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


                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997

                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                         Commission file number 0-22461

                          O.A.K. FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

              MICHIGAN                                    38-2817345
(State of other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

2445 84th Street, S.W., Byron Center, Michigan                 49315
  (Address of principal executive offices)                   (Zip Code)

       Registrant's telephone number, including area code: (616) 878-1591

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $1.00 par value
                                (Title of Class)
                                   -----------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  8-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K.

The  aggregate  market value of the voting and  non-voting  common stock held by
non-affiliates of the Registrant,  based on a per share price of $69 as of March
1, 1998, was  $55,230,291  (common stock,  $1.00 par value).  As of December 31,
1997,  there were  outstanding  1,000,000  shares of the Company's  Common Stock
($1.00 par value).


Documents Incorporated by Reference:
Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
to be held April 16, 1998 are  incorporated  by reference  into Part III of this
report.
<PAGE>
Item 1.  Business.

     O.A.K.   Financial   Corporation  (the  "Company"),   a  Michigan  business
corporation,  is a one bank holding  company,  which owns all of the outstanding
capital  stock of Byron  Center  State Bank (the  "Bank"),  a  Michigan  banking
corporation.  The Company was formed in 1988 for the purpose of acquiring all of
the common stock of the Bank in a  shareholder  approved  reorganization,  which
became effective October 13 of 1988.

     The  Bank  was  originally   organized  in  1921  as  a  Michigan   banking
corporation.  As of December 31, 1997, the Bank had  approximately 104 full-time
and part-time employees.  None of the Bank's employees are subject to collective
bargaining agreements.  The Company does not directly employ any personnel.  The
principal executive offices of the Company and the Bank are located at 2445 84th
Street, S.W., Byron Center, Michigan 49315. The Bank's main office is located in
Byron Center and it serves other  communities with branch offices in Dorr, Grand
Rapids,  Grandville,  Hudsonville,  Jamestown and Moline. The Bank's offices are
located in the southwestern  portion of Kent County, the southeastern portion of
Ottawa County and the northern portion of Allegan County.

     The area in which the Bank's offices are located,  which is basically south
and west of the city of Grand Rapids,  has historically  been rural in character
but now has a growing  urban  population as the Grand Rapids  Metropolitan  Area
expands  south and  west.  The  populations  of the  cities in which the  Bank's
offices are located are  approximately as follows:  Byron Center - 1,000; Dorr -
1,450;  Grand  Rapids -  189,125;  Grandville  -  15,620;  Hudsonville  - 6,170;
Jamestown - 300; Moline - 800.

Bank Services

     The Bank is a full service  bank  offering a wide range of  commercial  and
personal banking services.  These traditional consumer services include checking
accounts,  savings  accounts,  certificates of deposit,  commercial  loans, real
estate  loans,   installment  loans,   collections,   traveler's  checks,  night
depository,  safe deposit boxes and U.S. Savings Bonds. Currently, the Bank does
not offer trust services.  The Bank maintains  correspondent  relationships with
major banks in Detroit and Grand  Rapids,  pursuant to which the Bank engages in
federal  funds  sale and  purchase  transactions,  the  clearance  of checks and
certain foreign currency  transactions.  In addition, the Bank participates with
other financial  institutions to fund certain large commercial loans which would
exceed the Bank's legal lending limit if made solely by the Bank.

     The Bank's deposits are generated in the normal course of business, and the
loss of any one  depositor  would not have a  materially  adverse  effect on the
business of the Bank.  No material  portion of the Bank's loans is  concentrated
within a single  industry or group of related  industries.  As of  December  31,
1997,  the Bank's  certificates  of deposits  of  $100,000  or more  constituted
approximately  6% of total deposit  liabilities.  The Bank's deposits  originate
primarily  from its service area,  and the Bank does,  on a very limited  basis,
obtain large deposits from outside this area.

     The Bank's principal  sources of revenue are interest and fees on loans and
interest  on  investment  securities.  Interest  and fees on  loans  constituted
approximately  74.1% and 74.8% of total  revenues for the periods ended December
31,  1997,  and  December  31,  1996,   respectively.   Interest  on  investment
securities, including short-term investments and federal funds sold, constituted
approximately  18.6% and 19.2% of total revenues in 1997 and 1996. Revenues were
also generated from deposit service charges and other financial service fees.

     The Bank provides real estate,  consumer and commercial  loans to customers
in its market.  69.6 percent of the Bank's loan portfolio is in fixed rate loans
as of December 31, 1997. Most of these loans, approximately 91.7%, mature within
five years of issuance.  Approximately  $9,757,000  in loans (or roughly 5.8% of
the Bank's total loan portfolio) have fixed rates with maturities exceeding five
years. 40.9 percent of the Bank's interest-bearing deposits are held in savings,
NOW and MMDAs,  all of which are variable rate products.  Of the  $93,568,000 in
certificates, approximately $65,980,000 mature within one year, with the balance
maturing within a five year period.

     Requests  to the Bank for  credit  are  considered  on the  basis of credit
worthiness of each applicant,  without  consideration to race, color,  religion,
national origin, sex, marital status,  physical handicap, age, or the receipt of
income  from  public  assistance   programs.   Consideration  is  given  to  the
applicant's capacity for repayment, collateral,

                                        1
<PAGE>
capital and alternative sources of repayment.  Loan applications are accepted at
all the Bank's  offices  and are  approved  within  the  limits of each  lending
officer's  authority.  Loan  requests in excess of $750,000  are  required to be
presented to the Board of Directors or the Executive  Committee of the Board for
its review and approval.

     As  described  in more  detail in Table 20 on page 27, the Bank's  ratio of
rate sensitive assets to rate sensitive liabilities as of December 31, 1997, was
a 23% positive  gap,  compared to a 4% negative  gap at December  31,  1996.  As
indicated  on page 27, the entire  balance of  savings,  NOW,  and MMDAs are not
categorized as 0 to 3 months,  although they are variable rate products. Some of
these balances are core deposits which are not considered  rate sensitive  based
on the Bank's historical experiences.

     The Bank  sells  participations  in  commercial  loans  to other  financial
institutions  approved  by the Bank,  for the purpose of meeting  legal  lending
limit requirements or loan concentration considerations.  The Bank has also sold
student  loans and regularly  sells fixed rate and  conforming  adjustable  rate
residential  mortgages to the Federal Home Loan Mortgage  Corporation  ("Freddie
Mac").  Those  residential  real estate  mortgage loan requests that do not meet
Freddie Mac criteria are reviewed by the Bank for approval and, if approved, are
retained  in the Bank's  loan  portfolio.  The Bank has the  ability to purchase
loans which meet its normal credit standards.

     The Bank's investment policy is considered to be generally conservative. It
provides for unlimited  investment in U.S.  government  bonds,  with the maximum
size of a single  purchase  limited  to  $3,000,000  and a maximum  maturity  of
fifteen  years.  Municipal  bonds with an A rating or better may be purchased to
provide nontaxable  income,  with the maximum life of municipal bonds limited to
ten years.  Nonrated  bonds may be  purchased  from local  communities  that are
familiar to the Bank, with a maximum block size of a single purchase  limited to
$250,000.  Investments  in states other than  Michigan may not exceed 10% of the
municipal  portfolio,  and  investments  in a single issuer may not exceed 5% of
equity capital.  Mortgage backed securities,  which are fully  collateralized by
securities issued by government  sponsored  agencies,  may be purchased in block
sizes of up to $3,000,000,  provided the average life expectancy does not exceed
ten years.

     In addition,  certain collateralized  mortgage obligations may be purchased
if  their  average  life  does not  exceed  five  years.  In  addition  to these
referenced  thresholds  affecting  the  acquisition  of  investment  securities,
holdings of approved  "non  high-risk  mortgage  securities"  are required to be
"stress  tested" at least  annually.  The  acquisition  of  "high-risk  mortgage
securities"  is  prohibited.  In no  case  may  the  Bank  participate  in  such
activities  as gains  trading,  "when-issued"  trading,  "pair offs,"  corporate
settlement  of  government  and  agency  securities,   repositioning  repurchase
agreements,  and short sales. All securities  dealers effecting  transactions in
securities held or purchased by the Bank must be approved by the Bank's Board of
Directors.

Bank Competition

     The Bank has seven offices,  one within each of the  communities it serves.
See  "Properties"  below  for more  detail  on these  facilities.  Within  these
communities,  its principal  competitors  are Comerica  Bank, NBD Bank, Old Kent
Bank, First of America Bank,  Huntington Bank, Michigan National Bank and United
Bank of Michigan. Each of these financial institutions,  which are headquartered
in larger  metropolitan  areas, have significantly  greater assets and financial
resources than the Company, with the exception of United Bank of Michigan. Based
on deposit information as of June 30, 1996, the Bank holds approximately 1.8% of
deposits  in the Kent  County  market,  1.3% of  deposits  in the Ottawa  County
market,  and 4% of the deposits in the Allegan County market.  Information as to
asset  size of  competitor  financial  institutions  is  derived  from  publicly
available reports filed by and with regulatory agencies.

     The financial services industry  continues to be increasingly  competitive.
Principal methods of competition  include loan and deposit pricing,  advertising
and  marketing  programs  and the types and  quality of services  provided.  The
deregulation of the financial service industry has led to increased  competition
among banks and other financial  institutions for a significant portion of funds
which have  traditionally  been deposited  with  commercial  banks.  Competition
within the Bank's  markets has been  relatively  stable  within the past several
years.  Management  continues to evaluate the opportunities for the expansion of
products  and  services,  such  as  trust  services,  and  additional  branching
opportunities.

                                        2
<PAGE>
Growth of Bank

     The following table sets forth certain financial  information regarding the
growth of the Bank (and accordingly, excludes holding company data):
<TABLE>

                                                                     Balances as of December 31,
                                                                         (in thousands)
==========================================================================================================================
                                                 1997              1996            1995             1994            1993
                                                 ----              ----            ----             ----            ----
<S>                                             <C>              <C>             <C>              <C>             <C>
Total Assets                                    $241,283         $216,755        $210,307         $187,079        $176,858
Loans, Net of Unearned Income                    168,953          145,069         142,813          127,286         115,176
Securities                                        59,988           57,302          56,702           45,598          47,383
Noninterest-Bearing Deposits                      26,459           23,807          19,211           16,478          16,088
Interest-Bearing Deposits                        158,244          146,442         150,807          134,603         128,128
Total Deposits                                   184,703          170,249         170,018          151,081         144,216
Stockholders' Equity                              35,107           34,744          31,979           27,728          25,772
====================================== =================  =============== ===============  =============== ===============
</TABLE>
     The Main Office in Byron Center  began in a small 600 square foot  building
in 1921.  It was expanded to 1,100  square feet in 1954.  In 1965 the Bank moved
next door to a new 10,000 square foot building.  In 1987 construction of another
new  building  of 30,000  square feet was begun.  The Main Office  moved to this
facility in 1988 and currently  occupies this space. The Bank's first branch was
opened in 1963 when the bank  refitted an old bank  building in  Jamestown.  The
building was once a bank which closed  during the Great  Depression.  The Bank's
next branch was opened in  Cutlerville  in 1972.  The original 2,500 square foot
building was expanded with a 1,000 square foot addition in 1987. The Bank's Dorr
office  was  opened  in 1986 at the site of the  Hillcrest  Mall.  It is a 2,500
square foot facility  with a 2,500 square foot storage  basement.  In 1991,  the
Bank opened its branch in  Hudsonville.  The Bank maximized this site for future
expansion  with a 10,000 square foot  building.  The Bank occupies  2,500 square
feet while the remainder is rented to various  office use tenants.  During 1995,
the Bank purchased and remodeled a former bank branch in  Grandville.  Also, the
same year,  the Bank purchased from First of America a building and the deposits
of its Moline branch. Currently, the Bank operates three off-site ATMs. The Bank
leased  space at 10500  Chicago  Drive in Zeeland,  Michigan for its next branch
which is expected to open in March 1998.

     It also has a future branch site in Wyoming with  tentative  plans to build
in 1999.  This site is just off a future  interchange of the proposed  Southbelt
Expressway.

                           SUPERVISION AND REGULATION

     The following is a summary of certain  statutes and  regulations  affecting
the Company and the Bank.  This  summary is  qualified  in its  entirety by such
statutes and regulations.  A change in applicable laws or regulations may have a
material effect on the Company, the Bank and the business of the Company and the
Bank.

General

     Financial   institutions  and  their  holding   companies  are  extensively
regulated  under  federal and state law.  Consequently,  the growth and earnings
performance  of the Company and the Bank can be affected not only by  management
decisions and general economic conditions, but also by the statutes administered
by,  and the  regulations  and  policies  of,  various  governmental  regulatory
authorities.  Those  authorities  include,  but are not limited to, the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), the FDIC,
the Commissioner of the Michigan Financial Institutions Bureau ("Commissioner"),
the Internal Revenue Service, and state taxing

                                        3
<PAGE>
authorities.  The  effect of such  statutes,  regulations  and  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 and their holding companies regulate, among other things, the scope
of business, investments,  reserves against deposits, capital levels relative to
operations,   lending  activities  and  practices,  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,  the  depositors  of the Bank,  and the  public,  rather  than
shareholders of the Bank or the Company.

     Federal law and regulations  establish  supervisory standards applicable to
the  lending  activities  of  the  Bank,  including  internal  controls,  credit
underwriting,  loan documentation and loan-to-value  ratios for loans secured by
real property.

The Company

     General.  The Company is a bank holding company and, as such, is registered
with,  and subject to  regulation  by, the Federal  Reserve Board under the Bank
Holding  Company Act, as amended (the  "BHCA").  Under the BHCA,  the Company is
subject to periodic examination by the Federal Reserve Board, and is required to
file with the Federal Reserve Board periodic  reports of its operations and such
additional information as the Federal Reserve Board may require.

     In accordance with Federal Reserve Board 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 do so absent such
policy.  In  addition,  if the  Commissioner  deems  the  Bank's  capital  to be
impaired,  the  Commissioner  may  require  the Bank to restore its capital by a
special  assessment  upon the  Company as the Bank's  sole  shareholder.  If the
Company were to fail to pay any such assessment, the directors of the Bank would
be required, under Michigan law, to sell the shares of the Bank's stock owned by
the Company to the highest bidder at either a public or private  auction and use
the proceeds of the sale to restore the Bank's capital.

