   ========   ========

     Average shareholders'
       equity (1)                               $ 19,545   $ 17,480   $ 13,345
                                                ========   ========   ========

     Net income                                 $  1,275   $  1,022   $    511
                                                ========   ========   ========

     Cash dividends declared                    $      -   $      -   $      -
                                                ========   ========   ========

     Return on average total assets                  .67%       .69%       .47%

     Return on average shareholders' equity         6.52%      5.85%      3.83%

     Dividend payout percentage                       -%         -%         -%

     Average shareholders'
       equity to average total assets              10.20%     11.83%     12.27%


     (1)  Net of average unrealized appreciation or depreciation on securities
          available for sale.

VII. SHORT-TERM BORROWINGS

     The Company had securities sold under agreements to repurchase for which
     the average balance outstanding during the reported periods was 30 percent
     or more of shareholders' equity at the end of each reported period. The
     required disclosures are incorporated by reference and can be located in
     Note 7 of the consolidated financial statements.

ITEM 2.  DESCRIPTION OF PROPERTY.

     We purchased the building and land for our main office for $800,000 in May,
1999. This facility serves as our main office as well as our corporate
headquarters and is located at 3820 Edison Lakes Parkway, Mishawaka, Indiana.
The premises consist of a 9,600 square foot, two-story brick building
constructed in 1988 with parking for approximately 57 vehicles. The building is
located on a major thoroughfare in Mishawaka, approximately 2 miles south of
Interstate 80 and near the city's population center.

     We have four interior teller stations and a night depository facility. We
believe the facility will be adequate to meet our needs for the foreseeable
future. We believe that the building is adequately covered by insurance.

                                       23
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

     As a depository of funds, we may occasionally be named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to our business.

     We are not aware of any pending litigation against us.

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

     No matters were submitted during the fourth quarter of 2001 to a vote of
the Company's shareholders.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock was held by approximately 127 holders of record as of
February 28, 2002, and is quoted on the OTC Bulletin Board under the symbol
"SJOE." To date there has been no regular and liquid market for the common
stock, and there can be no assurance that a regular and liquid trading market
will develop in the foreseeable future.

     The following table shows, for the periods indicated, the high and low
trades per share of transactions in our common stock as quoted on the OTC
Bulletin Board. Other private transactions may have occurred during the periods
indicated of which we have no knowledge. The following prices represent
inter-dealer prices without retail markups, markdowns or commissions.

<TABLE>
<CAPTION>
                                  Per Share           Per Share
                                    Prices            Dividends
           2000               High          Low       Declared
           ----               ----          ---       --------
<S>                         <C>          <C>          <C>
     March 31, 2000         $  15.67     $  13.00         -
     June 30, 2000             15.25        13.50         -
     September 30, 2000        15.25        13.50         -
     December 31, 2000         15.13        11.50         -

           2000
           ----

     March 31, 2001         $  17.38     $  12.00         -
     June 30, 2001             14.50        13.00         -
     September 30, 2001        14.80        12.60         -
     December 31, 2001         13.10        11.05         -
</TABLE>


                                       24
<PAGE>

     No cash or other dividends were declared or paid during the fiscal years
ended December 31, 2001 or 2000. We expect that all company and bank earnings,
if any, will be retained to finance our growth and that no cash dividends will
be paid for the foreseeable future. If and when dividends are declared, will be
largely dependent upon dividends paid by the Bank for funds to pay dividends on
our common stock, although it is also possible that we will pay dividends in the
future generated from investment income and other company activities.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

OVERVIEW

     St. Joseph was formed in February 1996 for the purpose of organizing the
bank. We opened for business in February 1997 with $10.0 million in assets and
have grown to approximately $214.8 million as of December 31, 2001. Management
anticipates this rate of growth in assets will slow in connection with our
expectation that the growth in the Michiana economy will slow from the strong
growth experienced in recent years. Management believes that the Michiana
economy will still grow at a moderate pace.

     The following discussion provides additional information regarding our
operations and financial condition for the years ended December 31, 2001, 2000
and 1999. The objective of this financial review is to enhance the reader's
understanding of the accompanying consolidated financial statements and the
related notes thereto presented elsewhere in this report.

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

     This document (including information incorporated by reference) contains,
and future oral and written statements of the company and our management may
contain, forward-looking statements, within the meaning of such term in the
Private Securities Litigation Reform Act of 1995, with respect to our financial
condition, results of operations, plans, objectives, future performance and
business. Forward-looking statements, which may be based upon beliefs,
expectations and assumptions of our management and on information currently
available to management, are generally identifiable by the use of words such as
"believe," "expect," "anticipate," "plan," "intend," "estimate," "may," "will,"
"would," "could," "should" or other similar expressions. Additionally, all
statements in this document, including forward-looking statements, speak only as
of the date they are made, and we undertake no obligation to update any
statement in light of new information or future events.

     Our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors that could have a material adverse
effect on the operations and future prospects of the Company and its
subsidiaries include, but are not limited to, the following:

  -  The strength of the United States economy in general and the strength of
     the local economies in which we conduct our operations which may be less
     favorable than expected an may result in, among other things, a
     deterioration in the credit quality and value of our assets.

                                       25
<PAGE>

  -  The economic impact of the terrorist attacks that occurred on September
     11th, as well as any future threats and attacks, and the response of the
     United States to any such threats and attacks.
  -  The effects of, and changes in, federal, state and local laws, regulations
     and policies affecting banking, securities, insurance and monetary and
     financial matters.
  -  The effects of changes in interest rates (including the effects of changes
     in the rate of prepayments of our assets) and the policies of the Board of
     Governors of the Federal Reserve System.
  -  Our ability to compete with other financial institutions as effectively as
     we currently intend due to increases in competitive pressures in the
     financial services sector.
  -  Our inability to obtain new clients and to retain existing clients.
  -  The timely development and acceptance of products and services, including
     products and services offered through alternative delivery channels such as
     the Internet.
  -  Technological changes implemented by us and by other parties, including
     third party vendors, which may be more difficult or more expensive than
     anticipated or which may have unforeseen consequences to us and our
     clients.
  -  Our ability to develop and maintain secure and reliable electronic systems.
  -  Our ability to retain key executives and employees and the difficulty that
     we may experience in replacing key executives and employees in an effective
     manner.
  -  Consumer spending and saving habits which may change in a manner that
     affects our business adversely.
  -  Business combinations and the integration of acquired businesses that may
     be more difficult or expensive than expected.
  -  The costs, effects and outcomes of existing or future litigation.
  -  Changes in accounting policies and practices, as may be adopted by state
     and federal regulatory agencies and the Financial Accounting Standards
     Board.
  -  Our ability to manage the risks associated with the foregoing as well as
     anticipated.

     These risks and uncertainties should be considered in evaluating
forward-looking statements and undue reliance should not be placed on such
statements. Additional information concerning us and our business including
other factors that could materially affect our financial results, is included in
our filings with the Securities and Exchange Commission.


                                       26
<PAGE>

FINANCIAL CONDITION

DECEMBER 31, 2001 COMPARED WITH DECEMBER 31, 2000

     During the twelve-month period of 2001, our assets increased from $177.1
million on December 31, 2000, to $214.8 million on December 31, 2001. This
represents a total increase in assets of $37.7 million, or 21.3%. The asset
growth was comprised primarily of a $14.8 million increase in net loans and an
increase of $22.0 million in investment securities. The increase in assets was
primarily funded by a $31.1 million growth in deposits, an increase of $3.0
million in Federal Home Loan Bank advances and an increase of $2.4 million in
securities sold under agreements to repurchase.

     CASH AND CASH EQUIVALENTS. Cash and cash equivalents increased by a modest
$.5 million to $20.0 million at December 31, 2001 from $19.5 at December 31,
2000. Cash and due from banks represented cash maintained at correspondent
banks, in the form of demand deposits as well as cash maintained at the Federal
Reserve Bank of Chicago. Cash and due from banks increased $8.8 million to $19.5
at December 31, 2001 from $10.8 million at December 31, 2000. The 81.5% increase
in cash and due from banks was primarily due to the increased size of our daily
cash letter as well as the increased required reserve balance at the Federal
Reserve Bank of Chicago, all of which are due to the growth in the overall size
of the bank. The federal funds sold are inter-bank funds with daily liquidity.
At December 31, 2001, we had no federal funds sold.

     INVESTMENT PORTFOLIO. Securities available for sale and FHLB stock totaled
$46.8 million at December 31, 2001, which represented an increase of $22.3
million or 90.6% from December 31, 2000. The increase was a result of management
investing excess cash into higher yielding assets.

     All securities have been classified as available for sale. Securities
available for sale represent those securities that we may decide to sell if
needed for liquidity, asset/liability management or other reasons. Such
securities are reported at fair value with unrealized gains and losses included
as a separate component of shareholders' equity, net of tax. The unrealized gain
on the securities portfolio, net of taxes was $140,637 at December 31, 2001, and
the unrealized loss on the securities portfolio, net of taxes was $(10,024) at
December 31, 2000. The increase in the unrealized gain on the securities
portfolio was due to the decreases in market interest rates.

     LOAN PORTFOLIO. Loans receivable net of allowance was $144.7 million at
December 31, 2001 reflecting a $14.9 million increase or 11.5% from $129.8
million at December 31, 2000. Commercial loans increased by $7.2 million during
2001 and totaled $97.0 million, or 65.9% of the total loan portfolio. The
continued significant concentration of the loan portfolio in commercial loans
and the continued future growth of this portion of our lending business is
consistent with our stated strategy of focusing on small to mid size businesses
or what is commonly known as "wholesale banking." Our deposit accounts related
to our commercial lending business generates the greatest amount of local
deposits, and is the primary source of demand deposits.


                                       27
<PAGE>

     Residential mortgage loans also increased by $8.4 million and consumer
loans decreased by $.3 million during 2001. As of December 31, 2001, these loan
types totaled a combined $50.0 million, or 50.1% of the total loan portfolio.
Although residential mortgage loan and consumer loan portfolios have increased
historically and are expected to continue to increase in future periods, given
our stated strategy, the commercial sector of the lending efforts and resultant
assets are expected to remain the dominant loan portfolio category.

     The quality of our loan portfolio remains strong. We have not experienced
any charge-offs since inception. We believe we have instilled a very strong
credit culture within our lending department as it pertains to the underwriting
and administration processes. Over 86% of the loan portfolio consists of loans
extended directly to companies and individuals doing business and residing
within our market area or having strong, long-standing ties to management. The
remaining portion is comprised of commercial loans participated with certain
non-affiliated commercial banks outside of our immediate area, which are
underwritten using the same loan underwriting criteria as though our bank was
the originating bank.