     Investments and Activities.  In general, any direct or indirect acquisition
by the  Company  of any  voting  shares of any bank  which  would  result in the
Company's  direct or indirect  ownership or control of more than 5% of any class
of voting shares of such bank,  and any merger or  consolidation  of the Company
with  another  bank  company,  will  require the prior  written  approval of the
Federal  Reserve  Board  under the BHCA.  In  acting on such  applications,  the
Federal Reserve Board must consider various statutory  factors,  including among
others,  the effect of the  proposed  transaction  on  competition  in  relevant
geographic and product markets, and each party's financial condition, managerial
resources,  and record of  performance  under the  Community  Reinvestment  Act.
Effective  September 29, 1995, bank holding  companies may acquire banks located
in any state in the United States without regard to geographic  restrictions  or
reciprocity   requirements   imposed  by  state  law,  but  subject  to  certain
conditions,  including  limitations on the aggregate amount of deposits that may
be held by the acquiring company and all of its insured  depository  institution
affiliates.

     The merger or  consolidation  of an existing bank subsidiary of the Company
with another bank, or the  acquisition by such a subsidiary of assets of another
bank, or the assumption of liability by such a subsidiary to pay any deposits in
another bank, will require the prior written approval of the responsible Federal
depository institution regulatory agency under the Bank Merger Act, based upon a
consideration of statutory  factors similar to those outlined above with respect
to the BHCA. In addition, in certain such cases an application to, and the prior
approval of, the Federal  Reserve  Board under the BHCA and/or the  Commissioner
under the Michigan Banking Code, may be required.

     With certain limited  exceptions,  the BHCA prohibits any bank company from
engaging,  either directly or indirectly  through a subsidiary,  in any activity
other  than  managing  or  controlling  banks  unless the  proposed  non-banking
activity is one that the Federal  Reserve Board has  determined to be so closely
related to banking or managing or controlling  banks as to be a proper  incident
thereto. Under current Federal Reserve Board regulations,

                                        4
<PAGE>
such permissible non-banking activities include such things as mortgage banking,
equipment  leasing,  securities  brokerage,  and consumer and commercial finance
company   operations.   As  a  result   of  recent   amendments   to  the  BHCA,
well-capitalized  and well-managed  bank holding companies may engage de novo in
certain types of non-banking activities without prior notice to, or approval of,
the Federal  Reserve Board,  provided that written notice of the new activity is
given to the Federal Reserve Board within 10 business days after the activity is
commenced.  If a bank  company  wishes to engage in a  non-banking  activity  by
acquiring a going concern,  prior notice and/or prior approval will be required,
depending  upon the  activities  in which the company to be acquired is engaged,
the  size of the  company  to be  acquired  and  the  financial  and  managerial
condition of the acquiring bank company.

     In  evaluating  a  proposal  to  engage  (either  de  novo or  through  the
acquisition of a going concern) in a non-banking  activity,  the Federal Reserve
Board will consider  various  factors,  including among others the financial and
managerial  resources of the bank company,  and the relative public benefits and
adverse  effects  which may be expected to result  from the  performance  of the
activity by an  affiliate of the bank  company.  The Federal  Reserve  Board may
apply  different  standards to  activities  proposed to be commenced de novo and
activities commenced by acquisition, in whole or in part, of a going concern.

     Capital  Requirements.  The Federal  Reserve  Board uses  capital  adequacy
guidelines  in its  examination  and  regulation of bank holding  companies.  If
capital falls below minimum guidelines,  a bank company may, among other things,
be  denied  approval  to  acquire  or  establish  additional  banks or  non-bank
businesses.

     The Federal  Reserve  Board's  capital  guidelines  establish the following
minimum  regulatory  capital  requirements  for bank  holding  companies:  (i) a
leverage capital requirement expressed as a percentage of total assets, and (ii)
a  risk-based  requirement  expressed  as a  percentage  of total  risk-weighted
assets. The leverage capital  requirement  consists of a minimum ratio of Tier 1
capital (which consists principally of shareholders'  equity) to total assets of
3% for the most highly rated  companies,  with minimum  requirements of 4% to 5%
for all others. The risk- based requirement consists of a minimum ratio of total
capital to total risk-weighted  assets of 8%, of which at least one-half must be
Tier 1 capital.

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum  requirements,  and higher  capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations.  For example,  Federal  Reserve  Board  regulations  provide that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk and 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. The Federal
Reserve Board has not advised the Company of any specific minimum Tier 1 Capital
leverage ratio applicable to it.

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank. Most of the Company's revenues are received by it in the form of dividends
paid  by  the  Bank.  Thus,  the  Company's  ability  to  pay  dividends  to its
shareholders  is  indirectly  limited by  statutory  restrictions  on the Bank's
ability  to  pay  dividends.  See  "SUPERVISION  AND  REGULATION  - The  Bank  -
Dividends."  Further, the Federal Reserve Board has issued a policy statement on
the  payment  of  cash  dividends  by  bank  holding  companies.  In the  policy
statement,  the Federal  Reserve  Board  expressed  its view that a bank company
experiencing earnings weaknesses should not pay cash dividends exceeding its net
income or which can only be funded  in ways  that  weakened  the bank  company's
financial health, such as by borrowing.  Additionally, the Federal Reserve Board
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. Similar enforcement powers over the Bank are possessed by the
FDIC. The "prompt  corrective  action"  provisions of federal law and regulation
authorizes the Federal Reserve Board to restrict the payment of dividends by the
Company for an insured bank which fails to meet specified capital levels.

     In addition to the restrictions on dividends imposed by the Federal Reserve
Board,  the Michigan  Business  Corporation  Act provides that  dividends may be
legally declared or paid only if after the  distribution a corporation,  such as
the Company,  can pay its debts as they come due in the usual course of business
and its total assets equal

                                        5
<PAGE>
or exceed the sum of its  liabilities  plus the  amount  that would be needed to
satisfy the  preferential  rights upon  dissolution  of any holders of preferred
stock  whose   preferential   rights  are  superior  to  those   receiving   the
distribution.  The Company is authorized to issue  preferred stock but it has no
current plans to issue any such preferred stock.

The Bank

     General.  The  Bank is a  Michigan  banking  corporation  and  its  deposit
accounts are insured by the Bank  Insurance  Fund (the "BIF") of the FDIC.  As a
BIF-insured  Michigan  chartered  bank, the Bank is subject to the  examination,
supervision,  reporting and enforcement requirements of the Commissioner, as the
chartering  authority for Michigan banks,  and the FDIC, as administrator of the
BIF.  These  agencies and the federal and state laws  applicable to the Bank and
its operations,  extensively  regulate  various aspects of the banking  business
including,   among  other  things,  permissible  types  and  amounts  of  loans,
investments and other activities, capital adequacy, branching, interest rates on
loans and on deposits,  the  maintenance  of  non-interest  bearing  reserves on
deposit accounts, and the safety and soundness of banking practices.

     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  evaluation.
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.  Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period.

     The Federal Deposit  Insurance Act ("FDIA")  requires the FDIC to establish
assessment  rates at levels which will maintain the Deposit  Insurance Fund at a
mandated  reserve  ratio of not less than 1.25% of estimated  insured  deposits.
Accordingly,  the FDIC established the schedule of BIF insurance assessments for
the first semi-annual assessment period of 1998, ranging from 0% of deposits for
institutions in the lowest risk category to .27% of deposits for institutions in
the highest risk  category.  For 1997,  the Bank paid  $26,753 in BIF  insurance
assessments, representing a premium of .02%.

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound  practices,  or have
violated any applicable  law,  regulation,  order,  or any condition  imposed in
writing by, or written  agreement with, the FDIC, or if the institution is in an
unsafe or unsound  condition to continue  operations.  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.

     Commissioner  Assessments.  Michigan banks are required to pay  supervisory
fees to the Commissioner to fund the operations of the Commissioner.  The amount
of  supervisory  fees paid by a bank is based upon the bank's total  assets,  as
reported to the Commissioner.

     FICO  Assessments.  Pursuant to federal  legislation  enacted September 30,
1996,  the Bank, as a member of the BIF, is subject to  assessments to cover the
payments on 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 predecessor to the FDIC's Savings  Association
Insurance  Fund (the "SAIF") which insures the deposits of thrift  institutions.
Until  January 1, 2000,  the FICO  assessments  made against BIF members may not
exceed  20% of the  amount  of  FICO  assessments  made  against  SAIF  members.
Currently,  SAIF members pay FICO  assessments at a rate equal to  approximately
0.063% of deposits  while BIF members  pay FICO  assessments  at a rate equal to
approximately  0.013% of deposits.  Between  January 1, 2000 and the maturity of
the  outstanding  FICO  obligations  in 2019,  BIF members and SAIF members will
share the cost of the  interest  on the FICO  bonds on a pro rata  basis.  It is
estimated that FICO  assessments  during this period will be less than 0.025% of
deposits

     Capital  Requirements.  The  FDIC has  established  the  following  minimum
capital standards for  state-chartered,  FDIC-insured  non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total assets of 3% for the most highly-rated banks with minimum  requirements
of 4% to 5% for

                                        6
<PAGE>
all others, and a risk-based capital  requirement  consisting of a minimum ratio
of total capital to total risk-weighted assets of 8%, at least one-half of which
must be Tier 1 capital.  Tier 1 capital  consists  principally of  shareholders'
equity.  These capital  requirements  are minimum  requirements.  Higher capital
levels will be required if warranted  by the  particular  circumstances  or risk
profiles of individual institutions.  For example, FDIC regulations provide that
higher capital may be required to take adequate  account of, among other things,
interest   rate  risk  and  the  risks  posed  by   concentrations   of  credit,
nontraditional  activities or securities trading  activities.  As a condition to
regulatory  approval of the Bank's  formation,  the Bank was required to have an
initial capitalization  sufficient to provide a ratio of Tier 1 capital to total
estimated assets of at least 8% at the end of the third year of operation.

     Federal law 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  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."  Federal  regulations  define  these  capital  categories  as
follows:
<TABLE>
                                           Total                  Tier 1
                                           Risk-Based             Risk-Based
                                           Capital Ratio          Capital Ratio           Leverage Ratio
<S>                                        <C>                    <C>                     <C>
Well capitalized                           10% or above           6% or above             5% or above
Adequately capitalized                       8% or above          4% or above             4% or above
Undercapitalized                           Less than 8%           Less than 4%            Less than 4%
Significantly undercapitalized             Less than 6%           Less than 3%            Less than 3%
Critically undercapitalized                          --                     --            A ratio of tangible
                                                                                          equity to total assets
                                                                                          of 2% or less
</TABLE>
     As of  December  31,  1997,  each of the  Bank's  ratios  exceeded  minimum
requirements for the well capitalized category.

     Depending  upon the capital  category to which an  institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring  the  institution  to  issue   additional   capital  stock  (including
additional  voting  stock)  or to be  acquired;  restricting  transactions  with
affiliates;  restricting  the interest rate the institution may pay on deposits;
ordering a new election of directors of the  institution;  requiring that senior
executive  officers or directors be dismissed;  prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain  subsidiaries;  prohibiting  the  payment of  principal  or  interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

     In  general,  a  depository  institution  may be  reclassified  to a  lower
category  than is indicated  by its capital  levels if the  appropriate  federal
depository  institution  regulatory  agency  determines  the  institution  to be
otherwise  in an unsafe or  unsound  condition  or to be engaged in an unsafe or
unsound  practice.  This could include a failure by the  institution,  following
receipt  of a  less-than-satisfactory  rating  on its  most  recent  examination
report, to correct the deficiency.

     Dividends.  Under  Michigan  law, the Bank is  restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend  unless the bank will have
a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare or pay any  dividend  until an amount  equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual  dividends) has been  transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of  shareholders  owning 2/3 of the stock  eligible  to vote  increase  its
capital  stock by a  declaration  of a stock  dividend,  provided that after the
increase  the  bank's  surplus  equals at least  20% of its  capital  stock,  as
increased.  The Bank may not declare or pay any  dividend  until the  cumulative
dividends on preferred stock (should any such stock be

                                        7
<PAGE>
issued  and  outstanding)  have  been  paid in  full.  The  Bank's  Articles  of
Incorporation  do not authorize the issuance of preferred stock and there are no
current plans to seek such authorization.

     Federal law generally  prohibits a depository  institution  from making any
capital distribution  (including payment of a dividend) or paying any management
fee  to  its  company  if  the  depository   institution   would  thereafter  be
undercapitalized.  The FDIC may prevent an insured bank from paying dividends if
the  bank is in  default  of  payment  of any  assessment  due to the  FDIC.  In
addition,  the FDIC may prohibit  the payment of dividends by the Bank,  if such
payment is determined,  by reason of the financial  condition of the Bank, to be
an unsafe and unsound banking practice.

     Insider  Transactions.  The Bank is subject to certain restrictions imposed
by the  Federal  Reserve Act on any  extensions  of credit to the Company or its
subsidiaries,  on investments in the stock or other securities of the Company or
its  subsidiaries  and the  acceptance  of the stock or other  securities of the
Company or its  subsidiaries  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 and its
subsidiaries,  to  principal  shareholders  of  the  Company,  and  to  "related
interests" of such directors,  officers and principal shareholders. In addition,
federal law and  regulations may affect the terms upon which any person becoming
a director or officer of the Company or one of its  subsidiaries  or a principal
shareholder  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 to promote the safety and soundness of federally  insured  depository
institutions.  These  guidelines  establish  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 guidelines prescribe the
goals to be achieved in each area, and each  institution will be responsible for
establishing its own procedures to achieve those goals. If an institution  fails
to  comply  with  any  of  the  standards  set  forth  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose  failure to meet one or more of the  standards is of such severity that it
could  threaten  the safe and sound  operation  of the  institution.  Failure to
submit an acceptable  compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate  regulator,  would constitute  grounds
for further enforcement action.

     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,  as  implemented  by  FDIC
regulations,  also prohibits  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.  Impermissible investments
and activities must be divested or  discontinued  within certain time frames set
by the FDIC in accordance with federal law. These restrictions are not currently
expected to have a material impact on the operations of the Bank.

     Consumer  Protection Laws. The Bank's business includes making a variety of
types of loans to  individuals.  In making these  loans,  the Bank is subject to
State usury and regulatory  laws and to various  federal  statutes,  such as the
Equal  Credit  Opportunity  Act,  the Fair Credit  Reporting  Act,  the Truth in
Lending Act, the Real Estate  Settlement  Procedures  Act, and the Home Mortgage
Disclosure  Act, and the  regulations  promulgated  thereunder,  which  prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and
settlement  costs,  and regulate the mortgage loan  servicing  activities of the
Bank,  including  the  maintenance  and  operation  of escrow  accounts  and the
transfer of mortgage loan servicing.  In receiving deposits, the Bank is subject
to extensive  regulation under State and federal law and regulations,  including
the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy
Act, the Electronic  Funds Transfer Act, and the Federal Deposit  Insurance Act.
Violation of these laws could result in the  imposition of  significant  damages
and fines upon the Bank and its directors and officers.

                                        8
<PAGE>
     Branching  Authority.  Michigan banks, such as the Bank, have the authority
under  Michigan  law to  establish  branches  anywhere in the State of Michigan,
subject to receipt of all required regulatory  approvals (including the approval
of the Commissioner and the FDIC).

     Effective  June 1, 1997 (or earlier if expressly  authorized  by applicable
state law), the Riegle-Neal  Interstate Banking and Branching  Efficiency Act of
1994 (the "IBBEA") allows banks 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 de novo  interstate  branches or the acquisition of individual
branches  of a  bank  in  another  state  (rather  than  the  acquisition  of an
out-of-state  bank in its  entirety)  is allowed  by IBBEA only if  specifically
authorized by state law. The legislation  allowed individual states to "opt-out"
of interstate branching authority by enacting  appropriate  legislation prior to
June 1, 1997.

     Michigan  did not opt out of IBBEA,  and now permits both U.S. and non-U.S.
banks to  establish  branch  offices in  Michigan.  The  Michigan  Banking  Code
permits, in appropriate circumstances and with the approval of the Commissioner,
(i)  the  acquisition  of  all  or   substantially   all  of  the  assets  of  a
Michigan-chartered  bank by an FDIC-insured  bank,  savings bank, or savings and
loan  association   located  in  another  state,   (ii)  the  acquisition  by  a
Michigan-chartered  bank  of  all or  substantially  all  of  the  assets  of an
FDIC-insured  bank,  savings  bank or savings  and loan  association  located in
another state, (iii) the consolidation of one or more  Michigan-chartered  banks
and FDIC-insured banks,  savings banks or savings and loan associations  located
in other states having laws  permitting such  consolidation,  with the resulting
organization  chartered by Michigan,  (iv) the  establishment by a foreign bank,
which has not previously  designated any other state as its home state under the
International Banking Act of 1978, of branches located in Michigan,  and (v) the
establishment  or  acquisition  of branches in  Michigan by  FDIC-insured  banks
located in other  states,  the  District  of  Columbia  or U.S.  territories  or
protectorates  having  laws  permitting  Michigan-chartered  banks to  establish
branches in such jurisdiction.  Further, the Michigan Banking Code permits, upon
written notice to the Commissioner,  (i) the acquisition by a Michigan-chartered
bank of one or more branches (not  comprising  all or  substantially  all of the
assets) of an FDIC-insured  bank,  savings bank or savings and loan  association
located in another  state,  the  District of  Columbia,  or a U.S.  territory or
protectorate,  (ii) the  establishment by  Michigan-chartered  banks of branches
located in other  states,  the  District of  Columbia,  or U.S.  territories  or
protectorates,  and (iii) the  consolidation  of one or more  Michigan-chartered
banks and  FDIC-insured  banks,  savings banks or savings and loan  associations
located in other  states,  with the resulting  organization  chartered by one of
such other states.

Item 2.  Properties.

     The Bank operates from seven facilities,  located in seven communities,  in
Kent, Ottawa and Allegan Counties,  Michigan.  The Bank's main office is located
at 2445 84th Street, S.W., Byron Center,  Michigan. This facility is a two story
30,000 square foot building  constructed  in 1988.  The Bank's branch offices in
Dorr, Grand Rapids, Grandville, Hudsonville, Jamestown and Moline are all single
story  facilities  ranging in size from 1,100 square feet to 10,000 square feet.
All of the  properties  are owned by the  Bank.  The Bank is in the  process  of
renovating a leased  office space at 10500  Chicago  Drive,  Zeeland,  Michigan,
which will open in March 1998.

Item 3.  Legal Proceedings.

     Neither  the Company  nor the Bank are  involved  in any legal  proceedings
other than routine litigation incidental to the ordinary conduct of the business
of the bank,  none of which would result in a material  impact on the Company or
the Bank, individually or in the aggregate, in the event of an adverse outcome.

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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of 1997.

                                        9
<PAGE>
Additional Item - Executive Officers

     Executive  officers of the Company are  appointed  annually by the Board of
Directors.  There are no family  relationships  among the  officers  and/or  the
directors  of the  Company,  or any  arrangement  or  understanding  between any
officer and any other person pursuant to which the officer was elected.

     The  following  table sets forth  certain  information  with respect to the
Company's officers as of December 31, 1997:
<TABLE>
                                                                                                   Year Became
            Name                  Age                   Position with Company                      an Officer
<S>                               <C>     <C>                                                         <C>
John A. Van Singel                 43     President, CEO and director of the Company                  1976
                                          and the Bank
Lois Smalligan                     65     Director of the Company and the Bank, Vice                  1975
                                          President of the Bank
John Peterson                      49     Executive Vice President of the Bank                        1983
Forrest Bowling                    49     Vice President of the Bank                                  1988
Martin Braun                       42     Vice President of the Bank                                  1988
</TABLE>









                           [INTENTIONALLY LEFT BLANK]



                                       10
<PAGE>
                                     PART II

Item 5.   Market Price of and  Dividends on the  Registrant's  Common Equity and
          Related Stockholder Matters.

     There is no active market for the Company's  Common Stock,  and there is no
published  information  with respect to its market price.  There are  occasional
sales through  brokers and direct sales by  shareholders  of which the Company's
management is aware.  It is the  understanding  of the management of the Company
that over the last two years,  the Company's  Common Stock has sold at prices in
excess of book value.  From January 1, 1996,  through  December 31, 1997,  there
were,  so far as the  Company's  management  knows,  110  sales of shares of the
Company's  Common  Stock,  involving  a total of  73,295  shares.  The price was
reported to management in only a few of these  transactions,  and management has
no way of confirming  the prices which were  reported.  During this period,  the
highest  price known by management to be paid was $70.00 per share in the fourth
quarter of 1997 and the first  quarter of 1998,  and the lowest price was $52.00
per share in the third quarter of 1996. To the knowledge of management, the last
sale of Common Stock  occurred on February 10, 1998,  involving  the sale of 194
shares at a price of  $70.00  per  share.  The per  share  information  has been
adjusted for the July 1, 1996 10% stock dividend.

     The  following  table sets forth the range of high and low sales  prices of
the Company's  Common Stock during 1996 and 1997 and through  February 10, 1998,
based on information  made  available to the Company,  as well as per share cash
dividends declared during those periods. Although management is not aware of any
transactions  at higher or lower  prices,  there may have been  transactions  at
prices outside the ranges listed below:
<TABLE>
                                                                                                 Cash
                                                         Sales Prices                      Dividends Declared

                 1996                             High                       Low
                 ----                             ----                       ---
<S>                                               <C>                        <C>                    <C>
First Quarter.........................            $  49.09                   $  49.09
Second Quarter........................               61.60                      60.50                  $.44
Third Quarter.........................               58.00                      52.00
Fourth Quarter........................               58.00                      53.00                  $.50
                 1997                             High                       Low
First Quarter.........................            $  63.00                   $  56.00                 $2.00 (1)
Second Quarter........................               65.00                      63.00                  $.53
Third Quarter.........................               68.00                      63.00
Fourth Quarter........................               70.00                      68.00                  $.57
                 1998                             High                       Low
First Quarter.........................            $  70.00                   $  69.00                 $1.00 (2)
</TABLE>
(1) A special dividend of $2.00 per share.

(2) A special dividend of $1.00 per share.

     There are 2,000,000  shares of the Company's  Common Stock  authorized,  of
which  1,000,000  shares were issued and  outstanding  as of February  28, 1998.
There were approximately 620 shareholders of record, including trusts and shares
jointly owned, as of that date. No warrants or options exist for the purchase of
additional stock of the Company.

                                       11
<PAGE>
     The holders of the Company's  Common Stock are entitled to dividends  when,
as and if declared by the Board of Directors of the Company out of funds legally
available for that purpose.  Dividends have been paid on a semi-annual basis. In
determining  dividends,  the Board of Directors considers the earnings,  capital
requirements  and  financial  condition of the Company and the Bank,  along with
other  relevant  factors.  The  Company's  principal  source  of funds  for cash
dividends is the dividends  paid by the Bank. The ability of the Company and the
Bank to pay dividends is subject to regulatory  restrictions  and  requirements.
See the discussion under "Business-Supervision and Regulation" above.










                           [INTENTIONALLY LEFT BLANK]

                                       12
<PAGE>
Item 6.  Selected Financial Data.
<TABLE>
                 SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
                      (in thousands, except per share data)

                                                                      Year Ended December 31,
                                                  1997            1996             1995             1994             1993
                                                  ----            ----             ----             ----             ----
<S>                                           <C>             <C>              <C>              <C>              <C>
Income Statement Data:
  Interest income                             $  18,624       $  17,502        $  16,268        $  14,082        $  12,773
  Interest expense                                7,693           7,181            6,637            5,371            5,118
  Net interest income                            10,931          10,321            9,631            8,711            7,655
  Provision for loan losses                          50               0              275              170              510
  Noninterest income                              1,542           1,075              919              665            1,523
  Noninterest expenses                            5,782           5,169            4,511            4,097            3,761
  Income before federal                           6,641           6,227            5,764            5,109            4,907
    income taxes
  Net income                                      4,626           4,375            4,004            3,680            3,396
Per Share Data(1):
  Net income                                       4.60            4.35             3.98             3.66             3.38
  Cash dividends declared                          3.10             .94              .82              .67              .67
  Book Value                                      36.91           35.32            32.24            27.51            25.55
  Weighted average shares
outstanding (1)                                   1,005           1,007            1,010            1,014            1,015
Balance Sheet Data:
  Total assets                                 $243,088        $217,527         $210,880         $187,244         $176,914
  Loans, net of unearned income                 168,953         145,069          142,813          127,286          115,176
  Allowance for loan losses                       2,565           2,376            2,305            2,056            2,049
  Deposits                                      184,700         170,221          170,012          151,074          144,111
  Stockholders' equity                           36,915          35,544           32,559           27,900           25,932
Ratios:
  Tax equivalent net interest
  income to average earning
  assets                                          5.24%           5.23%            5.42%            5.24%            5.09%
  Return on average equity                        13.08           12.87            13.21            13.64            13.84
  Return on average assets                         2.03            2.03             2.07             2.02             2.02
  Nonperforming loans to
  total loans                                      0.14            0.82             0.66             0.24             0.63
  Tier 1 leverage ratio                           15.03           15.97            15.42            15.36            15.45
  Dividend payout ratio                           67.35           21.54            18.75            16.77            14.56
  Equity to asset ratio                           15.19           16.34            15.44            14.90            14.66
</TABLE>
(1)      At year end.

                                       13
<PAGE>
ITEM 7.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


     The  following  financial  review  presents  management's   discussion  and
analysis of consolidated  financial  condition and results of operations  during
the period of 1995 through 1997.  The  discussion  should be read in conjunction
with the Company's consolidated financial statements and accompanying notes.

Summary

     The Company and its subsidiary bank, Byron Center State Bank,  consistently
have been ranked as a high  performance  community  bank by various  bank rating
companies.  The Company has had twelve  consecutive  years of returns on average
assets of over 2%. The  Company's  capital  ratio of 15.03%  makes it one of the
strongest capitalized community banks in the State of Michigan.

     To achieve  this  status,  the  Company  has relied on years of  continuous
improvements in a business culture that emphasizes quality assets, managed in an
efficient  manner so as to minimize  the cost of overhead.  Technology  has also
been a key component to the Company's  success and will remain an important tool
that will help  management  deliver  more  services  and manage more assets at a
lower cost to support these functions.

     The Company has a surplus of capital.  The Board of Directors has made it a
priority  to make  more  efficient  use of  capital.  The  primary  emphasis  is
re-leveraging capital through aggressive yet careful growth. This is expected to
be  accomplished  through  competitive,  cost  effective  products and services,
efficiently  delivered  without  compromising  the Bank's risk and  underwriting
standards.  The  Company  has also had limited  success in  redeeming  shares of
common  stock.  The Company has  increased  its dividend  pay-out ratio over the
years  from  15% in 1993 to 67% in 1997.  However,  the 1997  ratio  reflects  a
special  one time  $2.00 per  share  cash  dividend  paid out in  January  1997.
Effective  January 22, 1998,  the Board of Directors  declared a $1.00 per share
special cash dividend  resulting in a return of $1,000,000 in excess  capital to
the stockholders.