     There has been substantial evidence of a much slower economy during 2001.
This had led to significant lower market interest rates and an increase in
refinancing of loans by borrowers. During this period we have grown and have
maintained our interest rate spread, while experiencing no significant change in
asset quality or in non-performing loan totals. However, a slowing economy could
result in some increase in problem assets, which could possibly result in some
increase in losses on loans.

     Along with other financial institutions, management shares a concern for
the possible continued softening of the economy in 2002. Should the economic
climate continue to deteriorate, borrowers may experience difficulty, and the
level of non-performing loans, charge-offs, and delinquencies could rise and
require further increases in the provision for loan losses.

     The allowance for loan losses balance and the provision for loan losses are
judgmentally determined by management based upon periodic reviews of the loan
portfolio. In addition, as we do not have an established charge-off history,
management considers the level of charge-offs experienced by peer financial
institutions having loan portfolio mix and risk characteristics similar to our
loan portfolio mix and risk characteristics. Estimating the risk of loss and the
amount of loss 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's periodic analysis of the adequacy of the allowance for
loan losses may allocate portions of the allowance for specific problem loan
situations, the entire allowance is available for any loan charge-offs that
occur.

                                       28
<PAGE>

     DEPOSITS. Deposits increased $30.9 million or 25.2% to $153.3 million at
December 31, 2001 from $122.4 million at December 31, 2000. Certificates of
deposit, which comprised 24.9% of total deposits, increased $7.4 million 2001.
Savings, NOW and money market accounts, which comprised 55.6% of total deposits,
increased $23.5 million during 2001. To date, we have accepted only $3,000,000
in brokered certificates of deposit. The increase in deposits was a result of
the uncertainty in the economy as a result of the September 11 terrorist attack
as well as ongoing marketing efforts and the hiring of new personnel to solicit
new clients. Management also believes the increase was attributable to our
ability to offer more personalized service than the competition.

     FHLB ADVANCES. FHLB advances increased by $3.0 million to $30.6 million at
December 31, 2001 from $27.6 million at December 31, 2000. As of December 31,
2001 we held $1,628,500 of FHLB stock. The increases in FHLB advances primarily
resulted as we used FHLB advances for loan matching, for hedging against the
possibility of rising interest rates and general liquidity purposes.

LIQUIDITY

     Liquidity relates primarily to our ability to fund loan demand, meet
deposit clients' withdrawal requirements and provide for operating expenses.
Assets used to satisfy these needs consist of cash and due from banks, federal
funds sold, interest-bearing deposits in other financial institutions and
securities available for sale. These assets are commonly referred to as liquid
assets. Liquid assets were $65.2 million at December 31, 2001 compared to $42.7
million at December 31, 2000.

     The statements of cash flows for the periods presented provide an
indication of our sources and uses of cash as well as an indication of our
ability to maintain an adequate level of liquidity. A discussion of the
statements of cash flows for 2001, 2000 and 1999 follows.

     During all periods presented, we experienced a net increase in cash from
operating activities. Net cash from operating activities was $1.4 million during
2001 compared to $1.5 million and $1.2 million for 2000 and 1999, respectively.
The increase in cash from operating activities was primarily a result of our
ability to generate net income of $1.3 million in 2001 and $1.0 million and $.5
million in 2000 and 1999, respectively.

     For 2001, 2000 and 1999, we experienced a net decrease in net cash from
investing activities. Net cash from investing activities was $(37.2) million,
$(39.4) million and $(38.7) million for 2001, 2000 and 1999, respectively. The
changes in net cash from investing activities include purchases, sales,
maturities and calls of securities available for sale, growth in loans
receivable and purchases of premises and equipment.

     Net cash flow from financing activities was $36.3 million, $44.2 million
and $35.1 million for 2001, 2000 and 1999, respectively. In 2001, the increase
was primarily attributable to the growth in total deposits and net Federal Home
Loan Bank advances of $30.9 million, and $3.0 million, respectively. In 2000,
the increase was primarily attributable to the growth in total

                                       29
<PAGE>

deposits and net Federal Home Loan Bank advances of $24.2 million, and $20.1
million, respectively. In 1999, the increase was primarily attributable to the
growth in total deposits, Federal Home Loan Bank advances and net proceeds from
the issuance of common stock of $21.9 million, $5.5 million and $6.0 million,
respectively.

CAPITAL RESOURCES

     Retained earnings at December 31, 2001 was $1,526,583 compared $251,708 at
December 31, 2000. The increase in retained earnings was equal to our net income
of $1,274,875 for 2001.

     Accumulated other comprehensive income, net of tax from net unrealized
gains on securities available for sale, was $140,637 as of December 31, 2001 as
compared to a loss of $(10,024) as of December 31, 2000. The improvement since
December 31, 2000 was attributable to an increase in the fair value of the
securities available for sale due to falling interest rates.

     Total shareholders' equity was $20.0 million as of December 31, 2001, an
increase of $1.4 million from $18.6 million as of December 31, 2000. The
increase resulted from the increase in the net income for the year as well as
the increase in the net unrealized gain on securities available for sale, net of
tax and the proceeds from the issuance of common stock upon the exercise of
stock options.

     The components of total risk-based capital are Tier 1 capital and Tier 2
capital. Tier 1 capital is total shareholders' equity less intangible assets.
Tier 2 capital is Tier 1 capital plus a portion of the allowance for loan
losses. The allowance for loan losses is includable in Tier 2 capital up to a
maximum of 1.25% of risk-weighted assets. The net unrealized appreciation
(depreciation) on securities available for sale, net of tax, is not considered
in meeting regulatory capital requirements. The tables in Note 14 of the notes
to consolidated financial statements provide the minimum regulatory capital
requirements and the actual capital ratios at December 31, 2001 and 2000. The
company and the Bank were considered well capitalized and all regulatory capital
requirements were met at December 31, 2001 and 2000.

     As of December 31, 2001 management was not aware of any current
recommendations by the banking regulatory authorities which, if they were to be
implemented, would have, or are reasonably likely to have, a material adverse
effect on the Company' liquidity, capital resources or operations.

RESULTS OF OPERATIONS

2001 COMPARED WITH 2000 AND 1999

     OVERVIEW. Consolidated net income for the year ended December 31, 2001 was
$1,274,875 as compared to $1,021,572 and $510,994 for 2000 and 1999,
respectively, for an

                                       30
<PAGE>

increase of $253,303 or 24.8% over 2000 and $763,881 or 149.5% over 1999. Income
per common share for 2001 increased to $.76 basic and $.75 diluted from a $.61
basic and $.60 diluted income per common share and $.37 basic and $.36 diluted
income per common share for 2000 and 1999, respectively. The increase in net
income for 2001 and 2000 as compared to the prior years was comprised of
increases in net interest income after provision for loan losses of $1,192,003
or 28.4% for 2001 and $1,194,386 or 39.7% for 2000 and an increase in
noninterest income of $463,470 or 226.4% for 2001 and $106,576 or 108.6% for
2000, reduced by an increase in noninterest expense of $897,019 or 28.3% for
2001 and $577,035 or 22.3% for 2000 and reduced by an increase in income tax
expense. Income tax expense for 2001 was $718,500, compared to $213,349 in 2000.

     INTEREST INCOME. Interest income during 2001 was $12,413,734, a 12.1%
increase over the $11,071,962 earned during 2000. Interest income during 2000
increased $3,701,614, a 50.2% increase over the $7,370,348 earned during 1999.
The growth that was obtained in interest income during the periods was
attributable to greater average outstanding balances in interest earning assets,
principally loans receivable. In 2001, earning assets averaged $179.8 million,
an increase from average earning assets of $139.0 million in 2000 and $101.8
million in 1999. The growth in interest income during 2001 was negatively
impacted by the decline in the yield on earning assets from 2000 and 1999.
During 2001, 2000 and 1999, the weighted average yield on earning assets was
6.90%, 7.93% and 7.23%, respectively. The decrease in yields in 2001 was
primarily due to the overall decline of market interest rates during the first
nine months, in part evidenced by the 475 basis point drop in the prime rate
since January 3, 2001. Interest income should continue to grow as the loan
portfolio and other interest earning assets increase.

     INTEREST EXPENSE. Interest expense during 2001 was $6,600,110, a 4.9%
increase over the $6,290,341 expensed during 2000. Interest expense during 2000,
increased $2,443,553 or 63.5% over the $3,846,788 expensed during 1999. The
growth in interest expense on a year-over-year basis was primarily attributable
to the growth in interest-bearing liabilities, which were needed to fund the
increase in interest-earning assets outlined above. During 2001,
interest-bearing liabilities averaged $153.7 million, which was higher than the
average interest-bearing funds of $115.7 million and $84.6 million in 2000 and
1999, respectively. Positively impacting interest expense for 2001 compared to
2000 and 1999 was the decline in the cost of interest-bearing funds due to the
decline in market rates as mentioned above. During 2001, 2000 and 1999,
interest-bearing liabilities had a weighted average rate of 4.30%, 5.44% and
4.55%, respectively. The increasing interest rate environment during 2000, that
peaked toward the end of the second quarter of 2000 and remained relatively
stable throughout the remainder of 2000, resulted in an increased cost of funds
during the second six months of 2000 compared to 1999. The significant decline
in market interest rates during 2001 resulted in a substantial decline in the
cost of funds over 2000.

     NET INTEREST INCOME. Net interest income during 2001 was $5,813,624, an
increase of 21.6% over the $4,781,621 earned during 2000. The average net
interest margin on a fully tax equivalent (FTE) basis declined from 3.49% during
2000 to 3.29% in 2001. Although our bank experienced significant asset growth
during 2001 compared to 2000, the net interest margin declined primarily due to
the rapid decline in market interest rates that occurred during 2001 and our
vulnerability to such an event in the short-term time horizon. The level of
loans tied to the

                                       31
<PAGE>

prime rate is more than the level of non-certificate of deposit funding
products. As a result, and despite the fact that most of the major interest rate
indices declined in a similar manner, each time market interest rates declined
our net interest margin was negatively impacted. However, we believe that this
repricing gap is short term in nature. As interest rates stabilize and or
increase throughout 2002, the net interest margin is expected to improve. This
expectation is further supported by the results of the net interest income
simulation analysis completed as of December 31, 2001, as presented and
discussed under the heading Management of Interest Sensitivity.

     PROVISION FOR LOAN LOSSES. Provisions to the allowance for loan losses
during 2001, were $422,000 a decrease from the $582,000 expensed during 2000 and
the $518,325 expensed in 1999. The allowance for loan losses as a percentage of
total loans outstanding as of December 31, 2001 was 1.55%, compared to 1.41% at
December 31, 2000. The increase in the allowance for loan losses as a percentage
of total loans receivable was primarily a result of management's risk assessment
of the portfolio. The risk assessment is based on numerous statistical and other
factors including the specific asset class of each loan (i.e. commercial,
residential or consumer), the internal risk rating of each loan, specific
industry concentrations, an assessment for large dollar and unsecured loans and
specific reserves for watchlist credits.