Results of Operations

Table 1  Earnings Performance (in thousands, except per share data)
<TABLE>
                                                               Year Ended December 31
                                                       1997             1996             1995
                                                       ----             ----             ----
<S>                                                   <C>              <C>              <C>
Net Income..................................          $4,626           $4,375           $4,004
  Per share of common stock.................            4.60             4.35             3.98

Earnings ratios:
  Return on average assets..................           2.03%            2.03%            2.07%
  Return on average equity..................           13.08            12.89            13.21
</TABLE>
Net Interest Income

     The following schedule presents the average daily balances, interest income
(on a fully  taxable  equivalent  basis) and interest  expense and average rates
earned and paid for the Company's major categories of assets,  liabilities,  and
stockholders' equity for the periods indicated:

                                       14
<PAGE>
Table 2 - Interest Yields and Costs (in thousands)
<TABLE>
                                                                Year ended December 31,

                                         1997                                1996                                 1995
                              Average                  Yield/     Average                  Yield/      Average                Yield/
                              Balance      Interest     Cost      Balance      Interest     Cost       Balance      Interest    Cost
Assets:
<S>                           <C>        <C>             <C>     <C>          <C>          <C>      <C>            <C>         <C>
Fed. funds sold               $   1,197  $       67      5.60%  $    2,483    $    133     5.36%    $    1,850     $    108    5.81%
Securities:
  Taxable                        41,684       2,696      6.47       39,831       2,524      6.34        32,540        1,982    6.09
  Tax-exempt                     16,681       1,373      8.23       14,875       1,283      8.63        15,174        1,355    8.93
Loans(1)(2)                     156,657      14,887      9.50      147,529      13,952      9.46       135,557       13,232    9.76
                              ---------    --------              ---------    --------               ---------     --------
Total earning assets/total
 interest income                216,219     $19,023      8.80      204,718     $17,892      8.74       185,121      $16,673    9.01
                                             -------                           -------                              -------
Cash and due from banks           4,956                              4,474                               3,917
Unrealized Gain(Loss)               289                                420                                (293)
All other assets                  8,427                              7,999                               7,048
Allowance for loan loss         (2,477)                            (2,462)                              (2,187)
                            -----------                         ----------                          ----------
  Total assets                 $227,414                           $215,149                            $193,606
                               ========                           ========                            ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
MMDA, Savings/NOW accounts    $  63,927    $  1,927     3.01%    $  62,076    $  1,854      2.99%    $  57,751     $  1,892    3.28%
Time                             90,180       5,131      5.69       87,885       4,916      5.59        80,319        4,419    5.50
Fed Funds Purchased               9,038         369      4.08        8,004         301      3.76         4,304          166    3.86
Other Borrowed Money              4,443         266      5.99        1,893         110      5.81         2,843          159    5.59
                             ----------   ---------             ----------   ---------               ---------
Total interest bearing
   liabilities/total
   interest expense             167,588    $  7,693      4.59      159,858    $  7,181      4.49       145,217     $  6,637    4.57
                                            --------                          --------                             --------
Noninterest bearing deposits     22,764                             19,762                              16,744
All other liabilities             1,773                              1,543                               1,328
Stockholders' Equity:
Unrealized Holding Gain(Loss)       191                                277                               (192)
Common Stock, Surplus,
  Retained Earnings              35,098                             33,709                              30,509
                              ---------                          ---------                          ----------
Total liabilities and
  stockholders' equity         $227,414                           $215,149                            $193,606
                               ========                           ========                            ========

Interest spread                             $10,931     4.21%                  $10,321     4.25%                   $  9,631    4.44%
                                                        =====                              =====                               =====
Net interest income-FTE                     $11,330                            $10,711                              $10,036
                                            =======                            =======                              =======
Net Interest Margin as
  a Percentage of Average
  Earning Assets - FTE                                  5.24%                              5.23%                               5.20%
                                                        =====                              =====                               =====
</TABLE>
                                       15
<PAGE>
(1)      Nonaccruing loans are not significant during the periods indicated, and
         for  purposes of the  computations  above,  are included in the average
         daily loan balances.
(2)      Interest on loans  includes  net  origination fees totaling $249,067 in
         1997 and $263,376 in 1996 and $265,562 in 1995.

     Net interest income is the principal source of income for the Company.  Tax
equivalent  net  interest  income  increased  $619,000 to  $11,330,000,  a 5.78%
increase from the same period in 1996.  In the prior year,  tax  equivalent  net
interest income increased by 6.7% to $10,711,000 from $10,036,000 in 1995.

     Net interest  income is the difference  between  interest  earned on loans,
securities,  and other earning assets and interest paid on deposits and borrowed
funds.  In Table 2 and Table 3 the interest  earned on investments  and loans is
expressed on a fully  taxable  equivalent  (FTE) basis.  Tax exempt  interest is
increased to an amount comparable to interest subject to federal income taxes in
order to properly  evaluate the effective  yields earned on earning assets.  The
tax equivalent  adjustment is based on a federal income tax rate of 34%. Table 3
analyzes the reasons for the  increases  and  decreases  in interest  income and
expense. The change in interest due to changes in both balance and rate has been
allocated to change due to balance and change due to rate in  proportion  to the
relationship of the absolute dollar amounts of change in each.

Table 3 - Change in Tax Equivalent Net Interest Income (in thousands)
<TABLE>
                                             1997 Compared to 1996                        1996 Compared to 1995
                                            -----------------------                       ---------------------

                                                   Amount of                                    Amount of
                                              Increase/(Decrease)                          Increase/(Decrease)
                                               Due to Change In                              Due to Change In
                                                                     Net                                           Net
                                                                    Amount                                       Amount
                                                                      of                                           of
                                                    Average       Increase/                      Average        Increase/
                                     Volume          Rate         (Decrease)       Volume          Rate        (Decrease)
Interest Income
<S>                                    <C>            <C>             <C>            <C>          <C>               <C>
Federal funds sold..............       $   (72)       $      6        $   (66)       $     34     $      (8)        $    26
Securities:
   Taxable......................            120             52             172            462             80            542
   Tax Exempt                               149           (59)              90           (26)           (46)           (72)
Loans...........................            867             68             935          1,133          (413)            720
                                       --------       --------        --------        -------     ----------       --------
Total interest income...........          1,064             67           1,131          1,603          (387)          1,216
                                        -------       --------         -------        -------     ----------        -------
Interest Expense
Interest bearing deposits:
   Savings/NOW Accounts.........             56             17              73            129          (167)           (38)
   Time.........................            131             84             215            423             74            497
   Fed Funds Purchased..........             42             26              68            139            (4)            135
   Other Borrowed Money.........            152              4             156           (55)              6           (49)
                                       --------      ---------        --------     ----------    -----------      ---------
   Total Interest Expense.......            381            131             512            636           (91)            545
                                        -------        -------        --------       --------     ----------        -------
Net interest income (FTE).......         $  683      $    (64)         $   619        $   967       $  (294)        $   671
                                         ======      =========         =======        =======       ========        =======
</TABLE>
     The Company's  commitment to reinvesting  in its  communities is evident in
its ratios of loans to assets and loans to deposits, which are generally greater
than the comparable  ratios of the Company's peers. This in turn translates into
above  peer net  interest  margin.  (Based  on FFIEC  uniform  bank  performance
report.)

                                       16
<PAGE>
     Net interest  income as a percent of total  interest  income FTE was 59.6%,
59.9% and 60.2%, for 1997, 1996 and 1995  respectively.  Net interest margin was
5.24%, 5.23% and 5.20% for the same periods.

     Interest from loans  represents  78.3%,  78.0% and 79.4% of total  interest
income for 1997,  1996 and 1995  respectively.  Net interest  income is strongly
influenced by results of the Bank's lending activities.

     Total interest expense  increased 7.1% from 1996 to 1997 and also increased
8.2% from 1995 to 1996, the variances are detailed in table 3. Cost of funds are
influenced by economic  conditions  and activities of the Federal  Reserve.  The
Bank's asset/liability  committee seeks to manage sources and uses of funds, and
to  monitor  the gap in  maturities  of these  funds to  maintain  a steady  net
interest margin in varying market conditions.


Table 4 - Composition of Average Earning Assets and Interest Paying Liabilities
<TABLE>
                                                                          Year ended December 31
                                                               1997                1996                1995
                                                               ----                ----                ----
<S>                                                         <C>                 <C>                 <C>
As a percent of average earning assets
  Loans......................................                 72%                 72%                 73%
  Other earning assets.......................                 28%                 28%                 27%
                                                            -----               -----               -----
     Average earning assets..................                100%                100%                100%

  Savings and NOW accounts...................                 38%                 39%                 40%
  Time deposits..............................                 54%                 55%                 55%
  Other borrowings...........................                  8%                  6%                  5%
                                                            -----               -----               -----
     Average interest bearing liabilities....                100%                100%                100%

Earning asset ratio..........................                 95%                 95%                 96%
</TABLE>

Table 5 - Noninterest Income (in thousands)
<TABLE>
                                                                                 Year Ended December 31
                                                                    ----------------------------------------
                                                                 1997                 1996                 1995
                                                                 ----                 ----                 ----
<S>                                                          <C>                  <C>                     <C>
Service charges on deposit accounts .........                $  527               $  529                  $492
Net gains (losses) on asset sales:
  Loans......................................                   414                  133                   105
  Securities.................................                    66                   13                    (4)
Other........................................                   535                  400                   326
                                                            -------              -------                ------
     Total noninterest income................                $1,542               $1,075                  $919
                                                             ======               ======                  ====
</TABLE>

Non-interest Income

     Non-interest  income  consists  of service  charges  on  deposit  accounts,
service fees, gains on investment securities  available-for-sale  and gains from
sales of loans to the Federal Home Loan Mortgage  Corporation (Freddie Mac). The
Company  retains  the  servicing  rights  on these  loans.  Non-interest  income
increased  $467,000 or 43% for 1997 versus 1996.  The increase was primarily due
to a $281,000  increase in gains on real estate  mortgage loan sales, a $139,000
increase in brokerage and annuity commissions and a $53,000 increase on gains of
securities available-for-sale.

                                       17
<PAGE>
Table 6  Net Gains on the Sale of Real Estate Mortgage Loans (in thousands)
<TABLE>
                                                                              Year ended December 31
                                                               ------------------------------------------
                                                                1997                 1996                  1995
                                                                ----                 ----                  ----
<S>                                                        <C>                  <C>                    <C>
Real estate mortgage loan originations.......              $39,112              $40,934                $34,585
Real estate mortgage loan sales..............               20,567               21,784                 16,655
Real estate mortgage loans servicing
    rights sold..............................                    0                    0                      0
Net gains on the sale of real
    estate mortgage loans....................                  414                  133                    105
Net gains as a percent of real
    estate mortgage loan sales...............                2.01%                0.61%                  0.63%
</TABLE>

     Net  gains on the sale of real  estate  mortgage  loans  totaled  $414,000,
$133,000 and $105,000 in 1997,  1996 and 1995  respectively.  The increase  from
1996 to 1997 of $281,000 was a result of adopting FASB 125 and a more  favorable
interest  rate  environment.  The  increases  from 1995 to 1996 were obtained by
increased loan originations and favorable interest rates.

     The Bank sells the majority of its fixed-rate  obligations.  Such loans are
sold without recourse. The Bank retains servicing rights on real estate mortgage
loans sold.  The impact of new accounting  standards in 1996 (see  Discussion of
SFAS No.'s 122 and 125 in Notes to Consolidated  Financial  Statements) has been
and is expected to continue to be  insignificant  to the Company's  consolidated
financial position and results of operations.

Noninterest Expense

Table 7 - Noninterest Expense (in thousands)
<TABLE>
                                                                        Year ended December 31
                                                              -----------------------------------------
                                                             1997                 1996                  1995
                                                             ----                 ----                  ----
<S>                                                         <C>                  <C>                    <C>
Salaries and employee benefits...............               $3,028               $2,650                 $2,170
Occupancy and equipment......................                  897                  845                    788
FDIC assessment..............................                   27                   17                    176
Postage......................................                  129                  104                     93
Printing and supplies........................                  118                  132                    122
Marketing....................................                  163                  161                    131
Michigan Single Business Tax.................                  220                  197                    172
Other........................................                1,200                1,063                    859
                                                            ------              -------                -------
  Total noninterest expense..................               $5,782               $5,169                 $4,511
                                                            ======               ======                 ======
</TABLE>
     Table 7 lists the Bank's most significant noninterest expenses.

     Non-interest  expense  increased  $613,000 or 11.9% for 1997  versus  1996.
Salaries  and  employee  benefits  increased  $378,000  to  $3,028,000,  a 14.3%
increase which was the major factor for the increase in non-interest expense.

     Non-interest  expense  increased  $658,000  or 14.6% in 1996  versus  1995.
Salaries  and  employee  benefits  increased  $480,000  to  $2,650,000,  a 22.1%
increase which was the major factor for the increase in non-interest expense.

                                       18
<PAGE>
     The 1997 and 1996  increases  in salary and  employee  benefit  expense are
related to increased  staffing,  annual  hourly and salary pay  adjustments  and
increased  medical  insurance  expenses.  The increased  staffing is a long term
initiative that will be utilized to improve asset quality, regulatory compliance
and build and improve marketing and sales support.

Financial Condition--Summary

     During  1997,  total  assets  increased  11.8%  to  $243,087,920,  deposits
increased 8.5% to 184,700,328 and loans grew 16.5% to $168,953,080.  The Bank is
emphasizing  relationship  banking  and  has  competed  aggressively  to  obtain
deposits and loans.  A discussion  of changes in balance  sheet amounts by major
categories follows:

The Loan Portfolio

     The loan  personnel of the bank are committed to making  quality loans that
produce a  competitive  rate of return for the Bank and also serve the community
by providing funds for home purchases, business purposes, and consumer needs. It
is management's  intent to maintain a loan to deposit ratio in the 75-85% range,
enabling the Company to earn the highest interest rates available on loans. Loan
demand in the Bank's  service area is expected to remain  strong to achieve that
goal.

     The  majority  of loans are made to  businesses  in the form of  commercial
loans and real  estate  mortgages.  The Bank's  consumer  mortgage  activity  is
substantial;  however,  only a small portion of these loans are retained for the
Bank's own portfolio. The Bank does retain servicing rights on substantially all
such sold  loans.  Over the past six  years  the Bank has built an  eighty-seven
million  dollar  servicing   portfolio  with  the  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC").  At December 31, 1997 and 1996,  the Bank was  servicing
loans of $93,000,000 and  $82,000,000,  respectively,  which relate primarily to
residential  mortgages  originated by the Bank. The Bank originated  $39,112,000
(441  loans)  and  $40,934,000  (485  loans)  in  mortgage  loans  in  1997  and
1996,respectively,  and  sold to  FHLMC  $20,567,000  (233  loans)  in 1997  and
$21,784,000  (262 loans) in 1996.  Repayments and early payoffs were $13,102,000
in 1997 and $17,484,000 in 1996.

     The loan portfolio mix at December 31, 1997 consists of 53% commercial real
estate, 23% residential real estate, 16% commercial and 8% consumer installment.
The growth  rate of the lending  portfolio  was 1.6% from 1995 to 1996 and 16.5%
from 1996 to 1997.

     Nearly 80% of loans are placed  within the area the Bank  designates as its
market for purposes of regulatory Community Reinvestment Act ("CRA") compliance.
Nearly all loans are placed  within the  metropolitan  area of Grand  Rapids and
surrounding communities.

Table 8 - Loan Portfolio Composition (in thousands)
<TABLE>
                                                                           Year ended December 31
                                                       1997                      1996                      1995
                                                  Amount         %          Amount          %          Amount         %
<S>                                               <C>          <C>          <C>           <C>          <C>          <C>
Commercial Real Estate.....................       $ 90,005     53           $ 72,280      50           $ 71,690     50
Residential Real Estate....................         38,886     23             33,443      23             33,530     24
Other Commercial...........................         26,380     16             27,452      19             26,912     19
Installment................................         13,682      8             11,894       8             10,681      7
                                                 ---------     --          ---------      --          ---------     --
  Total loans.............................        $168,953    100%          $145,069     100%          $142,813    100%
                                                              ====                       ====                      ====
Less:
Allowance for Loan Losses.................         (2,565)                   (2,376)                    (2,305)
                                                ----------                ----------                 ----------
Total Loans Receivable, Net................      $166,388                   $142,693                   $140,508
                                                 =========                  ========                   ========
</TABLE>

                                       19
<PAGE>
     The lending  policy of the Bank was written to reduce credit risk,  enhance
earnings and guide the lending officers in making credit decisions.  There are 8
levels in the loan authorization procedure depending on the dollar amount of the
loan request.

                     $1,600,001 to $4,000,000   Board of Directors
                     $  750,001 to $1,600,000   Executive Loan Committee
                              0 to $  750,000   Loan Committee
                              0 to $  250,000   Class 1 Lender
                              0 to $  150,000   Class 2 Lender
                              0 to $   75,000   Class 3 Lender
                              0 to $   30,000   Class 4 Lender
                           Student Loans Only   Class 5 Lender

     The class of lender is approved by the Bank's Board of Directors. The Board
of Directors has appointed a Chief Lending  Officer who is  responsible  for the
supervision of the lending  activities of the Bank. The Board has also appointed
a loan review  officer who  monitors  the credit  quality of the loan  portfolio
independent of the loan approval process.  Periodic reviews are submitted by the
loan  review  officers  to the  Chief  Lending  Officer  and these  reviews  are
submitted to the  Audit/Compliance  Committee on a quarterly basis. The Bank has
no foreign  loans and there  were no  concentrations  greater  than 10% of total
loans that are not disclosed as a separate category in Table 8.

     The  extent  of  loan  quality  is   demonstrated  by  the  low  ratios  of
nonperforming  loans and charge offs as a percentage of the loan  portfolio.  As
referenced in more detail in table 10 below,  the Bank's ratio of  nonperforming
loans to total  loans  at  December  31,  1997  was only  .1%.  The Bank had net
recoveries  of  $139,000  and $71,000 in 1997 and 1996  respectively,  while net
charge offs were $26,000 in 1995.

     Nonperforming  assets  are  comprised  of loans for which  the  accrual  of
interest  has been  discontinued,  accruing  loans  90 days or more  past due in
payments,  collateral  for loans which have been  in-substance  foreclosed,  and
other real estate which has been acquired  primarily through  foreclosure and is
awaiting disposition.  Loans, including loans considered impaired under SFAS No.
118, are generally  placed on a nonaccrual  basis when  principal or interest is
past due 90 days or more and when, in the opinion of management, full collection
of principal and interest is unlikely.

Table 9  Maturities and Sensitivities of Loans in Interest Rates

     The  following  table  shows the amount of total  loans  outstanding  as of
December 31, 1997 which, based on remaining  scheduled  repayments of principal,
are due in the periods indicated.
<TABLE>
                                                                                    Maturing
                                                                            (in thousands of dollars)
                                                                       After one but
                                                  Within one Year      within five years      After five years        Total
<S>                                                 <C>                  <C>                     <C>            <C>
Residential Real Estate..............               $  6,735             $  26,516                $5,635        $ 38,886
Installment..........................                  1,550                11,578                   554          13,682
Commercial Real Estate...............                 13,492                73,173                 3,340          90,005
Other Commercial.....................                 15,457                10,587                   336          26,380
                                                  ----------            ----------              --------        --------
      Totals.........................                $37,234              $121,854                $9,865        $168,953
                                                     =======              ========                ======                
Allowance for Loan Losses............                                                                            (2,565)
                                                                                                              ----------
Total Loans Receivable, Net..........                                                                           $166,388
                                                                                                                ========
</TABLE>
                                       20
<PAGE>

     Below  is a  schedule  of the  amounts  maturing  or  repricing  which  are
classified according to their sensitivity to changes in interest rates.
<TABLE>
                                                                                       Interest Sensitivity
                                                                                    (in thousands of dollars)
                                                                      Fixed Rate            Variable Rate          Total
<S>                                                                   <C>                    <C>              <C>
Due within 3 months....................................               $   4,627              $51,404          $  56,031
Due after 3 months within 1 year.......................                  11,179                    0             11,179
Due after one but within five years....................                  91,986                    0             91,986
Due after five years...................................                   9,757                    0              9,757
                                                                     ----------            ---------              -----
Total..................................................                $117,549              $51,404           $168,953
                                                                       ========              =======                   
Allowance for Loan Losses..............................                                                         (2,565)
                                                                                                            -----------
Total Loans Receivable, Net............................                                                        $166,388
                                                                                                               ========

</TABLE>
Table 10 - Nonperforming Assets(in thousands)
<TABLE>
                                                                                            December 31
                                                                             1997              1996              1995
                                                                             ----              ----              ----
<S>                                                                         <C>               <C>                 <C>
Nonaccrual loans................................................            $  105            $1,080              $835
90 days or more past due & still accruing.......................               132               114               111
                                                                           -------               ---               ---
    Total nonperforming loans...................................               237             1,194               946
Other real estate...............................................                45                 0                 0
                                                                          --------            ------            ------
    Total nonperforming assets..................................            $  282            $1,194              $946
                                                                            ======            ======              ====

Nonperforming loans as a percent of total loans.................             0.14%             0.82%             0.66%
Nonperforming assets as a percent of total loans................             0.17%             0.82%             0.66%
Nonperforming loans as a percent of the allowance                                                50%               41%
    for loan losses.............................................                9%
</TABLE>
     Nonperforming  loans equal 9% of the Bank's allowance for loan losses as of
December 31, 1997,  management  believes  that the  allowance for loan losses is
adequate  for these  loans and the  remainder  of the lending  portfolio.  As of
December 31, 1997 there were no other  interest  bearing  assets which  required
classification.  Management  is not aware of any  recommendations  by regulatory
agencies,  which, if implemented,  would have a material impact on the Company's
liquidity, capital or operations.

     It is expected  that the $105,000 in  non-accrual  loans and the $45,000 in
other real estate will be liquidated without loss in 1998.

     The table below presents the interest income that would have been earned on
non-performing  loans outstanding at December 31, 1997, 1996, and 1995 had those
loans been accruing  interest in accordance  with the original terms of the loan
agreement  (pro forma  interest)  and the  amount of  interest  income  actually
included in net interest income for those years.

                                       21
<PAGE>
Table 11 - Foregone Interest on Non-Performing Loans
<TABLE>
                                                             For the Year Ended December 31
                                                                     (in thousands)
                                              1997                            1996                            1995
                                  Non-accrual     Restructured    Non-accrual       Restructured     Non-accrual    Restructured
<S>                                   <C>              <C>             <C>            <C>              <C>            <C>
Pro forma interest                      $11             $25            $212            $  -            $103            $  -
Interest earned                           8              25              11               -               1               -
                                      -----            ----           -----           -----            ----           -----
Foregone interest income               $  3            $  0            $201               -            $102               -
                                       ====            ====            ====           =====            ====           =====
</TABLE>

Table 12 - Loan Loss Experience(in thousands)

     The  following is a summary of loan  balances at the end of each period and
their daily average balances,  changes in the allowance for possible loan losses
arising from loans charged off and recoveries on loans  previously  charged off,
and additions to the allowance which have been expensed.
<TABLE>
                                                                                       Year ended December 31
                                                                              1997              1996             1995
                                                                              ----              ----             ----
Loans:
<S>                                                                        <C>               <C>               <C>
  Average daily balance of loans for the year....................          $155,286          $146,052          $135,282
  Amount of loans outstanding at end of period...................          $168,953          $145,069          $142,813

Allowance for loan losses:
  Balance at beginning of year...................................         $   2,376         $   2,305         $   2,056
  Loans charged off:
    Real estate..................................................                 0                 0                 0
    Commercial...................................................                 0               108                25
    Consumer.....................................................               124                71                75
                                                                          ---------         ---------         ---------
        Total charge-offs........................................               124               179               100
  Recoveries of loans previously charged off:
    Real estate..................................................                 0                56                 3
    Commercial...................................................               224               157                57
    Consumer.....................................................                39                37                14
                                                                          ---------         ---------        ----------
        Total recoveries.........................................               263               250                74
                                                                           --------         ---------        ----------

  Net (recoveries) charge off....................................             (139)              (71)                26
  Additions to allowance charged to operations...................                50                 0               275
                                                                         ----------       -----------        ----------
        Balance at end of year...................................          $  2,565         $   2,376         $   2,305
                                                                           ========         =========         =========

Ratios:
  Net (recoveries) charge offs...................................           (.09% )            (.05%)              .02%
  Allowance for loan losses to loans outstanding at year end.....             1.52%             1.64%             1.61%
</TABLE>

Table 13 - Allocation of the Allowance for Loan Losses

     The allowance for loan losses is analyzed  quarterly by  management.  In so
doing,  management  assigns a portion of the allowance to specific  credits that
have been  identified  as problem  loans and reviews past loss  experience.  The
local economy and particular  concentrations are considered, as well as a number
of other factors.

                                       22
<PAGE>
<TABLE>
                                                                Year ended December 31
                                            1997                           1996                          1995
                                            ----                           ----                          ----
                                                  % of each                      % of each                     % of each
                                                  category                       category                      category
                                   Allowance      to total       Allowance       to total       Allowance      to total
                                    Amount          loans          Amount          loans         Amount          loans
<S>                                      <C>            <C>            <C>              <C>           <C>             <C>
Commercial.....................          $1,895          1.1%          $1,734           1.2%          $1,707          1.2%
Real estate mortgages..........             205            .1             188             .1             177            .1
Consumer.......................             179            .1             158             .1             136            .1
Unallocated....................             286            .2             296             .2             285            .2
                                        -------        ------         -------         ------         -------          ----
  Total........................          $2,565           1.5%         $2,376            1.6%         $2,305           1.6%
                                         ======         =====          ======                         ======
</TABLE>
     The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any future loans without regard
to loan type.

Investment Securities

     Securities are purchased and classified as  "available-for-sale."  The Bank
adopted the provisions of Statement of Financial  Accounting  Standards ("SFAS")
No. 115,  "Accounting for Certain  Investments in Debt and Equity Securities" on
January 1, 1994. These securities may be sold to meet the Bank's liquidity needs
or to improve the quality of the investment portfolio.  The primary objective of
the  Company's  investing  activities  is to provide for safety of the principal
invested. Secondary considerations include earnings,  liquidity, and the overall
exposure to changes in interest rates.  The Company's net holdings of investment
securities  increased $3.7 million in 1997. The mortgage  backed  securities are
issues of the Federal Home Loan Mortgage  Corporation,  GNMA, and FNMA which pay
monthly amortized principal and interest payments.

Table 14 - Securities Available for Sale Portfolio
<TABLE>
                                                                                       Year Ended December 31
                                                                             1997              1996              1995
                                                                             ----              ----              ----
<S>                                                                      <C>                <C>               <C>
U. S. Treasury and U.S. Government Agencies.....................         $  39,176          $ 40,048          $ 38,584
State and politicial subdivisions...............................            19,604            15,880            16,312
Other...........................................................             3,013             2,143             2,379
                                                                        ----------         ---------         ---------
                                                                         $  61,793          $ 58,071          $ 57,275
                                                                         =========          ========          ========
</TABLE>

     Excluding those holdings of the investment  portfolio in U.S.  Treasury and
U.S.  Government Agency  Securities,  there were no investments in securities of
any one issuer which exceeded 10% of shareholders' equity.

Table 15 -   Schedule of  Maturities  of  Investment  Securities  and Weighted
             Average Yields

     The following is a schedule of maturities and their weighted  average yield
of each category of investment  securities as of December 31, 1997. The weighted
average interest rates have been computed on a fully taxable  equivalent  basis,
based on  amortized  cost.  The rates shown on  securities  issued by states and
political  subdivisions are stated on a taxable equivalent basis using a 34% tax
rate.

                                       23
<PAGE>
<TABLE>
                                                                        Maturing
                                                                 (Dollars in Thousands)
                                                                                                               Investments With
                          Due Within              One to                Five to               After             No Contractual
                           One Year             Five Years             Ten Years            Ten Years              Maturity
                     Estimated              Estimated             Estimated             Estimated             Estimated
                       Market      Avg.      Market       Avg.     Market       Avg.     Market      Avg.      Market      Avg.
                       Value       Yield      Value      Yield      Value      Yield      Value     Yield       Value     Yield
<S>                     <C>         <C>        <C>         <C>      <C>          <C>       <C>       <C>        <C>        <C>
Available for Sale:
U.S. Treasury
and U.S.
Government
Agencies                $      -         -     $   453     6.28%    $  7,373     6.70%     $31,350    6.74%     $      -        -
States and
Political
Subdivisions               2,458     9.53%       6,102     9.68%       6,394     7.79%       4,650    7.66%            -        -
Other Securities               -         -           -         -           -         -           -        -        3,013    7.11%
                         -------             ---------            ----------            ----------               -------
                          $2,458     9.53%      $6,555     9.43%     $13,767     7.20%     $36,000    6.86%       $3,013    7.11%
</TABLE>

Deposits

     Deposits are gathered from the communities the Bank serves, Lately the Bank
has  emphasized  relationship  marketing  to  reinforce  the core  nature of its
deposit base.

     Table 16  indicates a  relatively  stable base of deposits  spread over the
Bank's  product  lines.  Average total  deposits grew 4.2% from 1996 to 1997 and
grew 9.6% from 1995 to 1996.  The increase from 1995 to 1996 resulted  primarily
from the $10,000,000  deposits only  acquisition of the Moline Branch from First
of America  Bank.  The increase in 1997  resulted  primarily  in gaining  market
share.

     The Bank is  continually  enhancing  its  deposit  product.  In addition to
relationship  pricing the Bank has  instituted  telephone and personal  computer
banking as new alternatives to customer access. The Bank operates nine automated
teller machines, three of which are off-site.