     In each accounting period, the allowance for loan losses is adjusted to the
amount believed necessary to maintain the allowance at adequate levels. Through
the loan review and credit department, we allocate specific portions of the
allowance for loan losses based on specifically identifiable problem loans. The
evaluation of the allowance for loan losses is further based on, although not
limited to, consideration of the internally prepared Loan Loss Reserve Analysis
("Reserve Analysis"), composition of the loan portfolio, third party analysis of
the loan administration processes and loan portfolio and general economic
conditions. In addition, our bank's status as a relatively new banking
organization and the rapid loan growth since inception is taken into account.

     The Reserve Analysis, used since the inception of our bank and completed
quarterly, applies reserve allocation factors to outstanding loan balances to
calculate an overall allowance dollar amount. For commercial loans, which
continue to comprise a vast majority of our total loans, reserve allocation
factors are based upon the loan ratings as determined by our comprehensive loan
rating paradigm that is administered by our loan review function. For retail
loans, reserve allocation factors are based upon the type of credit. The Reserve
Analysis is reviewed regularly by senior management and the Board of Directors
and is adjusted periodically based upon identifiable trends and experience.

     We have not experienced any charge-offs from loans receivable since
inception. Accordingly, in estimating the risk of loss in our loan portfolio we
considered the level of charge-offs on loans experienced by peer financial
institutions having a loan portfolio mix and risk characteristics similar to our
loan portfolio mix and risk characteristics. At December 31, 2001, no portion of
the allowance for loan losses was allocated to impaired loan balances, as there
were no loans considered impaired. Management believes the allowance for loan
losses at December 31, 2001 was adequate to absorb losses in the loan portfolio,
including probable incurred losses due to the slowing economy.

                                       32
<PAGE>

     NONINTEREST INCOME. Noninterest income increased by $463,470 and $106,576
in 2001 and 2000, as compared to the prior years ended 2000 and 1999.
Noninterest income in 2001 consisted primarily of depository account service
fees and net gain on sales and calls of securities available for sale.
Noninterest income in 2000 consisted primarily of depository account service
fees offset by a $(19,916) loss on the sale of securities available for sale and
in 1999, noninterest income consisted of depository account service fees and
other miscellaneous fees.

     NONINTEREST EXPENSE. The main components of noninterest expense were
salaries and employee benefits, occupancy and equipment, data processing and
professional fees for 2001, 2000 and 1999. Noninterest expense for 2001 was
$4,066,468 as compared to $3,169,449 in 2000 and $2,592,414 in 1999. Management
continues to control overhead expenses without impairing the quality of service
provided to clients.

     Salaries and employee benefits experienced the most significant dollar
increase of any noninterest expense component. For 2001, total salaries and
employee benefits were $2,519,849 compared to $1,935,203 and $1,495,407 for 2000
and 1999, respectively. The increases were primarily attributable to the
increase in the number of employees required to service the increased client
base, as well as merit and cost of living raises.

     Monitoring and controlling noninterest costs, while at the same time
providing high quality service to clients, is one of our top priorities. Our
efficiency ratio, computed by dividing noninterest expenses by net interest
income plus noninterest income, was 62.74%, 63.56% and 71.58% during 2001, 2000
and 1999, respectively. A higher level of net revenue growth (net interest
income plus noninterest income) when compared to the growth in overhead costs
has lead to improved efficiency ratios and overall profitability.

     INCOME TAXES. We have utilized our entire net operating loss carry forward
and have shown adequate profitability to warrant recording our net deferred tax
assets. Consequently, we reversed all of the remaining valuation allowance for
deferred tax assets during 2000, therefore making the Company a full taxpayer
during 2001. The effective tax rate in 2001 was 36.0% compared to 17.3% in 2000.
As we continue to be profitable, we will report net tax expense.

MANAGEMENT OF INTEREST SENSITIVITY

     Our primary market risk exposure is interest rate risk and, to a lesser
extent, liquidity risk. Interest rate risk is the exposure of our financial
condition to adverse movements in interest rates. We derive our income primarily
from the excess of interest collected on our interest-earning assets over the
interest paid on our interest-bearing liabilities. The rates of interest we earn
on our assets and owe on our liabilities generally are established contractually
for a period of time. Since market interest rates change over time, we are
exposed to lower profitability if we cannot adapt to interest rate changes.
Accepting interest rate risk can be an important source of profitability and
shareholder value; however, excessive levels of interest rate risk could pose a
significant threat to our earnings and capital base. Accordingly, effective risk
management that maintains interest rate risk at prudent levels is essential to
our safety and soundness.

     Evaluating the exposure to changes in interest rates includes assessing
both the adequacy of the process used to control interest rate risk and the
quantitative level of exposure. Our interest rate risk management process seeks
to ensure that appropriate policies, procedures, management,

                                       33
<PAGE>

information systems and internal controls are in place to maintain interest rate
risk at prudent levels with consistency and continuity. In evaluating the
quantitative level of interest rate risk, we assess the existing and potential
future effects of changes in interest rates on our financial condition,
including capital adequacy, earnings, liquidity and asset quality.

     We use three interest rate risk measurement techniques. The first, which is
commonly referred to as GAP analysis, measures the difference between the dollar
amounts of interest sensitive assets and liabilities that will be refinanced or
repriced during a given time period. A significant repricing gap could result in
a negative impact to our net interest margin during periods of changing market
interest rates.

     The second interest rate risk measurement used is commonly referred to as
net interest income simulation analysis. We believe that this methodology
provides a more accurate measurement of interest rate risk than the GAP
analysis, and therefore, serves as one of our primary interest rate risk
measurement technique. The simulation model assesses the direction and magnitude
of variations in net interest income resulting from potential changes in market
interest rates. Key assumptions in the model include prepayment speeds on
various loan and investment assets; cash flows and maturities of
interest-sensitive assets and liabilities; and changes in market conditions
impacting loan and deposit volume and pricing. These assumptions are inherently
uncertain and subject to fluctuation and revision in a dynamic environment;
therefore, the model cannot precisely estimate net interest income or exactly
predict the impact of higher or lower interest rates on net interest income.
Actual results will differ from simulated results due to timing, magnitude, and
frequency of interest rate changes and changes in market conditions and the
company's strategies, among other factors.

     We conducted multiple simulations as of December 31, 2001, whereby it was
assumed that a simultaneous, instant and sustained change in market interest
rates occurred. Results of the simulation suggest that we could expect net
interest income to increase by approximately $172,000, if interest rates
gradually decline by 100 basis points over the next twelve months, and to
increase approximately $184,000, if interest rates gradually increase 100 basis
points over the next twelve months, from forecast levels of net interest income
absent any changes in rates. These variances in net interest income were within
our policy parameters established to manage interest rate risk. Other
simulations are run quarterly looking at changes to net interest income given
200 and 300 basis point changes in interest rates.

     The third interest rate risk measurement used is commonly referred to as an
"EVE" analysis or an Economic Value of Equity analysis. As well as the
simulation analysis, we believe that this methodology provides a more accurate
measurement of interest rate risk than the GAP analysis, and therefore, serves
as one of our primary interest rate risk measurement techniques. The EVE
analysis assesses the impact to the value of equity given potential changes in
market interest rates. Key assumptions in the model include prepayment speeds on
various loans, discount rates and the duration of assets and liabilities as
determined by the federal regulatory agencies. These assumptions are inherently
uncertain, subject to fluctuation and revision in a dynamic environment;
therefore, the model cannot precisely estimate the value of equity or exactly
predict the impact that higher or lower interest rates will have on the value of
equity. Actual results will differ from simulated results due to timing,
magnitude, and frequency of interest rate changes and changes in market
conditions and the company's strategies, among other factors.

                                       34
<PAGE>

     Results of the economic value of equity analysis done as of December 31,
2001, suggest that we could expect the value of our equity to increase 2.88% and
5.87%, if there was an immediate interest rate shift upward of 100 and 200 basis
points and to decrease (4.96)% and (5.45)%, if there was an immediate interest
rate shift downward of 100 and 200 basis points. Management believes the
different scenarios indicate a bank that has relatively low overall interest
rate risk.

     Austin Advisors, Inc., a firm specializing in consulting and providing
assistance to banks, performs a formal asset/liability management analysis on a
monthly basis. This information is presented and reviewed by the Asset/Liability
Committee.

IMPACT OF INFLATION AND CHANGING PRICES

     The majority of our assets and liabilities are monetary in nature and
therefore we differ greatly from most commercial and industrial companies that
have significant investments in fixed assets or inventories. However, inflation
does have an important impact on the growth of total assets in the banking
industry and the resulting need to increase equity capital at higher than normal
rates in order to maintain an appropriate equity to assets ratio. Inflation
significantly affects noninterest expense, which tends to rise during periods of
general inflation.




                                       35
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.


                         REPORT OF INDEPENDENT AUDITORS


Board of Directors and Shareholders
St. Joseph Capital Corporation
Mishawaka, Indiana


We have audited the accompanying consolidated balance sheets of St. Joseph
Capital Corporation (the Company) as of December 31, 2001 and 2000 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the years ended December 31, 2001, 2000 and 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2001 and 2000, and the results of its operations and its cash flows
for the years ended December 31, 2001, 2000 and 1999 in conformity with
accounting principles generally accepted in the United States of America.