Table 16 - Average Daily Deposits (in thousands)
<TABLE>
                                                                               Average for the Year
                                                      1997                          1996                          1995
                                             Amount       % of Assets      Amount       % of Assets      Amount       % of Assets
<S>                                           <C>              <C>        <C>             <C>           <C>             <C>
Noninterest bearing demand..............      $ 22,764         10%        $ 19,762              9%      $ 16,744            9%
NOW accounts............................        12,687          6           11,840              6         10,335            5
MMDA/Savings ...........................        51,240         22           50,236             23         47,416           25
Time....................................        90,180         40           87,885             41         80,319           41
                                             ---------        ----       ---------            ----     ---------           --
   Total Deposits.......................      $176,871         78%        $169,723             79%      $154,814           80%
                                              ========         ===        ========             ===      ========           ===
</TABLE>

                                       24
<PAGE>
Table 17 - Average Deposit Balances

     The  following  table  sets  forth the  average  deposit  balances  and the
weighted average rates paid thereon:
<TABLE>
                                                                                Average for the Year

                                                      1997                          1996                          1995
                                            Average         Average        Average        Average        Average        Average
                                            Balance          Rate          Balance         Rate          Balance         Rate
<S>                                           <C>            <C>           <C>             <C>           <C>            <C>
Noninterest bearing demand..............      $ 22,764                   $ 19,762                     $  16,744
NOW Accounts............................        12,687        2.44%        11,840           2.44%        10,335          2.43%
MMDA/Savings............................        51,240        3.16         50,236           3.11         47,416          3.46
Time....................................        90,180        5.69         87,885           5.99         80,319          5.50
                                             ---------       -----       --------          ------     ---------          ----
   Total Deposits.......................      $176,871        3.99%      $169,723           3.99%      $154,814          4.08%
                                              ========                   ========                      ========
</TABLE>

Table 18 - Maturity Distribution of Time Deposits of $100,000 Or More

     The following table summarizes time deposits in amounts of $100,000 or more
by time remaining until maturity as of December 31, 1997:
<TABLE>
                                                                           Amount
        <S>                                                               <C>
        Three months or less.............................                  $2,923
        Over 3 months through 6 months...................                   2,083
        Over 6 months through 1 year....................                    3,125
        Over 1 year......................................                   3,236
                                                                          -------
                                                                          $11,367
</TABLE>
     The Bank operates in a very competitive  environment.  Management  monitors
rates at other  financial  institutions  in the area to ascertain that its rates
are  competitive  with the  market.  Management  also  attempts  to offer a wide
variety  of  products  to meets  the  needs of its  customers.  The Bank  offers
business  and  consumer  checking  accounts,  regular and money  market  savings
accounts, and certificates having many options in their terms.

Market Risk

     The Bank complements its stable core deposit base with alternate sources of
funds,  which  includes  advances  from the Federal Home Loan Bank and on a very
limited  basis,  jumbo  certificates  of deposit  from  outside its market area.
Management  evaluates  the funding  needs and makes a decision  based on current
interest rates and terms whether to fund  internally or from alternate  sources.
To date, the Bank has not employed the use of derivative  financial  instruments
in managing the risk of changes in interest rates.

Capital

     A financial  institution's  capital ratio is looked upon by the  regulators
and the  public as an  indication  of its  soundness.  Table 19  summarizes  the
Company's  regulatory capital and its capital ratios. Also shown are the capital
requirements   established  by  the  regulatory   agencies  for  adequately  and
well-capitalized  institutions.  The Bank's strong  capital ratio puts it in the
best  classification  on which the FDIC bases its assessment  charge. As capital
ratios  continue  to  increase,   management  is  challenged  to  find  ways  to
effectively administer the Bank's resources.

     In 1997, the Company paid dividends totaling $3,115,620,  approximately 67%
of earnings. In 1996, the Company paid dividends of $942,389,  approximately 22%
of earnings,  and in 1995  dividends paid were  $750,891,  approximately  19% of
earnings.

                                       25
<PAGE>
     On February 2, 1998,  the Company paid a special $1.00 per share  dividend.
This is in addition to the anticipated  regular  dividends for 1998. The Company
will  still  remain in all the top  regulatory  categories  for  adequately  and
well-capitalized institutions after paying such dividends.

Table 19 - Capital Resources (in thousands)
<TABLE>
                                     Regulatory Requirements                            December 31

                                        Adequately          Well
                                       Capitalized       Capitalized          1997             1996             1995
                                                                              ----             ----             ----
<S>                                       <C>               <C>               <C>              <C>              <C>
Tier 1 capital.....................                                           $35,689          $34,566          $31,129
Tier 2 capital.....................                                             2,293            1,976            1,923
                                                                            ---------        ---------         --------
  Total qualifying capital.........                                           $37,982          $36,542          $33,052
                                                                              =======          =======          =======

Tier 1 leverage ratio..............             4%                5%           15.03%           15.97%           15.42%
Tier 1 risk-based capital..........             4%                6%           19.48%           21.92%           20.28%
Total risk-based capital...........             8%               10%           20.74%           23.18%           21.54%
</TABLE>

Asset/Liability Management

     The Bank's Asset/Liability Management committee ("ALCO") meets regularly to
evaluate  the Bank's  interest  rate  sensitivity  position,  address  issues of
liquidity,  and review the interest margin,  analyzing causes for changes in net
interest income.

     The Bank's  Asset/Liability  Policy provides that the one year gap position
will be plus or minus  25%.  During  1997,  the  Bank's  one  year gap  position
averaged a 8% negative gap.

     Management  was able to influence the gap by selling fixed rate  mortgages,
investments/sales  of available-  for-sale securities that met the criteria that
filled the gap position decided by the Asset/Liability Committee.

     The Company's sources of liquidity  include principal  payments received on
loans, maturing investment securities, sale of securities held in the "available
for sale" designation,  customer deposits,  borrowing from the Federal Home Loan
Bank of Indianapolis,  other bank borrowings,  Federal Funds and the issuance of
common stock.  The Company has ready access to significant  sources of liquidity
on  an  almost  immediate  basis.   Management   anticipates  no  difficulty  in
maintaining  liquidity  at levels  necessary  to conduct  the Bank's  day-to-day
business activity.

                                       26
<PAGE>
Table 20 - Asset/Liability Gap Position (in thousands)
<TABLE>
                                                                             December 31, 1997
                                                    0-3            4-12             1-5             5+
                                                   Months          Months           Years           Years           Total
Interest earning assets:
<S>                                                <C>            <C>            <C>              <C>             <C>
  Loans...................................         $56,031        $ 11,179       $  91,986        $  9,757        $168,953
  Securities..............................          11,652           6,182           9,182          34,777          61,793
  Loans held for sale.....................           1,346               0               0               0           1,346
                                                 ---------      ----------     -----------      ----------      ----------
  Total interest earning assets...........          69,029          17,361         101,168          44,534         232,092
                                                  --------        --------       ---------        --------       ---------
Interest bearing liabilities:
  Savings & NOW...........................         $21,498       $       0      $        0       $  43,178       $  64,676
  Time....................................          19,413          46,568          27,587               0          93,568
                                                  --------        --------        --------     -----------       ---------
  Total deposits..........................          40,911          46,568          27,587          43,178         158,244
  Other borrowings........................          13,958               0           6,000               0          19,958
                                                  --------      ----------        --------     -----------       ---------
   Total interest bearing liabilities.....          54,869          46,568          33,587          43,178         178,202
                                                  --------        --------        --------       ---------       ---------
Rate sensitivity gap and ratios:
  Gap for period..........................         $14,160       ($29,207)        $ 67,581        $  1,356
  Cumulative gap..........................          14,160        (15,047)          52,534          53,890
Ratio for period..........................           6.10%        (12.58)%           29.1%            .58%
Cumulative rate sensitive ratio...........            6.10          (6.48)           22.63           23.22
</TABLE>
     The savings and NOW accounts are  categorized in the above table based upon
the Bank's historical experience.

Impact of Inflation

     The  majority  of assets and  liabilities  of  financial  institutions  are
monetary in nature. Generally, changes in interest rates have a more significant
impact on earnings of the Bank than inflation. Although influenced by inflation,
changes  in rates do not  necessarily  move in  either  the  same  magnitude  or
direction as changes in the price of goods and services.  Inflation  does impact
the growth of total  assets,  creating a need to  increase  equity  capital at a
higher  rate to  maintain  an  adequate  equity to assets  ratio,  which in turn
reduces the amount of earnings available for cash dividends.

Year 2000

     Management  has  evaluated  the likely impact of the Year 2000 issue on the
operating  systems  of the  Company  and  the  Bank.  Based  on  its  continuing
evaluation,  Management does not anticipate material expenditures to ensure that
these systems are compliant.


                                       27
<PAGE>
              ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


O.A.K. FINANCIAL CORPORATION                             TABLE OF CONTENTS
       AND SUBSIDIARY

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



                                                                            PAGE

Independent Auditors' Report...........................................       29

Audited Consolidated Financial Statements

   Consolidated Balance Sheets.........................................       30

   Consolidated Statements of Income...................................       31

   Consolidated Statements of Changes in Stockholders' Equity..........       32

   Consolidated Statements of Cash Flows...............................       33

   Notes to Consolidated Financial Statements..........................    34-47


                                       28
<PAGE>
                          INDEPENDENT AUDITORS' REPORT




Board of Directors and Stockholders
O.A.K. Financial Corporation and Subsidiary
Byron Center, Michigan

We have audited the accompanying consolidated balance sheets of O.A.K. Financial
Corporation  and  Subsidiary  as of December 31, 1997 and 1996,  and the related
consolidated  statements  of income,  changes in  stockholders'  equity and cash
flows for each of the three years in the period ended  December 31, 1997.  These
consolidated  financial  statements are the  responsibility of O.A.K.  Financial
Corporation's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  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 O.A.K.  Financial
Corporation  and Subsidiary as of December 31, 1997 and 1996, and the results of
their  operations and their cash flows for each of the three years in the period
ended  December  31,  1997 in  conformity  with  generally  accepted  accounting
principles.

                                        /s/ Rehmann Robson, P.C.

Grand Rapids, Michigan
January 13, 1998

                                       29
<PAGE>
O.A.K. FINANCIAL CORPORATION                      CONSOLIDATED BALANCE SHEETS
     AND SUBSIDIARY
-------------------------------------------------------------------------------
<TABLE>
                                                                                             December 31
                                  ASSETS                                              1997                 1996
                                                                                      ----                 ----
<S>                                                                              <C>                  <C>
Cash and due from banks (Note 10)..........................................      $    5,367,937       $    6,399,085
Federal funds sold.........................................................                   -              400,000
                                                                                 --------------       --------------
Cash and cash equivalents..................................................           5,367,937            6,799,085
Available-for-sale securities - amortized cost of
   $60,999,414 - 1997 and $57,703,349 - 1996 (Notes 2, 7 and 8)............          61,792,674          58,071,403
Loans receivable, net (Notes 3 and 4)......................................         166,387,650          142,693,370
Loans held for sale........................................................           1,345,615            1,933,000
Accrued interest receivable................................................           1,513,146            1,453,398
Premises and equipment, net (Note 5).......................................           4,534,281            4,653,473
Other assets...............................................................           2,146,617            1,922,801
Total assets...............................................................      $  243,087,920       $  217,526,530
                                                                                 ==============       ==============

     LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits (Note 6)
Noninterest bearing........................................................      $   26,456,357       $   23,778,515
Interest bearing...........................................................         158,243,971          146,442,392
                                                                                 --------------       --------------
Total deposits.............................................................         184,700,328          170,220,907
Borrowed funds (Note 7)....................................................          11,300,000            2,800,000
Securities sold under agreements to repurchase (Note 8)....................           8,657,583            7,336,298
Other liabilities..........................................................           1,515,231            1,625,709
                                                                                 --------------       --------------
Total liabilities..........................................................         206,173,142          181,982,914
                                                                                 --------------       --------------
Stockholders' equity (Note 10)
Common stock, $1 par value; 2,000,000 shares authorized;
   1,000,000 shares issued and outstanding,
   (1,006,174 shares in 1996)..............................................           1,000,000            1,006,174
Additional paid-in capital.................................................           5,622,680            6,036,338
Retained earnings..........................................................          29,768,536           28,258,182
Net unrealized appreciation on available-for-sale securities (Note 2)......             523,562              242,922
                                                                                        -------              -------
Total stockholders' equity.................................................          36,914,778           35,543,616
                                                                                 --------------       --------------
Total liabilities and stockholders' equity.................................      $  243,087,920       $  217,526,530
                                                                                 ==============       ==============
</TABLE>
See accompanying notes.

                                       30
<PAGE>
O.A.K. FINANCIAL CORPORATION                        CONSOLIDATED STATEMENTS OF
       AND SUBSIDIARY                                         INCOME
-------------------------------------------------------------------------------
<TABLE>
                                                                           For the Years Ended December 31
                                                                    1997               1996                 1995
                                                                    ----               ----                 ----
<S>                                                             <C>                <C>                 <C>
Interest income
   Loans  ...............................................       $  14,858,954      $   13,922,548      $  13,209,731
   Available-for-sale securities (Note 2)................           3,697,712           3,445,883          2,951,342
   Federal funds sold....................................              67,073             133,136            107,543
                                                                -------------      --------------      -------------
Total interest income....................................          18,623,739          17,501,567         16,268,616
                                                                -------------      --------------      -------------
Interest expense
   Deposits (Note 6).....................................           7,058,031           6,770,126          6,311,550
   Borrowed funds........................................             314,015             137,212            168,952
   Securities sold under agreements to repurchase........             320,519             273,350            156,771
                                                                -------------      --------------      -------------
Total interest expense...................................           7,692,565           7,180,688          6,637,273
                                                                -------------      --------------      -------------
Net interest income......................................          10,931,174          10,320,879          9,631,343
Provision for possible loan losses (Note 4)..............              50,000                   -            275,000
                                                                -------------      --------------      -------------
Net interest income after provision for
   possible loan losses..................................          10,881,174          10,320,879          9,356,343
                                                                -------------      --------------      -------------
Noninterest income
   Service charges.......................................             527,099             529,471            491,654
   Net realized gain on sale of available-for-sale
     loans (Note 3)......................................             414,364             133,000            105,000
   Loan service fee......................................             203,295             180,837            158,632
   Net realized appreciation (depreciation) on sale
     of available-for-sale securities (Note 2)...........              66,190              13,071             (3,728)
   Other  ...............................................             331,126             218,562            167,657
                                                                -------------      --------------      -------------
Total noninterest income.................................           1,542,074           1,074,941            919,215
                                                                -------------      --------------      -------------
Noninterest expenses
   Salaries and employee benefits........................           3,028,338           2,649,626          2,169,657
   Occupancy.............................................             384,237             361,280            348,645
   Furniture and fixtures................................             512,896             483,930            439,594
   Michigan single business tax..........................             220,000             197,000            172,000
   Federal Deposit Insurance Corporation premium.........              26,726              17,096            175,622
   Other  ...............................................           1,609,277           1,459,596          1,205,573
                                                                -------------      --------------      -------------
Total noninterest expenses...............................           5,782,274           5,168,528          4,511,091
                                                                -------------      --------------      -------------
Income before federal income taxes.......................           6,640,974           6,227,292          5,764,467
Federal income taxes (Note 9)............................           2,015,000           1,852,000          1,760,000
                                                                -------------      --------------      -------------
Net income...............................................       $   4,625,974      $    4,375,292      $   4,004,467
                                                                =============      ==============      =============
Net income per share of common stock (Note 1)...........        $       4.60       $         4.35      $        3.98
                                                                =============      ==============      =============
</TABLE>
See accompanying notes.