                                        /s/ Crowe, Chizek and Company LLP

                                        Crowe, Chizek and Company LLP


South Bend, Indiana
February 27, 2002


                                       36
<PAGE>

                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                    2001              2000
                                                                    ----              ----
<S>                                                            <C>               <C>
ASSETS
Cash and due from banks                                        $  19,532,168     $  10,761,934
Interest-earning deposits in other financial institutions            489,111           181,342
Federal funds sold                                                         -         8,600,000
                                                               -------------     -------------
     Total cash and cash equivalents                              20,021,279        19,543,276
Securities available for sale                                     45,172,394        23,171,754
Federal Home Loan Bank (FHLB) stock                                1,628,500         1,378,500
Loans receivable, net of allowance for loan losses
  of $2,274,000 in 2001 and $1,852,000 in 2000                   144,688,499       129,840,947
Accrued interest receivable                                        1,037,738         1,112,052
Premises and equipment, net                                        1,286,132         1,411,981
Other assets                                                         969,955           612,369
                                                               -------------     -------------
         Total assets                                          $ 214,804,497     $ 177,070,879
                                                               =============     =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Deposits
         Noninterest-bearing demand                            $  29,843,196     $  19,331,110
         Savings, NOW and money market                            85,242,416        72,259,033
         Certificates of deposit                                  38,222,320        30,841,379
                                                               -------------     -------------
              Total deposits                                     153,307,932       122,431,522
     Securities sold under agreements to repurchase               10,509,100         8,083,473
     FHLB advances                                                30,570,000        27,570,000
     Accrued interest payable                                        158,121           238,386
     Other liabilities                                               243,944           186,924
                                                               -------------     -------------
         Total liabilities                                       194,789,097       158,510,305

Shareholders' equity
     Preferred stock, $.01 par value, 100,000 shares
       authorized; -0- shares issued and outstanding                       -                 -
     Common stock, $.01 par value, 2,500,000 shares
       authorized; 1,678,112 and 1,675,112 shares issued
       and outstanding in 2001 and 2000                               16,781            16,751
     Additional paid-in capital                                   18,331,399        18,302,139
     Retained earnings                                             1,526,583           251,708
     Accumulated other comprehensive income (loss),
       net of tax of $93,758 and $(6,683) in 2001 and 2000           140,637           (10,024)
                                                               -------------     -------------
         Total shareholders' equity                               20,015,400        18,560,574
                                                               -------------     -------------
              Total liabilities and shareholders' equity       $ 214,804,497     $ 177,070,879
                                                               =============     =============
</TABLE>

--------------------------------------------------------------------------------

          See accompanying notes to consolidated financial statements.

                                       37

<PAGE>
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                     2001              2000              1999
                                                                     ----              ----              ----
<S>                                                            <C>                <C>               <C>
Interest and dividend income
     Loans receivable, including fees                          $   10,499,436     $    9,253,725    $     5,384,235
     Securities available for sale - taxable                        1,220,050          1,509,768          1,725,177
     Securities available for sale - tax exempt                       180,608             33,972                803
     FHLB stock                                                       116,648             56,764             23,871
     Federal funds sold                                               255,340            212,276            228,533
     Other interest earning assets                                    141,652              5,457              7,729
                                                               --------------     --------------    ---------------
         Total interest and dividend income                        12,413,734         11,071,962          7,370,348

Interest expense
     Deposits                                                       4,612,364          5,169,224          3,284,113
     Federal funds purchased                                           24,992             42,340              3,522
     Securities sold under agreements to repurchase                   222,171            311,364            365,811
     FHLB advances                                                  1,740,583            767,413            193,342
                                                               --------------     --------------    ---------------
         Total interest expense                                     6,600,110          6,290,341          3,846,788
                                                               --------------     --------------    ---------------

NET INTEREST INCOME                                                 5,813,624          4,781,621          3,523,560

Provision for loan losses                                             422,000            582,000            518,325
                                                               --------------     --------------    ---------------
Net interest income after provision for loan losses                 5,391,624          4,199,621          3,005,235

Noninterest income
     Service charges on deposit accounts                              259,755            150,023             86,491
     Gain (loss) on sales and calls of securities
       available for sale, net                                        320,195            (19,916)              --
     Other income                                                      88,269             74,642             11,682
                                                               --------------     --------------    ---------------
         Total noninterest income                                     668,219            204,749             98,173

Noninterest expense
     Salaries and employee benefits                                 2,519,849          1,935,203          1,495,407
     Occupancy and equipment                                          489,617            397,375            432,573
     Other expense                                                  1,057,002            836,871            664,434
                                                               --------------     --------------    ---------------
         Total noninterest expense                                  4,066,468          3,169,449          2,592,414
                                                               --------------     --------------    ---------------
INCOME BEFORE INCOME TAXES                                          1,993,375          1,234,921            510,994

Income tax expense                                                    718,500           213,349               --
                                                               --------------     --------------    ---------------
NET INCOME                                                     $    1,274,875     $    1,021,572    $       510,994
                                                               ==============     ==============    ===============
Basic income per common share                                  $          .76     $          .61    $           .37
                                                               ==============     ==============    ===============
Diluted income per common share                                $          .75     $          .60    $           .36
                                                               ==============     ==============    ===============
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.




                                       38
<PAGE>
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                Retained         Other
                                                                Additional      Earnings     Comprehensive                 Total
                                                    Common       Paid-In      (Accumulated  Income (Loss),   Treasury  Shareholders'
                                                     Stock       Capital        Deficit)      Net of Tax      Stock       Equity
                                                  ----------   ------------   ------------  --------------   --------  -------------
<S>                                               <C>           <C>             <C>         <C>              <C>       <C>
BALANCE AT JANUARY 1, 1999 .....................  $   12,786    $12,323,967    $(1,280,858)    $   554,950   $   --     $11,610,845

Comprehensive income (loss):
  Net income ...................................          --           --          510,994            --         --         510,994
  Net change in net unrealized
    appreciation (depreciation) on
    securities available for sale, net
    of reclassification adjustments
    and tax effects ............................          --           --               --      (1,304,966)      --      (1,304,966)
                                                                                                                        -----------
       Total comprehensive income (loss)........                                                                           (793,972)
 Proceeds from issuance of 390,581 shares
  of common stock, net of stock offering costs ..      3,906      5,887,491             --            --         --       5,891,397

Proceeds from issuance of 5,906 shares of
  common stock for 401(k) plan ..................         59         94,579             --            --         --          94,638
Proceeds from issuance of 645 shares of
  common stock upon exercise of stock options ...          6          6,658             --            --         --           6,664
Repurchase and retirement of
  645 shares of common stock ....................         (6)       (10,556)            --            --         --         (10,562)
                                                  ----------    -----------    -----------     -----------   ---------  -----------
BALANCE AT DECEMBER 31, 1999 ....................     16,751     18,302,139       (769,864)       (750,016)      --      16,799,010

Comprehensive income
   Net income ...................................         --           --        1,021,572            --         --       1,021,572
   Net change in net unrealized
     appreciation (depreciation) on
     securities available for sale, net
     of reclassification adjustments
     and tax effects ............................         --           --               --         739,992       --         739,992
                                                                                                                        -----------
         Total comprehensive income .............                                                                         1,761,564
                                                  ----------    -----------    -----------     -----------   ---------  -----------
BALANCE AT DECEMBER 31, 2000 ....................     16,751     18,302,139        251,708         (10,024)      --      18,560,574

Comprehensive income
   Net income ...................................         --           --        1,274,875            --         --       1,274,875
   Net change in net unrealized
     appreciation (depreciation) on
     securities available for sale, net
     of reclassification adjustments
     and tax effects ............................         --           --               --         150,661       --         150,661
                                                                                                                        -----------
         Total comprehensive income .............                                                                         1,425,536

Purchase of 16,723 shares of treasury stock ....          --           --               --            --      (222,440)    (222,440)
Sale of 16,723 shares of treasury stock .........         --           (710)            --            --       222,440      221,730
Proceeds from issuance of 3,000 shares of
  common stock upon exercise of stock options ...         30         29,970             --            --          --         30,000
                                                  ----------    -----------    -----------     -----------   ---------  -----------
BALANCE AT DECEMBER 31, 2001 .................... $   16,781    $18,331,399    $ 1,526,583     $   140,637   $   --     $20,015,400
                                                  ==========    ===========    ===========     ===========   =========  ===========
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.




                                       39
<PAGE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                 2001            2000            1999
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income ..........................................   $  1,274,875    $  1,021,572    $    510,994
     Adjustments to reconcile net income
       to net cash from operating activities
         Depreciation ....................................        282,044         265,028         248,572
         Provision for loan losses .......................        422,000         582,000         518,325
         Net amortization on securities
           available for sale ............................        113,341          77,444          94,412
         (Gain) loss on sales and calls of
           securities available for sale, net ............       (320,195)         19,916            --
         Net change in
              Accrued interest receivable ................         74,314        (113,483)       (259,545)
              Other assets ...............................       (458,027)       (520,758)         18,637
              Accrued interest payable ...................        (80,265)         48,872          88,807
              Other liabilities ..........................         57,020         120,366         (46,494)
                                                             ------------    ------------    ------------
                  Net cash from operating activities .....      1,365,107       1,500,957       1,173,708

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of securities available for sale ...........    (49,719,482)     (2,448,628)     (4,208,781)
     Proceeds from sales of securities
       available for sale ................................     19,176,798       7,928,572            --
     Proceeds from maturities and calls of securities
       available for sale ................................      9,000,000       1,660,000       4,200,000
     Purchase of FHLB stock ..............................       (250,000)       (989,700)       (166,600)
     Net change in loans receivable ......................    (15,269,552)    (45,369,389)    (37,560,587)
     Purchase of premises and equipment, net .............       (156,195)       (212,641)       (970,445)
                                                             ------------    ------------    ------------
         Net cash from investing activities ..............    (37,218,431)    (39,431,786)    (38,706,413)

CASH FLOWS FROM FINANCING ACTIVITIES
     Net change in deposits ..............................     30,876,410      24,190,301      21,850,756
     Net change in securities sold under agreements
       to repurchase .....................................      2,425,627         (52,311)      1,746,813
     Proceeds from FHLB advances .........................      5,000,000      25,570,000       5,500,000
     Repayment of FHLB advances ..........................     (2,000,000)     (5,500,000)           --
     Purchase of treasury stock ..........................       (222,440)           --              --
     Proceeds from sales of treasury stock ...............        221,730            --              --
     Proceeds from issuance of common stock, net .........         30,000            --         5,982,137
                                                             ------------    ------------    ------------
         Net cash from financing activities ..............     36,331,327      44,207,990      35,079,706
                                                             ------------    ------------    ------------

Net change in cash and cash equivalents ..................        478,003       6,277,161      (2,452,999)

Cash and cash equivalents at beginning of year ...........     19,543,276      13,266,115      15,719,114
                                                             ------------    ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF YEAR .................   $ 20,021,279    $ 19,543,276    $ 13,266,115
                                                             ============    ============    ============

Supplemental disclosures of cash flow information
     Cash paid during the year for
         Interest     ....................................   $  6,680,375    $  6,241,469    $  3,757,981
         Income taxes ....................................      1,047,315         730,491          11,000
</TABLE>

--------------------------------------------------------------------------------
          See accompanying notes to consolidated financial statements.


                                       40
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of St. Joseph Capital Corporation conform
to accounting principles generally accepted in the United States of America and
to general practices within the banking industry. The following describes the
significant accounting and reporting policies, which are employed in the
preparation of the financial statements.

Principles of Consolidation: The consolidated financial statements include the
accounts of St. Joseph Capital Corporation, a bank holding company located in
Mishawaka, Indiana, (the Company) and its wholly-owned subsidiary St. Joseph
Capital Bank (the Bank). All significant intercompany balances and transactions
have been eliminated.