                                       31
<PAGE>
O.A.K. FINANCIAL CORPORATION                      CONSOLIDATED STATEMENTS OF
      AND SUBSIDIARY                            CHANGES IN STOCKHOLDERS' EQUITY
-------------------------------------------------------------------------------
<TABLE>
                                                                                For the Years Ended
                                                                 1997                 1996                 1995
                                                                 ----                 ----                 ----
<S>                                                               <C>                  <C>                  <C>
Shares of common stock issued and outstanding
    Balance, beginning of year..........................          1,006,174             915,562              919,781
    Common stock dividends..............................                  -              91,522                    -
    Repurchases and retirements.........................             (6,174)               (910)              (4,219)
                                                             ---------------      --------------       --------------
    Balance, end of year................................          1,000,000           1,006,174              915,562
                                                             ==============       =============        =============
Common stock
    Balance, beginning of year..........................     $    1,006,174       $     915,562        $     919,781
    Common stock dividends..............................                  -              91,522                    -
    Repurchase and retirement of common shares..........             (6,174)               (910)              (4,219)
                                                             ---------------      --------------       --------------
    Balance, end of year................................          1,000,000           1,006,174              915,562
                                                             --------------       -------------        -------------
Additional paid-in-capital
    Balance, beginning of year..........................          6,036,338           6,084,056            6,296,964
    Repurchase and retirement of common shares..........           (413,658)            (47,718)            (212,908)
                                                             ---------------      --------------       --------------
    Balance, end of year................................          5,622,680           6,036,338            6,084,056
                                                             --------------       -------------        -------------
Retained earnings
    Balance, beginning of year..........................         28,258,182          24,916,801           21,663,225
    Net income..........................................          4,625,974           4,375,292            4,004,467
    Common stock dividends..............................                  -             (91,522)                   -
    Cash dividends......................................         (3,115,620)           (942,389)            (750,891)
                                                             ---------------      --------------       --------------
    Balance, end of year................................         29,768,536          28,258,182           24,916,801
                                                             --------------       -------------        -------------
Net unrealized gain (loss) on available-for-
 sale securities
    Balance, beginning of year..........................            242,922             642,450             (979,808)
    Change in net unrealized appreciation
       (depreciation) on available-for-sale
       securities.......................................            280,640            (399,528)           1,622,258
                                                             --------------       --------------       -------------
    Balance, end of year................................            523,562             242,922              642,450
                                                             --------------       -------------        -------------
Total stockholders' equity..............................     $   36,914,778       $  35,543,616        $  32,558,869
                                                             ==============       =============        =============
</TABLE>
See accompanying notes.

                                       32
<PAGE>
O.A.K. FINANCIAL CORPORATION                         CONSOLIDATED STATEMENTS OF
       AND SUBSIDIARY                                        CASH FLOWS
-------------------------------------------------------------------------------
<TABLE>
                                                                               For the Years Ended
                                                                 1997                 1996                 1995
                                                                 ----                 ----                 ----
<S>                                                               <C>                <C>                 <C>
Cash flows from operating activities:
   Net income...........................................    $     4,625,974      $    4,375,292       $    4,004,467
   Adjustments to reconcile net income to net
      cash provided by operating activities:
        Depreciation and amortization...................            459,915             441,655              404,823
        Provision for possible loan losses..............             50,000                   -              275,000
        Proceeds from sales of loans held
           for sale.....................................         20,981,500          21,917,000           16,760,358
        Originations of loans held for sale.............        (19,979,751)        (21,784,000)         (16,655,358)
        Net (gain) loss on sale of available-for-
           sale securities .............................            (66,190)            (13,071)               3,728
        Net gain on loans held for sale.................           (414,364)           (133,000)            (105,000)
        Net amortization of investment premiums.........            196,390             211,107              157,995
        Changes in operating assets and liabilities
           which provided (used) cash:
               Accrued interest receivable..............            (59,748)            116,746             (264,408)
               Other assets.............................           (223,816)           (104,533)            (134,744)
               Other liabilities........................            290,516            (147,407)             378,887
                                                            ---------------      ---------------      --------------
Net cash provided by operating activities...............          5,860,426           4,879,789            4,825,748
                                                            ---------------      --------------       --------------

Cash flows from investing activities:
   Available-for-sale securities
      Proceeds from maturities..........................         10,278,679           9,466,608            6,733,468
      Proceeds from sales...............................          7,445,638           3,159,555            5,219,981
      Purchases.........................................        (21,299,916)        (14,019,935)         (22,004,083)
   Net increase in loans held for investment............        (23,744,280)         (3,938,702)         (15,532,756)
   Purchases of premises and equipment..................           (335,955)           (477,122)            (973,899)
                                                            ----------------     ---------------      ---------------
Net cash used in investing activities...................        (27,655,834)         (5,809,596)         (26,557,289)
                                                            ----------------     ---------------      ---------------
Cash flows from financing activities:
   Net increase in non-interest bearing demand
      deposits, NOW accounts and savings deposits.......          3,256,194           8,792,535               31,924
   Net increase (decrease) in time deposits.............         11,223,227          (8,583,471)          18,905,500
   Net increase (decrease) in borrowed funds............          8,099,006           1,200,000           (1,400,000)
   Net increase in securities sold under agreements
      to repurchase.....................................          1,321,285           2,399,741            1,061,189
   Dividends paid.......................................         (3,115,620)           (942,389)            (750,891)
   Repurchase and retirement of common shares...........           (419,832)            (48,628)            (217,127)
                                                            ----------------     ---------------      ---------------
Net cash provided by financing activities...............         20,364,260           2,817,788           17,630,595
                                                            ---------------      --------------       --------------
Net (decrease) increase in cash and
   cash equivalents.....................................         (1,431,148)          1,887,981           (4,100,946)
Cash and cash equivalents, beginning of year............          6,799,085           4,911,104            9,012,050
                                                            ---------------      --------------       --------------
Cash and cash equivalents, end of year..................    $     5,367,937      $    6,799,085       $    4,911,104
                                                            ===============      ==============       ==============
</TABLE>
See accompanying notes.

                                       33
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
      AND SUBSIDIARY                                     FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


1.  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business - O.A.K.  Financial Corporation (the "Corporation")  through its wholly
owned  subsidiary,  Byron Center  State Bank (the "Bank")  provides a variety of
financial  services to individuals and businesses in the southern portion of the
greater Grand Rapids,  Michigan area through its seven branches located in Byron
Center, Jamestown, Cutlerville, Hudsonville, Grandville, Moline and Dorr. Active
competition,  principally from other commercial banks and credit unions,  exists
in all of the Bank's principal markets.  The Bank's results of operations can be
significantly  affected  by  changes in  interest  rates or changes in the local
economic environment.

The Bank's  primary  deposit  products  are  interest  and  noninterest  bearing
checking  accounts,  savings  accounts and time deposits and its primary lending
products are commercial loans, real estate mortgages, and consumer loans.

The Bank is a state chartered bank and a member of the Federal Deposit Insurance
Corporation's  ("FDIC")  Bank  Insurance  Fund.  The  Bank  is  subject  to  the
regulations and supervision of the FDIC,  Federal Reserve Bank and the Financial
Institutions  Bureau and undergoes  periodic  examinations  by these  regulatory
authorities (see Note 10).

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent  assets and liabilities at the date of the consolidated
financial  statements and the reported  amounts of revenues and expenses  during
the reporting  period.  Actual  results could differ from those  estimates.  The
estimates that are  particularly  susceptible to significant  change in the near
term relate to the  determination  of the allowance for possible loan losses and
the fair value of certain financial instruments.

Accounting  Policies - The  accounting  policies used in the  preparation of the
accompanying  consolidated  financial  statements conform to predominant banking
industry  practices and are based on generally accepted  accounting  principles.
The principles which materially  affect the  determination of the  Corporation's
financial position or results of operations are summarized as follows:

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Corporation
and the Bank. All significant  intercompany  accounts and transactions have been
eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash  equivalents  include  cash on hand,  amounts  due from  banks and
federal funds sold. Generally, federal funds are sold for a one-day period.

Available-For-Sale Securities

All  securities are  classified as  available-for-sale  and are recorded at fair
value. Unrealized appreciation and depreciation, net of the effect of applicable
income taxes,  on  available-for-sale  securities  are  recognized as a separate
component of stockholders'  equity.  Realized gains or losses on securities sold
are determined using the specific  identification method. Premiums and discounts
are recognized in interest  income using the interest  method over the period to
maturity.

Loans held for Investment and Related Income

Loans held for  investment  are stated at their  principal  amount  outstanding.
Interest  on loans is accrued  over the term of the loan based on the  principal
amount  outstanding.  Management  reviews  loans  delinquent  90 days or more to
determine if interest accrual should be discontinued based on the estimated fair
market value of the collateral on a present value basis, or the present value of
estimated future cash flows. Under Statement of Financial  Accounting  Standards
("SFAS")  No. 114 as amended by SFAS No. 118,  the  carrying  values of impaired
loans are periodically  adjusted to reflect cash payments,  revised estimates of
future cash flows, and increases in the present value of expected cash flows due
to the passage of time. Cash payments  representing interest income are reported
as such. Other cash payments are reported as reductions in carrying value, while
increases or decreased due to changes in estimates of future payments and due to
the passage of time are reported as reductions or increases in the provision for
loan losses.

Loan fees net of direct loan  origination  costs are deferred and  recognized as
interest income over the term of the loan using the constant yield method.

                                       34
<PAGE>
 O.A.K. FINANCIAL CORPORATION                           NOTES TO CONSOLIDATED
        AND SUBSIDIARY                                  FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
1.  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Mortgage Banking Activities

Loans held for sale are  carried  at the lower of  aggregate  amortized  cost or
market  value.  Lower of cost or market value  adjustments,  as well as realized
gains and losses,  are recorded in current earnings.  SFAS No. 122 as amended by
SFAS No. 125 requires  the Bank to  recognize  as separate  assets the rights to
service  mortgage  loans for others  that have been  acquired by purchase or the
origination  and  subsequent  sale of a loan with servicing  retained.  The fair
value of capitalized  originated  mortgage  servicing rights has been determined
based upon market value quotes for similar  servicing.  These mortgage servicing
rights are  amortized in proportion to and over the period of estimated net loan
servicing  income.  SFAS No.  125 also  requires  the  Bank to  assess  mortgage
servicing  rights for  impairment  based on the fair value of those rights.  For
purposes of  measuring  impairment,  the risk  characteristics  used by the Bank
include the underlying loans' interest rates, term of loan and loan types. Gains
and losses on the sale of loans, which are sold without recourse, are recognized
when  proceeds  from the loan sales are received by the Bank and are measured by
the  difference  between the net selling  price and the  carrying  value of such
loans.  The  impact  of  adopting  SFAS  Nos.  122 and 125 on the  Corporation's
consolidated financial position and results of operations was not material.

Mortgage  servicing rights are allocated between the loan (without the servicing
rights) and the servicing rights, based on their relative fair values. The costs
allocated  to mortgage  servicing  rights are  recorded as a separate  asset and
amortized in proportion to, and over the life of, the net servicing income.  The
carrying value of the mortgage  servicing  rights is periodically  evaluated for
impairment.  Impairment is recognized using the fair value of individual stratum
of servicing rights based on the underlying risk characteristics of the serviced
loan  portfolio,  compared to an aggregate  portfolio  approach  under  existing
accounting guidance.

Foreclosed Real Estate

Real estate  properties  acquired  through,  or in lieu of, loan foreclosure are
initially  recorded at fair value at the date of foreclosure  establishing a new
cost basis.

Allowance for Possible Loan Losses

An allowance for possible loan losses is recorded  because some loans may not be
repaid  in full.  The  allowance  is  increased  by a  provision  in the  income
statement and by recoveries  on loans  previously  charged off. The allowance is
decreased as loans are charged off. A  charge-off,  in whole or in part,  occurs
once a significant  probability of loss has been determined,  with consideration
given  to  such  factors  as  the  customer's  financial  condition,  underlying
collateral and guarantees. Collection efforts continue and future recoveries may
occur with respect to loans previously charged off.

Estimating  the risk of loss and the  amount of loss on any loan is  necessarily
subjective.  Management's  evaluation  of the  allowance is based upon  periodic
reviews of the loan  portfolios.  These reviews are performed by the responsible
lending  officers and internal loan review  personnel who consider,  among other
factors,  the  Bank's  past  loan  loss  experience,   the  effects  of  current
developments  with respect to the borrowers,  the estimated  value of underlying
collateral, changes in economic conditions, specific impaired loans, and results
of examinations by bank regulatory authorities.