Nature of Business and Concentration of Credit Risk: The Company accepts
deposits and grants commercial, real estate, and installment loans to customers
primarily in northern Indiana. Substantially all loans are secured by specific
items of collateral including business assets, consumer assets and real estate.
Commercial loans are expected to be repaid from cash flow from operations of
businesses. Real estate loans are secured by both residential and commercial
real estate. At December 31, 2001, commercial loans totaled approximately 65.9%,
residential real estate loans totaled approximately 29.0% and consumer loans
totaled approximately 5.1% of total loans outstanding. Categories of commercial
loans at December 31, 2001 exceeding 30% of year end shareholders' equity are as
follows: Commercial loans concentrated in real estate development and investment
totaled $25.8 million or 17.6% of total loans; commercial loans concentrated in
medical and health services totaled $8.4 million or 5.7% of total loans;
commercial loans concentrated in special trade contractors totaled $6.6 million
or 4.5% of total loans.

Segments: The Company, through its subsidiary, the Bank, provides a broad range
of financial services to individuals and companies in northern Indiana. These
services include demand, time and savings deposits; lending; credit card
servicing; 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.

Use of Estimates in Preparing Financial Statements: The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The allowance for loan losses, fair
values of securities and other financial instruments and fair value of stock
options involve certain significant estimates made by management. These
estimates are reviewed by management routinely and it is reasonably possible
that circumstances that exist at December 31, 2001 may change in the near-term
future and that the effect could be material to the financial statements.



                                       41
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Restrictions on Cash and Due From Banks: To satisfy legal cash reserve and
clearing balance requirements, noninterest-bearing balances are required to be
maintained as deposits with the Federal Reserve or as cash on hand. The total
required cash reserve and clearing balance requirements was $2,138,000 and
$944,000 at year-end 2001 and 2000.

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 separately in other
comprehensive income (loss) and shareholders' equity, net of tax. 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.

The estimated fair value of securities is based on quoted market values for the
individual securities or for equivalent securities. Gains and losses on the sale
of securities are determined using the specific identification method based on
amortized cost and are reflected in results of operations at the time of sale.
Interest income includes amortization of purchase premiums and discounts over
the estimated life of the security using the level yield method.

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

Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term. Interest income is not
reported when full loan repayment is in doubt, typically when the loan is
impaired or payments are past due over 90 days (180 days for residential real
estate). Payments received on such loans are reported as principal reductions.

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

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


                                       42
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreclosed Real Estate: Real estate properties acquired through, or in lieu of,
loan foreclosure are initially recorded at the lower of the loan balance or fair
value at the date of acquisition, establishing a new cost basis. Any reduction
to fair value from the carrying value of the related loan at the time of
acquisition is accounted for as a loan loss and charged against the allowance
for loan losses. Valuations are periodically performed by management and
valuation allowances are adjusted through a charge to income for subsequent
declines in fair value. There were no foreclosed real estate properties held at
December 31, 2001 or 2000.

Premises and Equipment: Land and land improvements are stated at cost. Premises
and equipment are stated at cost less accumulated depreciation. Leasehold
improvements are depreciated using the straight-line method over the lease term.
Furniture and equipment are depreciated using the straight-line method over the
estimated useful life of the assets. Maintenance and repairs are expensed, and
major improvements are capitalized. Assets are reviewed for impairment when
events indicate that the reported carrying amount may not be fully recoverable.

Profit Sharing Plan: The Company maintains a 401(k) profit sharing plan covering
substantially all employees. For details concerning the plan, see Note 9.

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.

Financial Instruments With Off-Balance-Sheet Risk: The Company, in the normal
course of business, makes commitments to make loans which are not reflected in
the consolidated financial statements. A summary of these commitments is
disclosed in Note 13.

Dividend Restriction: Banking regulations prevent payment of dividends until
positive retained earnings are achieved and require maintaining certain capital
levels which may limit the dividends paid by the Bank to the holding company or
by the holding company to shareholders.

Comprehensive Income (Loss): Comprehensive income (loss) consists of net income
and other comprehensive income (loss). Other comprehensive income (loss)
includes the net change in net unrealized appreciation (depreciation) on
securities available for sale, net of tax, which is also recognized as a
separate component of shareholders' equity.

Derivatives: All derivatives are recorded at fair value. If derivative
instruments are designated as hedges of fair values, both the change in the fair
value of the hedge and the hedged items are included in current earnings. Fair
value adjustments related to cash flow hedges are recorded in other
comprehensive income (loss) and reclassified to earnings when the hedged
transaction is recorded in earnings. Ineffective portions of hedges are recorded
in earnings as they occur. At year-end 2001, the Company did not have any
derivative instruments.



                                       43
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Per Common Share: Basic income per common share is based on the net
income divided by the weighted average number of common shares outstanding
during the period. Diluted income per common share shows the dilutive effect of
additional potential common shares issuable under stock options.

Stock Compensation: Expense for employee compensation under stock option plans
is reported only if options are granted below market price at grant date.
Proforma disclosures of net income and income per common share are provided as
if the fair value method of SFAS No. 123 were used to measure expense.

Statement of Cash Flows: For purposes of the statement of cash flows, cash and
cash equivalents are defined to include the Company's cash on hand and due from
other banks, its short-term interest-earning deposits in other financial
institutions and federal funds sold with a maturity of 90 days or less. The
Company reports net cash flows for customer loan and deposit transactions and
short-term borrowings with original maturities of 90 days or less.

Fair Values of Financial Instruments: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in Note 16. Fair value estimates involve uncertainties and matters of
significant judgment regarding interest rates, credit risk, prepayments and
other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or in market conditions could significantly affect the
estimates.

Reclassifications: Certain amounts appearing in the prior year's financial
statement have been reclassified to conform to the current year's presentation.

New Accounting Pronouncements: Under new accounting standards, all business
combinations are to be recorded using the purchase method of accounting for any
transaction initiated after June 30, 2001. Under the purchase method, all
identifiable tangible and intangible assets and liabilities of the acquired
company must be recorded at fair value at the date of acquisition, and the
excess of the purchase cost over the fair value of the net assets acquired is
recorded as goodwill. Identifiable intangible assets must be separated from
goodwill. Identifiable assets with finite useful lives will be amortized under
the new standard, whereas goodwill, both amounts previously recorded and future
amounts purchased, will cease being amortized starting in 2002. Annual
impairment testing will be required for goodwill with impairment being recorded
if the carrying amount of goodwill exceeds its implied fair value. Adoption of
this standard on January 1, 2002 will not have a material effect on the
Company's consolidated financial statements as the Company has no intangible
assets.



                                       44
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - ORGANIZATION

St. Joseph Capital Corporation was incorporated under the laws of the state of
Delaware on February 29, 1996, with an initial capitalization of $1,000. During
1996 and the first part of 1997, the Company's activities were limited to the
organization of the Bank, as well as preparation for and completion of a
$12,650,000 common stock offering (the Offering). The Company sold 1,265,000
shares of common stock at a price of $10 per share in the Offering resulting in
net proceeds of $12,115,000. A substantial portion of the proceeds of the
Offering were used by the Company to provide the initial capitalization of the
Bank which occurred on February 13, 1997, at which time the Bank began
operations. During 1999, the Company sold 390,581 shares of additional common
stock at a price of $15.50 per share in a secondary offering, resulting in net
proceeds of $5,891,000.

NOTE 3 - SECURITIES AVAILABLE FOR SALE

Year end securities available for sale were as follows:

                                                Gross           Gross
                                 Fair         Unrealized     Unrealized
                                 Value          Gains          Losses
                               -----------   -----------    -----------
2001
U.S. Government and
  federal agencies             $29,352,772   $   327,104    $       (74)
Obligations of states and
  political subdivisions         4,980,197            80        (16,255)
Corporate bonds                  5,135,234          --          (65,617)
Mortgage backed securities       5,661,331        17,333        (26,149)
Marketable equity securities        42,860          --           (2,027)
                               -----------   -----------    -----------
                               $45,172,394   $   344,517    $  (110,122)
                               ===========   ===========    ===========

2000
U.S. Government and
  federal agencies             $20,279,527   $    65,468    $   (86,859)
Obligations of states and
  political subdivisions         2,758,628        32,536        (46,328)
Marketable equity securities       133,599        24,416         (5,940)
                               -----------   -----------    -----------
                               $23,171,754   $   122,420    $  (139,127)
                               ===========   ===========    ===========



                                       45
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - SECURITIES AVAILABLE FOR SALE (Continued)

The fair value of securities available for sale by contractual maturity at
December 31, 2001 are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties. Securities not due at
a single maturity date are shown separately.

                                                                 Fair
                                                                Value
                                                           ---------------
         Due in one year or less                           $    13,833,590
         Due after one year through five years                  20,429,433
         Due after five years through ten years                  3,562,711
         Due after ten years                                     1,642,469
         Mortgage backed securities                              5,661,331
         Marketable equity securities                               42,860
                                                           ---------------
                                                           $    45,172,394
                                                           ===============

Activities related to sales and calls of securities available for sale are
summarized as follows:


<TABLE>
<CAPTION>
                                                           2001           2000           1999
                                                        -----------   -----------      ---------
<S>                                                     <C>            <C>
     Proceeds from sales                                $19,176,798    $ 7,928,572         --
     Gross gains on sales                                   332,418           --           --
     Gross gains on calls                                     8,677           --           --
     Gross losses on sales                                  (20,900)       (19,916)        --
     Tax effects of net gains (losses) on sales
       and calls                                            128,078         (7,966)        --
</TABLE>


At December 31, 2001 and 2000, securities with a carrying value of approximately
$20,930,000 and $20,280,000, respectively, were pledged to secure certain
deposits, securities sold under agreements to repurchase and FHLB advances.


NOTE 4 - LOANS RECEIVABLE, NET

Year end loans receivable were as follows:


<TABLE>
<CAPTION>
                                                              2001                2000
                                                        ---------------     ---------------
<S>                                                     <C>                 <C>
     One to four family residential mortgage loans      $    40,604,644     $    32,762,811
     Construction loans - residential                         2,075,326           1,478,499
     Construction loans - commercial                          8,629,074          13,186,658
     Commercial and multi-family real estate loans           47,031,119          37,432,243
     Commercial business loans                               41,293,112          39,101,710
     Consumer loans                                           7,425,731           7,749,292
                                                        ---------------     ---------------
                                                            147,059,006         131,711,213
     Allowance for loan losses                               (2,274,000)         (1,852,000)
     Net deferred loan origination fees                         (96,507)            (18,266)
                                                        ---------------     ---------------
                                                        $   144,688,499     $   129,840,947
                                                        ===============     ===============
</TABLE>


                                       46
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - LOANS RECEIVABLE, NET (Continued)

Activity in the allowance for loan losses at year end was as follows:


                                      2001             2000           1999
                                 -------------    ------------    -------------

     Beginning balance           $   1,852,000    $  1,270,000    $     751,675
     Provision for loan losses         422,000         582,000          518,325
     Recoveries                          --               --               --
     Charge-offs                         --               --               --
                                 -------------    ------------    -------------
     Ending balance              $   2,274,000    $  1,852,000    $   1,270,000
                                 =============    ============    =============


At December 31, 2001 and 2000, no portion of the allowance for loan losses was
allocated to impaired loan balances as there were no loans considered impaired
as of or for the years ended December 31, 2001, 2000 and 1999.

Certain directors and executive officers of the Company and the Bank, including
associates of such persons, are loan customers. A summary of the related party
loan activity, for loans aggregating $60,000 or more to any one related party,
is as follows:

                                                   2001              2000
                                            ---------------    ---------------

           Balance - beginning of year      $     5,066,000    $     2,576,000
           New loans                              2,912,000          1,498,000
           Repayments                            (1,034,000)          (245,000)
           Other changes                              --             1,237,000
                                            ---------------    ---------------
           Balance - end of year            $     6,944,000    $     5,066,000
                                            ===============    ===============

Other changes include adjustments for loans applicable to one reporting period
that are excludable from the other reporting period.




                                       47
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - PREMISES AND EQUIPMENT, NET

Year end premises and equipment were as follows:

                                                 2001                2000
                                           ---------------     ---------------

     Land and improvements                 $       308,081     $       308,081
     Building and improvements                     830,859             826,922
     Furniture and equipment                     1,302,198           1,150,744
                                           ---------------     ---------------
         Total cost                              2,441,138           2,285,747
     Accumulated depreciation                   (1,155,006)           (873,766)
                                           ---------------     ---------------
                                           $     1,286,132     $     1,411,981
                                           ===============     ===============

NOTE 6 - DEPOSITS

Certificates of deposit in denominations of $100,000 or more totaled
approximately $29,921,000 and $25,210,000 at year end 2001 and 2000.

At December 31, 2001, the scheduled maturities of certificates of deposit were
as follows for the years ended December 31:

                  2002           $    30,755,290
                  2003                 6,730,506
                  2004                   736,524
                                 ---------------
                                 $    38,222,320
                                 ===============


NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase consist of obligations of the
Company to other parties. These arrangements are all short-term retail
repurchase agreements and are secured by securities available for sale. Such
collateral is held by safekeeping agents of the Company, and the Company
maintains control over such securities. Information concerning securities sold
under agreements to repurchase for 2001, 2000 and 1999, is summarized as
follows:


<TABLE>
<CAPTION>
                                                       2001             2000            1999
                                                   -------------    -----------    -------------
<S>                                                <C>              <C>            <C>
     Amount outstanding at year end                $  10,509,100    $ 8,083,473    $  8,135,784
     Weighted average interest rate at year end             2.11%          4.54%           4.10%
     Maximum month end balance during
       the year                                    $  10,509,100    $ 8,228,017    $ 11,201,198
     Average daily balance during the year         $   8,016,255    $ 6,998,189    $  8,980,174
     Weighted average interest rate during
       the year                                             2.77%          4.45%           4.07%
</TABLE>



                                       48
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Continued)

The following presents the carrying value and market value, including accrued
interest, of securities pledged for securities sold under agreements to
repurchase according to the maturity of such agreements at December 31, 2001 and
2000.


<TABLE>
<CAPTION>
                                                                                                           Repurchase
                                                                                                            Liability
                          U.S. Agencies          U.S. Treasuries               Total                        Weighted
                     ----------------------  ----------------------   ----------------------                 Average
                      Carrying     Market     Carrying     Market      Carrying     Market     Repurchase   Interest
                        Value       Value       Value       Value        Value      Value      Liability      Rate
                     ----------  ----------   --------    ---------    ---------  ----------   ---------- -----------
                                                 (Dollars in thousands)
<S>                  <C>         <C>         <C>          <C>         <C>         <C>         <C>             <C>
Overnight - 2001     $   11,693  $   11,693  $    1,996   $   1,996   $   13,689  $   13,689  $   10,509      2.11%
                     ==========  ==========  ==========   =========   ==========  ==========  ==========  ========
Overnight - 2000     $    8,020  $    8,020  $    2,026   $   2,026   $   10,046  $   10,046  $    8,083      4.54%
                     ==========  ==========  ==========   =========   ==========  ==========  ==========  ========
</TABLE>


NOTE 8 - FHLB ADVANCES

At December 31, 2001 and 2000, advances from the FHLB of Indianapolis totaled
$30,570,000 and $27,570,000. The advances had fixed interest rates ranging from
4.70% to 6.85% at December 31, 2001 and from 4.98% to 6.85% at December 31,
2000.

A majority of the advances outstanding at December 31, 2001 contain an option
that would allow the FHLB, at its discretion or upon the occurrence of certain
events related to the LIBOR interest rate, to convert the current fixed rate
advances to adjustable rate advances at certain conversion dates as of December
31, 2001 through December 27, 2010. The converted adjustable rate advances would
bear an interest rate equal to the three month LIBOR flat rate. Upon
notification by the FHLB to the Company that an option will be exercised to
convert an advance, the Company has the election to prepay, on the conversion
date or any subsequent quarterly reset date, the advance at par without a fee
being assessed. The remaining advances are fixed rate, fixed term, single
maturity advances.

At December 31, 2001, required annual principal payments on FHLB advances were
as follows:

                                    2002          $    2,500,000
                                    2003               2,050,000
                                    2004                 280,000
                                    2005               3,240,000
                                    2006               2,000,000
                                    After             20,500,000
                                                  --------------
                                                  $   30,570,000
                                                  ==============

At December 31, 2001 and 2000, in addition to FHLB stock, the Company pledged
qualifying loans of approximately $38,069,000 and $37,508,000 and securities
available for sale with a carrying value of approximately $7,241,000 and
$10,234,000 to the FHLB to secure advances outstanding.



                                       49
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - BENEFIT PLANS

Stock Option Plan

The Company's Board of Directors has adopted stock option plans. Under the terms
of these plans, options for up to 425,000 shares of the Company's common stock
may be granted to key management, employees and directors of the Company and its
subsidiaries. The exercise price of the options is determined at the time of
grant by an administrative committee appointed by the Board of Directors.

SFAS No. 123 requires proforma disclosures for companies that do not adopt its
fair value accounting method for stock-based employee compensation. Accordingly,
the following proforma information presents net income per common share had the
fair value method been used to measure compensation cost for stock option plans.
Compensation cost actually recognized for stock options was $-0- for 2001, 2000
and 1999.

The fair value of options granted during 2001, 2000 and 1999 is estimated using
the following weighted average information: risk-free interest rate of 4.4%,
5.6% and 5.0%, expected life of 8 years for 2001 and expected life of 10 years
for 2000 and 1999, expected volatility of stock price of .29, .18 and .12, and
expected dividends of 0% per year.


<TABLE>
<CAPTION>
                                                    2001            2000           1999
                                                 -----------    -----------    -----------
<S>                                              <C>            <C>            <C>
     Net income as reported                      $ 1,274,875    $ 1,021,572    $  510,994
     Proforma net income                         $ 1,303,183    $   917,615    $  272,597

     Reported income per common share
         Basic                                   $       .76    $       .61    $      .37
         Diluted                                 $       .75    $       .60    $      .36

     Proforma income per common share
         Basic                                   $       .78    $       .55    $      .20
         Diluted                                 $       .77    $       .54    $      .19
</TABLE>

In future years, the proforma effect of not applying this standard is expected
to increase as additional options are granted.



                                       50
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - BENEFIT PLANS (Continued)

Stock option plans are used to reward employees and provide them with an
additional equity interest. Options are issued for 10-year periods with varying
vesting periods. Information about option grants follows:


<TABLE>
<CAPTION>
                                                                                                         Weighted
                                            Number of                                  Weighted           Average
                                           Outstanding           Exercise               Average         Fair Value
                                             Options               Price             Exercise Price      of Grants
                                           ----------     ------------------------   --------------     -----------
<S>                                         <C>           <C>                        <C>                <C>
Outstanding, end of 1998                      126,162     $  10.00    -  $   18.25    $   13.45
Granted                                        47,668        15.75    -      17.75        16.81          $   6.48
Exercised                                        (645)       10.00    -      10.62        10.33
                                          -----------
Outstanding, end of 1999                      173,185        10.00    -      18.25        14.38
Granted                                        24,932        12.38    -      15.25        12.96          $   6.01
                                          -----------
Outstanding, end of 2000                      198,117        10.00    -      18.25        14.20
Granted                                        40,688        11.15    -      14.00        12.23          $   5.40
Forfeited                                     (29,500)       10.00    -      18.00        13.03
Exercised                                      (3,000)       10.00    -      10.00        10.00
                                          -----------
Outstanding, end of 2001                      206,305        10.00    -      18.25        14.04
</TABLE>


The weighted average remaining contractual life of options outstanding at
December 31, 2001 was approximately seven years. Stock options exercisable at
December 31, 2001, 2000 and 1999 totaled 132,345, 140,167 and 124,585 at a
weighted average exercise price of $14.18, $13.61 and $13.24. As of December 31,
2001, 215,050 options remain available for future grants.

Profit Sharing Plan

The Company maintains a 401(k) plan covering substantially all employees. The
plan provides for voluntary employee contributions and discretionary employer
contributions. Employee voluntary contributions are vested at all times and the
Company's discretionary contributions are fully vested after three years. Annual
expense related to the plan is based on a discretionary matching of 50% of
voluntary employee contributions on the first 6% of the participants'
compensation. The plan also allows for an additional discretionary contribution
on the employee's behalf for any eligible employee irrespective of the
employee's voluntary participation in the plan during the year. The
discretionary matching percentage and the additional discretionary contribution
are to be determined by the Board of Directors at the end of each year. The
expense recorded related to this plan was approximately $53,000 for 2001,
$41,000 for 2000 and $29,000 for 1999.




                                       51
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - OTHER EXPENSE

Other expense amounts were as follows:


<TABLE>
<CAPTION>
                                                            2001            2000            1999
                                                      -------------    -------------    --------------
<S>                                                   <C>              <C>              <C>
     Advertising and promotion                        $      96,514    $     106,831    $       75,605
     Client courier                                          36,133           35,984            24,850
     Data processing                                        266,295          198,420           149,658
     Incorporation expense                                     --               --               4,588
     Liability insurance                                     59,452           39,698            27,123
     Printing, postage, stationery and supplies             116,089           66,410            76,320
     Professional dues and memberships                       33,339           28,339            20,945
     Professional fees                                      202,824          120,050            85,979
     Telephone                                               44,399           34,327            36,731
     Other                                                  201,957          206,812           162,635
                                                      -------------    -------------    --------------
                                                      $   1,057,002    $     836,871    $      664,434
                                                      =============    =============    ==============
</TABLE>


NOTE 11 - INCOME TAXES

The provision for income taxes consist of:


<TABLE>
<S>                                                 <C>          <C>          <C>
     Federal
         Current                                    $ 803,120    $ 557,453    $153,359
         Deferred                                     212,420)    (168,241)     39,140
                                                    ---------    ---------    --------
                                                      590,700      389,212     192,499
     State
         Current                                      178,039      130,939      17,127
         Deferred                                     (50,239)     (45,967)     12,082
                                                    ---------    ---------    --------
                                                      127,800       84,972      29,209

     Change in deferred tax valuation allowance          --       (260,835)    221,708)
                                                    ---------    ---------    --------

         Total income tax expense                   $ 718,500    $ 213,349    $    --
                                                    =========    =========    ========
</TABLE>


There was no income tax expense for 1999 as the result of reversing $221,708 of
a deferred tax valuation allowance. Income tax expense for 2000 was reduced by
$260,835 as a result of the reversal of the remaining amount of deferred tax
valuation allowance established at December 31, 1999.



                                       52
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - INCOME TAXES (Continued)

Total income tax expense differed from the amounts computed by applying the
federal income tax rate of 34% in all periods presented to income before income
taxes as a result of the following for the years ended December 31:


<TABLE>
<CAPTION>
                                                             2001             2000           1999
                                                         -------------    ------------    ----------
<S>                                                      <C>              <C>             <C>
Income tax expense at statutory rate                     $     677,748    $    419,873    $  173,738
Tax effect of:
         State tax, net of federal income
           tax effect                                           84,348          56,081        19,278
         Change in deferred tax valuation allowance                  -        (260,835)     (221,708)
         Tax exempt interest                                   (61,406)        (11,550)         (273)
         Nondeductible interest expense                          9,597           1,812            43
         Other, net                                              8,213           7,968        28,922
                                                         -------------    ------------    ----------
              Total income tax expense                   $     718,500    $    213,349     $     --
                                                         =============    ============    ==========
</TABLE>


The components of the net deferred tax assets recorded in the consolidated
balance sheets as of December 31 are as follows:


                                         2001         2000         1999
                                      ---------    ---------    ---------
Deferred tax assets
    Allowance for bad debts           $ 867,760    $ 700,606    $ 470,076
    Net unrealized depreciation on
      securities available for sale        --          6,683         --
    Depreciation                         30,766         --           --
    Deferred loan fees                   38,227        7,235       14,251
    Other                                   334        1,019        1,703
                                      ---------    ---------    ---------
                                        937,087      715,543      486,030

Deferred tax liabilities
    Accretion                            (4,000)     (34,428)     (25,806)
    Depreciation                           --        (28,903)     (28,903)
    Net unrealized appreciation on
      securities available for sale     (93,758)        --           --
    Other                               (24,899)        --           --
                                      ---------    ---------    ---------
                                       (122,657)     (63,331)     (54,709)
Valuation allowance                        --           --       (260,835)
                                      ---------    ---------    ---------
    Net deferred tax assets           $ 814,430    $ 652,212    $ 170,486
                                      =========    =========    =========



                                       53
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 - INCOME TAXES (Continued)

A valuation allowance was recorded for the portion of deferred tax assets
considered more likely than not to not be realized in 1999. At December 31, 2001
and 2000, management considered the entire net deferred tax assets to be more
likely than not to be realized and, accordingly, the remaining valuation
allowance has been reversed.


NOTE 12 - BASIC AND DILUTED INCOME PER COMMON SHARE

Income per common and potential common share are based on the combined weighted
average number of common shares and potential common shares outstanding which
include, where appropriate, the assumed exercise or conversion of outstanding
stock options. In computing income per common and potential common share, the
Company has utilized the treasury stock method.

The computation of income per common share, weighted average common and
potential common shares used in the calculation of basic and diluted income per
common share is as follows:


<TABLE>
<CAPTION>
                                                   2001         2000         1999
                                               ----------   ----------   ----------
<S>                                            <C>          <C>          <C>
Basic Income Per Common Share
     Net income                                $1,274,875   $1,021,572   $  510,994
                                               ==========   ==========   ==========
     Weighted average common shares
       outstanding                              1,675,223    1,675,112    1,381,400
                                               ==========   ==========   ==========
         Basic Income Per Common Share         $      .76   $      .61   $      .37
                                               ==========   ==========   ==========
Diluted Income Per Common Share
     Net income                                $1,274,875   $1,021,572   $  510,994
                                               ==========   ==========   ==========

     Weighted average common shares
       outstanding                              1,675,223    1,675,112    1,381,400
     Add:  dilutive effects of assumed stock
       option exercises                            13,565       17,191       35,628
                                               ----------   ----------   ----------

     Weighted average common and dilutive
       additional potential common shares
       outstanding                              1,688,788    1,692,303    1,417,028
                                               ==========   ==========   ==========
         Diluted Income Per Common Share       $      .75   $      .60   $      .36
                                               ==========   ==========   ==========
</TABLE>


Outstanding stock options for 113,530, 95,660 and 86,135 shares of common stock
at December 31, 2001, 2000 and 1999, were not considered in computing diluted
income per common share for 2001, 2000 and 1999 because they were not dilutive.



                                       54
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - COMMITMENTS AND CONTINGENCIES

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

Commitments, primarily with variable interest rates, at year end were as
follows:

                                                      2001             2000
                                                  -------------    ------------

     Commitments to extend credit                 $   4,846,968    $  3,191,000
     Unused open end revolving lines of credit       45,401,329      36,810,000
     Standby letters of credit                        1,279,537       2,823,000

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


NOTE 14 - REGULATORY MATTERS

At year end 2001 and 2000, the Company and the Bank were considered well
capitalized and all regulatory capital requirements were met. The actual capital
levels (in millions) and minimum required levels were:


<TABLE>
<CAPTION>
                                                                                        Minimum Required
                                                                                           To Be Well
                                                                Minimum Required        Capitalized Under
                                                                  For Capital           Prompt Corrective
                                             Actual            Adequacy Purposes        Action Provisions
                                             ------            ------------------       -----------------
                                        Amount     Ratio       Amount       Ratio       Amount      Ratio
                                        ------     -----       ------       -----       ------      -----
<S>                                    <C>          <C>        <C>           <C>         <C>         <C>
2001
Total Capital to risk
  weighted assets
    Consolidated                       $ 21.8       13.9%      $ 12.5        8.0%        $15.7       10.0%
    Bank                                 20.1       12.9         12.5        8.0          15.6       10.0
Tier 1 (Core) Capital to risk
  weighted assets
    Consolidated                       $ 19.9       12.7%      $  6.3        4.0%        $ 9.4        6.0%
    Bank                                 18.2       11.6          6.3        4.0           9.4        6.0
Tier 1 (Core) Capital to
  average assets
    Consolidated                       $ 19.9        9.6%      $  8.3        4.0%        $10.3        5.0%
    Bank                                 18.2        8.8          8.3        4.0          10.3        5.0
</TABLE>


                                       55
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - REGULATORY MATTERS (Continued)


<TABLE>
<CAPTION>
                                                                                      Minimum Required
                                                                                         To Be Well
                                                              Minimum Required        Capitalized Under
                                                                 For Capital          Prompt Corrective
                                            Actual            Adequacy Purposes       Action Provisions
                                            ------           ------------------       -----------------
                                        Amount    Ratio      Amount       Ratio       Amount      Ratio
                                        ------    -----      ------       -----       ------      -----
<S>                                   <C>          <C>        <C>          <C>         <C>         <C>
2000
Total Capital to risk
  weighted assets
    Consolidated                       $ 20.3      15.0%        $10.8       8.0%       $13.5       10.0%
    Bank                                 18.5      13.7          10.8       8.0         13.5       10.0
Tier 1 (Core) Capital to risk
  weighted assets
    Consolidated                       $ 18.6      13.7%        $ 5.4       4.0%       $ 8.1        6.0%
    Bank                                 16.8      12.5           5.4       4.0          8.1        6.0
Tier 1 (Core) Capital to
  average assets
    Consolidated                       $ 18.6      11.4%        $ 6.5       4.0%       $ 8.1        5.0%
    Bank                                 16.8      10.4           6.5       4.0          8.1        5.0
</TABLE>


NOTE 15 - PARENT COMPANY FINANCIAL STATEMENTS

Presented below are the condensed financial statements for the parent company,
St. Joseph Capital Corporation.


                            CONDENSED BALANCE SHEETS
                           December 31, 2001 and 2000


                                                    2001          2000
                                                -----------   -----------
ASSETS
Cash and cash equivalents                       $ 1,637,263   $ 1,608,562
Securities available for sale                        42,860       133,599
Other assets                                         20,155          --
Investment in Bank subsidiary                    18,315,122    16,826,066
                                                -----------   -----------
    Total assets                                $20,015,400   $18,568,227
                                                ===========   ===========

LIABILITIES
Other liabilities                               $      --     $     7,653

SHAREHOLDERS' EQUITY                             20,015,400    18,560,574
                                                -----------   -----------
   Total liabilities and shareholders' equity   $20,015,400   $18,568,227
                                                ===========   ===========




                                       56
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                         CONDENSED STATEMENTS OF INCOME
                  Years ended December 31, 2001, 2000 and 1999



<TABLE>
<CAPTION>
                                                         2001           2000           1999
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Interest and dividend income                          $     3,625    $     1,779    $       471
Gain on sales of securities available for sale, net        14,230           --             --
Other expenses                                           (100,573)        (2,816)        (6,011)
                                                      -----------    -----------    -----------

LOSS BEFORE INCOME TAXES AND EQUITY
  IN UNDISTRIBUTED NET INCOME OF BANK
  SUBSIDIARY                                              (82,718)        (1,037)        (5,540)

Income tax benefit                                         31,500        150,164           --
                                                      -----------    -----------    -----------

INCOME (LOSS) BEFORE EQUITY IN UNDISTRIBUTED
  NET INCOME OF BANK SUBSIDIARY                           (51,218)       149,127         (5,540)

Equity in undistributed net income
  of Bank subsidiary                                    1,326,093        872,445        516,534
                                                      -----------    -----------    -----------
NET INCOME                                            $ 1,274,875    $ 1,021,572    $   510,994
                                                      ===========    ===========    ===========
</TABLE>


                       CONDENSED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                       2001          2000            1999
                                                   -----------    -----------    ------------
<S>                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income                                    $ 1,274,875    $ 1,021,572    $   510,994
     Adjustments to reconcile net income
       to net cash from operating activities
         Equity in undistributed net income
           of Bank subsidiary                       (1,326,093)      (872,445)      (516,534)
         Gain on sales of securities available
           for sale, net                               (14,230)          --             --
         Net change in other assets                    (11,954)          --            4,588
         Net change in other liabilities                (7,653)      (111,629)       109,818
                                                   -----------    -----------    -----------
              Net cash from operating activities       (85,055)        37,498        108,866

CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in Bank subsidiary                        --             --       (6,300,000)
     Purchase of securities available for sale          (9,900)       (37,000)       (53,136)
     Proceeds from sales of securities
       available for sale                               94,366           --             --
                                                   -----------    -----------    -----------
Net cash from investing activities                      84,466        (37,000)    (6,353,136)
</TABLE>


                                       57
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - PARENT COMPANY FINANCIAL STATEMENTS (Continued)

                 CONDENSED STATEMENTS OF CASH FLOWS (Continued)
                  Years ended December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                       2001           2000          1999
                                                   -----------    -----------   -----------
<S>                                                <C>            <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Purchase of treasury stock                    $  (222,440)   $      --     $      --
     Proceeds from sales of treasury stock             221,730           --            --
     Proceeds from issuance of common stock, net        30,000           --       5,982,137
                                                   -----------    -----------   -----------
         Net cash from financing activities             29,290           --       5,982,137
                                                   -----------    -----------   -----------

Net change in cash and cash equivalents                 28,701            498      (262,133)

Cash and cash equivalents at beginning of year       1,608,562      1,608,064     1,870,197
                                                   -----------    -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR           $ 1,637,263    $ 1,608,562   $ 1,608,064
                                                   ===========    ===========   ===========
</TABLE>


NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments at year end are as follows, in thousands:

<TABLE>
<CAPTION>
                                                     2001                    2000
                                           ------------------------  -----------------------
                                            Carrying    Estimated    Carrying     Estimated
                                             Amount     Fair Value     Amount     Fair Value
                                           ---------    -----------  ---------    ----------
<S>                                        <C>          <C>          <C>          <C>
Financial assets
     Cash and cash equivalents             $  20,021    $  20,021    $  19,543    $  19,543
     Securities available for sale            45,172       45,172       23,172       23,172
     FHLB stock                                1,629        1,629        1,379        1,379
     Loans receivable, net of allowance
       for loan losses                       144,688      144,423      129,841      129,440
     Accrued interest receivable               1,038        1,038        1,112        1,112

Financial liabilities
     Noninterest-bearing demand,
       savings, NOW and money
       market deposits                      (115,086)    (115,086)     (91,590)     (91,590)
     Certificates of deposit                 (38,222)     (38,222)     (30,841)     (30,841)
     Securities sold under agreements to
       repurchase                            (10,509)     (10,509)      (8,083)      (8,083)
     FHLB advances                           (30,570)     (31,935)     (27,570)     (26,454)
     Accrued interest payable                   (158)        (158)        (238)        (238)
</TABLE>



                                       58
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

The estimated fair value approximates carrying amount for all items except those
described below. Estimated fair value for securities available for sale is based
on quoted market values for the individual securities or for equivalent
securities. Estimated fair value for loans is based on the rates charged at year
end for new loans with similar maturities, applied until the loans are assumed
to reprice or be paid and the allowance for loan losses is considered to be a
reasonable estimate of discount for credit quality concerns. The estimated fair
value for FHLB advances is based on estimates of the rate the Company would pay
on such borrowings at year end, applied for the time period until maturity.
Estimated fair value for other financial instruments and off-balance-sheet loan
commitments is considered nominal.

While these estimates of fair value are based on management's judgment of the
most appropriate factors, there is no assurance that were the Company to have
disposed of such items at year end 2001 or 2000 that the estimated fair values
would necessarily have been achieved at those dates, since the market values may
differ depending on various circumstances. Also, the use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts. The estimated fair values at year end 2001 and
2000 should not necessarily be considered to apply at subsequent dates.

NOTE 17 - OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) components and related taxes were as follows:

<TABLE>
<CAPTION>
                                                          2001           2000           1999
                                                       -----------    -----------    -----------
<S>                                                    <C>            <C>            <C>
Net change in net unrealized appreciation
  (depreciation) on securities available
  for sale

     Net unrealized appreciation (depreciation)
       arising during the year                         $   571,297    $   713,393    $(1,304,966)

     Reclassification adjustments for (gains) losses
       included in net income                             (320,195)        19,916           --
                                                       -----------    -----------    -----------

         Net change in net unrealized appreciation
           (depreciation) on securities available
           for sale                                        251,102        733,309     (1,304,966)

Tax expense (benefit)                                      100,441         (6,683)          --
                                                       -----------    -----------    -----------
     Total other comprehensive income (loss)           $   150,661    $   739,992    $(1,304,966)
                                                       ===========    ===========    ===========
</TABLE>



                                       59
<PAGE>


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

         Not Applicable

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
         COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.

         The information listed under the caption "Election of Directors" in the
Proxy Statement furnished to the Securities Exchange Commission is incorporated
by reference.

ITEM 10. EXECUTIVE COMPENSATION.

         The information presented under the captions "Summary Compensation
Table," "Options Granted in Last Fiscal Year," and "Aggregated Stock Option
Exercises in Last Fiscal Year and Fiscal Year End Option Values" and in the
second to last paragraph under the caption "Election of Directors" in the Proxy
Statement furnished to the Securities Exchange Commission is incorporated by
reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information presented under the caption "Stock Ownership of Certain
Beneficial Owners" in the Proxy Statement furnished to the Securities Exchange
Commission is incorporated by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information listed under the caption "Transactions With Management"
in the Proxy Statement furnished to the Securities Exchange Commission is
incorporated by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

A.       The following documents are filed as part of this report:

         (a)(1)   Exhibits

                  See exhibit index below.



                                       60
<PAGE>

         (b)      Reports on Form 8-K

                  We have not filed any reports on Form 8-K during the last
                  quarter of the period covered by this report.

                         ST. JOSEPH CAPITAL CORPORATION
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

   EXHIBIT NO.                               DESCRIPTION OF EXHIBITS                                         REFERENCE
-----------------------------------------------------------------------------------------------------------------------
<S>                  <C>                                                                                     <C>
       3.1           Certificate of Incorporation, as amended, of St. Joseph Capital Corporation                  *
-----------------------------------------------------------------------------------------------------------------------

       3.2           Bylaws of St. Joseph Capital Corporation                                                     *
-----------------------------------------------------------------------------------------------------------------------

       4.1           Specimen Common Stock Certificate of St. Joseph Capital Corporation (See also                *
                     Articles IV, VI, VII, VIII, XI and XII of Exhibit 3.1 and
                     Articles III, IX, X, XI and XII of Exhibit 3.2)
-----------------------------------------------------------------------------------------------------------------------

      10.1           St. Joseph Capital Corporation 1996 Stock Incentive Plan                                     *
-----------------------------------------------------------------------------------------------------------------------

      10.2           Stock Option Agreement between St. Joseph Capital Corporation and John W.                    *
                     Rosenthal, dated June 11, 1996
-----------------------------------------------------------------------------------------------------------------------

      10.3           Employment Agreement between St. Joseph Capital and John W. Rosenthal, dated                 *
                     March 18, 1996
-----------------------------------------------------------------------------------------------------------------------

      10.4           Amendment to the Employment Agreement between St. Joseph Capital Corporation and            ***
                     John W. Rosenthal, dated March 18, 1996
-----------------------------------------------------------------------------------------------------------------------

      10.5           St. Joseph Capital Bank 401(k) Plan                                                         **
-----------------------------------------------------------------------------------------------------------------------

      21.1           Subsidiary of St. Joseph Capital Corporation                                                 *
-----------------------------------------------------------------------------------------------------------------------

      99.1           Proxy Statement and form of proxy for the Annual Meeting of Stockholders to be held         ****
                     May 23, 2002, (except for sections incorporated by reference into this Form 10-KSB,
                     the proxy materials shall not be deemed to be "filed" with the Commission)

-----------------------------------------------------------------------------------------------------------------------
</TABLE>


*        Incorporated by reference from the Registration Statement on Form SB-2
         filed by the Company on June 21, 1996 (SEC File No. 333-06581), as
         amended.
**       Incorporated by reference from the Registration Statement on Form S-8
         filed by the Company on October 29, 1996 and amended on January 23,
         1997 (SEC File No. 333-14999).
***      Incorporated by reference from the 1997 Form 10-KSB filed by the
         Company on March 31, 1998.
****     Portions incorporated by reference from the Form 14A (Definitive Proxy
         Statement) filed by the Company on March 26, 2002.


                                       61
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, as amended,
the Issuer caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 26, 2002.

                              ST. JOSEPH CAPITAL CORPORATION

                              By:  /s/ John W. Rosenthal
                                   John W. Rosenthal, Chief Executive Officer
                                   and Chairman of the Board

                              By:  /s/ Edward R. Pooley
                                   Edward R. Pooley, Principal Financial Officer
                                   and Accounting Officer



                                       62
<PAGE>


         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Issuer and in the capacities noted
below and on March 26, 2002.


         Signature                            Title
         ---------                            -----

  /s/ John W. Rosenthal                 President, Principal Executive Officer
  John W. Rosenthal                     and Chairman of the Board

  /s/ Brian R. Brady                    Director
  Brian R. Brady

  /s/ Anna Reilly Cullinan              Director
  Anna Reilly Cullinan

  /s/ David A. Eckrich                  Director
  David A. Eckrich

  /s/ Jeffrey V. Hammes                 Director
  Jeffrey V. Hammes

  /s/ Michael Leep, Sr.                 Director
  Michael Leep, Sr.

  /s/ Scott C. Malpass                  Director
  Scott C. Malpass


  /s/ Todd Martin                       Director
  Todd Martin

  /s/ Jack Matthys
  Jack Matthys                          Director

  /s/ Arthur H. McElwee                 Director
  Arthur H. McElwee



                                       63
<PAGE>


  /s/ Myron Noble                       Director
  Myron Noble

  /s/ Richard A. Rosenthal              Director
  Richard A. Rosenthal

  /s/ Robert A. Sullivan                Director
  Robert A. Sullivan

  /s/ Carolyn Y. Woo                    Director
  Carolyn Y. Woo



                                       64