In May 1993,  the  Financial  Accounting  Standards  Board  issued  Statement of
Financial  Accounting  Standards No. 114, Accounting by Creditors for Impairment
of a Loan (SFAS No.  114),  which was later  amended by  Statement  of Financial
Accounting  Standards  No. 118,  Accounting  by Creditors  for  Impairment  of a
Loan-Income Recognition and Disclosures (SFAS No. 118). These Standards, adopted
by the Corporation at January 1, 1995,  require that impaired loans, as defined,
be measured based on the present value of expected cash flows  discounted at the
loan's  effective  interest  rate or, as a  practical  expedient,  at the loan's
observable  market  price or at the  fair  value  of  collateral  if the loan is
collateral dependent. Under these standards, loans considered to be impaired are
reduced to the present value of expected  future cash flows or to the fair value
of collateral,  by allocating a portion of the allowance for loan losses to such
loans.  If these  allocations  cause the  allowance for loan losses to increase,
such increase is reported as additional provision for loan losses. The effect of
adopting  SFAS  Nos.  114  and  118 did not  have a  significant  impact  on the
consolidated financial position or results of operations of the Corporation.

                                       35
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                    FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

1.   BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)

Smaller-balance  homogeneous  loans are residential first mortgage loans secured
by one-to-four family residences,  residential  construction loans,  automobile,
home  equity  and  second  mortgage  loans and are  collectively  evaluated  for
impairment.   Commercial  loans  and  first  mortgage  loans  secured  by  other
properties  are  evaluated  individually  for  impairment.  Management  uses the
Corporation's normal credit analysis information, including delinquency reports,
non-accrual  listings and an internally  prepared  watch list, to identify loans
which should be evaluated for  impairment.  A loan is  considered  impaired when
management concludes it is probable that the borrower will not remit payments in
accordance  with the terms of the agreement.  Loans,  or portions  thereof,  are
charged off when deemed  uncollectible.  The nature of disclosures  for impaired
loans is considered generally comparable to prior nonaccrual,  past due, trouble
debt restructuring and nonperforming asset disclosures.

In management's  judgment,  the allowance for possible loan losses is maintained
at a level adequate to provide for estimated  potential  losses  inherent in the
loan portfolio.  However,  because of  uncertainties  inherent in the estimation
process,  it is possible  that the allowance for possible loan losses may change
in the near term.

Premises and Equipment

Premises  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation is computed using both the  straight-line  and accelerated  methods
over the related assets  estimated  useful lives which generally range from 5 to
39 years.  Maintenance,  repairs  and minor  alterations  are charged to current
operations  as  expenditures  occur  and  major  improvements  are  capitalized.
Management  annually  reviews these assets to determine  whether carrying values
have been impaired.

Net Income Per Share

Net income per share of common stock is  calculated on the basis of the weighted
average number of shares outstanding, which was approximately 1,005,000 in 1997,
1,007,000 in 1996 and 1,010,000 in 1995.  During 1997, the  Corporation  adopted
SFAS No. 128,  "Earnings  Per Share",  which  establishes  new standards for the
computation,  presentation,  and disclosure  requirements for earnings per share
("EPS"). Given the simple capital structure of the Corporation,  adoption of the
standard had no effect on the EPS  calculations and the restatement of prior EPS
data.

Federal Income Taxes

Income taxes are provided  for the tax effects of  transactions  reported in the
financial statements and consist of the taxes currently due plus deferred taxes.
Deferred  income taxes are  recognized  for  temporary  differences  between the
carrying amounts of assets and liabilities for financial  reporting purposes and
the  amounts  used for  income  tax  purposes.  Deferred  income  tax assets and
liabilities  represent the future tax return  consequences of those differences,
which will either be taxable or deductible  when the assets or  liabilities  are
recorded  or  settled.  As  changes  in income  tax laws or rates  are  enacted,
deferred income tax assets and  liabilities  are adjusted  through the provision
for income taxes.

The Corporation and its subsidiary file a consolidated federal income tax return
on a calendar year basis.

Reclassifications

Certain amounts as originally reported in the 1996 and 1995 financial statements
have been reclassified to conform to the 1997 presentation.

Issued But Not Yet Adopted Accounting Standards

In June 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
130,  "Reporting  Comprehensive  Income." The  statement  defines  comprehensive
income as "all  changes  in  equity  during a period,  with  exception  of stock
issuance and dividends."  The new  pronouncement  establishes  standards for the
disclosure  of  comprehensive   income  and  its  components  in  the  financial
statements.

Also in June 1997, the FASB issued SFAS No. 131,  "Disclosure  About Segments of
an  Enterprise  and Related  Information."  SFAS No. 131  requires  companies to
define and report  financial  and  descriptive  information  about its operating
segments.  It also establishes  standards for related disclosures about products
and services, geographic areas, and major customers.

Both  standards  will be adopted in 1998. The adoption of these new standards is
not expected to have a material impact on the Corporation's  financial  position
or results of operation.

                                       36
<PAGE>
O.A.K. FINANCIAL CORPORATION                           NOTES TO CONSOLIDATED
      AND SUBSIDIARY                                    FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

2.   AVAILABLE-FOR-SALE SECURITIES

The amortized cost, gross unrealized appreciation, gross unrealized depreciation
and  fair  value  of  investment  securities,  all of which  are  classified  as
available-for-sale as of December 31, are as follows:
<TABLE>
                                                                     Gross          Gross
                                                   Amortized      Unrealized     Unrealized          Fair
         1997                                        Cost        Appreciation   Depreciation         Value
         ----                                    ------------    ------------   ------------         -----
         <S>                                     <C>             <C>              <C>           <C>           
         U.S. Treasury, government
           agencies and corporations.........    $  38,998,513   $    349,221     $  172,346    $  39,175,388
         States and political subdivisions...       18,987,600        618,246          1,861       19,603,985
         Other...............................        3,013,301              -              -        3,013,301
                                                 -------------   ------------     ----------    -------------

         Total...............................    $  60,999,414   $    967,467     $  174,207    $  61,792,674
                                                 =============   ============     ==========    =============
         1996

         U.S. Treasury, government
           agencies and corporations.........    $  40,189,845   $    212,111     $  354,029    $  40,047,927
         States and political subdivisions...       15,369,629        520,170          9,910       15,879,889
         Other...............................        2,143,875              -            288        2,143,587
                                                 -------------   ------------     ----------    -------------
         Total...............................    $  57,703,349   $    732,281     $  364,227    $  58,071,403
                                                 =============   ============     ==========    =============
</TABLE>
At December 31, 1997,  the amortized  cost and fair value of  available-for-sale
securities by  contractual  maturity is shown below.  Expected  maturities  will
differ from contractual  maturities because borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
                                                                                 Amortized
                                                                                   Cost            Fair Value
         <S>                                                                  <C>                <C>
         Due in one year or less.........................................     $    2,435,636     $   2,457,531
         Due after one year through five years...........................          8,744,846         9,028,496
         Due after five years through ten years..........................         12,750,473        12,987,010
         Due after ten years.............................................          3,530,792         3,635,464
                                                                              --------------     -------------
         Subtotal........................................................         27,461,747        28,108,501
         Mortgage-backed securities......................................         33,537,667        33,684,173
                                                                              --------------     -------------
         Total...........................................................     $   60,999,414     $  61,792,674
                                                                              ==============     =============
</TABLE>
Investment  income from taxable and  nontaxable  securities  for the years ended
December 31, is as follows:
<TABLE>
                                                                   1997             1996              1995
                                                                   ----             ----              ----
         <S>                                                    <C>                <C>             <C>
         Taxable...........................................     $ 2,709,564       $ 2,523,572      $ 1,982,424
         Nontaxable........................................         988,148           922,311          968,918
                                                                -----------       -----------      -----------
         Total.............................................     $ 3,697,712       $ 3,445,883      $ 2,951,342
                                                                ===========       ===========      ===========
</TABLE>
                                       37
<PAGE>
O.A.K. FINANCIAL CORPORATION                              NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                     FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

2.   AVAILABLE-FOR-SALE SECURITIES (Concluded)

Proceeds from sales of available-for-sale  securities during 1997, 1996 and 1995
were  $7,445,638,  $3,159,555 and $5,219,981  respectively.  The gross gains and
gross losses realized on sales for the years ended December 31, are as follows:
<TABLE>
                                                                     1997             1996              1995
                                                                     ----             ----              ----
         <S>                                                      <C>               <C>              <C>
         Gross realized gains..............................       $  87,375         $  19,711        $  19,950
         Gross realized losses.............................         (21,185)           (6,640)         (23,678)
                                                                  ----------        ----------       ----------
         Net realized gain (loss) on sale of
              available-for-sale securities................       $  66,190         $  13,071        $  (3,728)
                                                                  =========         =========        ==========
</TABLE>
Investment  securities  with a carrying value of  approximately  $23,396,000 and
$14,404,000 at December 31, 1997 and 1996, respectively,  were pledged to secure
public  deposits and for various other purposes as required or permitted by law.
The fair value of these investments approximates carrying value.

3.   LOANS

The  Bank  grants  commercial,  consumer  and  residential  loans  to  customers
primarily in a fifteen mile radius of its  branches  which are located  south of
Grand Rapids, Michigan.  Substantially all of the consumer and residential loans
are secured by various  items of property,  while  commercial  loans are secured
primarily by business assets,  and personal  guarantees;  a portion of loans are
unsecured. The source of repayment of approximately 20% of the loan portfolio is
generated from cash flows from developers and owners of commercial real estate.

Major  classifications  of  loans  held for  investment  at  December  31 are as
follows:
<TABLE>
                                                                                1997                 1996
                                                                                ----                 ----
         <S>                                                               <C>                  <C>
         Commercial..................................................      $  26,379,822        $  27,451,855
         Commercial real estate......................................         90,004,939           72,280,315
         Residential real estate.....................................         38,885,996           33,443,275
         Consumer....................................................         13,682,323           11,893,895
                                                                           -------------        -------------
         Total loans receivable, net of deferred
             loan fees of $213,259 - 1997 and $309,351 - 1996........        168,953,080          145,069,340
         Less allowance for possible loan losses.....................          2,565,430            2,375,970
                                                                           -------------        -------------
         Loans receivable, net.......................................     $ 166,387,650         $ 142,693,370
                                                                          =============         =============
</TABLE>
At December 31, 1997, scheduled maturities of loans with fixed rates of interest
are as follows:
<TABLE>
         <S>                                                                         <C>
         One year or less.........................................................   $   15,805,568
         One to five years........................................................       91,986,459
         Over five years..........................................................        9,756,658
                                                                                     --------------
         Total  ..................................................................   $  117,548,685
                                                                                     ==============
</TABLE>
                                       38
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
      AND SUBSIDIARY                                      FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

3.  LOANS (Concluded)

Variable  rate loans of  $51,404,395  at December 31, 1997 reprice  quarterly or
more frequently.

The Bank  extends  loan  commitments  in the normal  course of  business to meet
financing needs of its customers.  These  commitments to make loans and lines of
credit are  recorded  when  proceeds  are  disbursed.  The Bank follows the same
credit policy to make such commitments, including collateral, as is followed for
those loans  recorded in the financial  statements;  no  significant  losses are
anticipated as a result of these commitments. At December 31, 1997, the Bank had
commitments  for standby  letters of credit of  approximately  $1,902,000,  loan
commitments outstanding of approximately $20,738,000 and unused credit lines and
revolving credit agreements of approximately $43,187,000.

Loans on which the accrual of  interest  has been  discontinued  and those loans
past due 90 days or more  amounted to $237,189  and  $1,194,007  at December 31,
1997 and 1996, respectively. Interest income that would have been recorded under
the original terms of such loans would have been approximately $3,000,  $201,000
and $102,000 for the years ended December 31, 1997, 1996 and 1995, respectively.

At December 31, 1997 and 1996, the Bank was servicing loans for others amounting
to approximately $93,000,000 and $82,000,000,  respectively;  such loans are not
included  in  the  accompanying  balance  sheets.  Servicing  loans  for  others
generally consists of collecting mortgage payments, maintaining escrow accounts,
disbursing  payments  to  investors  and  taxing  authorities,  and  foreclosure
processing.  Loan servicing  income is recorded on an accrual basis and includes
servicing fees from investors and certain charges collected from borrowers, such
as late payment fees.

Certain  directors,  executive  officers and their related  interests  were loan
customers of the Bank. All such loans were made on substantially the same terms,
including  interest rates and collateral,  as those  prevailing at the same time
for  comparable  transactions  and do not  represent  more than a normal risk of
collectibility   or  present  other  unfavorable   features.   The  total  loans
outstanding  to  these  customers   aggregated   approximately   $5,615,000  and
$2,738,000 at December 31, 1997 and 1996, respectively; new loans and repayments
during 1997 were approximately $3,341,000 and $464,000, respectively.


4.   ALLOWANCE FOR POSSIBLE LOAN LOSSES

The  following  is an analysis of changes in the  allowance  for  possible  loan
losses for the years ended December 31:
<TABLE>
                                                                     1997             1996              1995
                                                                     ----             ----              ----
         <S>                                                     <C>               <C>              <C>
         Balance, beginning of year..........................    $  2,375,970      $  2,304,848     $  2,055,554
         Provision for possible loan losses..................          50,000                 -          275,000
         Recoveries..........................................         263,109           249,854           74,053
         Loans charged off...................................        (123,649)         (178,732)         (99,759)
                                                                 -------------     -------------    -------------
         Balance, end of year................................    $  2,565,430      $  2,375,970     $  2,304,848
                                                                 ============      ============     ============
</TABLE>
                                       39
<PAGE>
O.A.K. FINANCIAL CORPORATION                              NOTES TO CONSOLIDATED
        AND SUBSIDIARY                                    FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

4.   ALLOWANCE FOR POSSIBLE LOAN LOSSES (Concluded)

Information  regarding  impaired loans is as follows for the year ended December
31:
<TABLE>
                                                                                    1997             1996
                                                                                    ----             ----
         <S>                                                                       <C>               <C>
         Balance of impaired loans at year-end.....................................$    478,250      $ 1,079,602
         Allowance for loan losses allocated
           to the impaired loan balance............................................      47,716           75,000
         Average investment in impaired loans......................................     620,890          847,835
         Interest income recognized on impaired loans (no
           interest income was recognized on the cash basis) ......................      42,940           14,456
</TABLE>

5.   PREMISES AND EQUIPMENT

A summary of premises and equipment at December 31 follows:
<TABLE>
                                                                                1997                  1996
                                                                                ----                  ----
         <S>                                                               <C>                   <C>
         Land                                                              $     880,376         $     880,376
         Buildings and improvements                                            4,369,850             4,355,846
         Furniture and equipment                                               2,760,477             2,479,124
                                                                           -------------         -------------
         Total premises and equipment                                          8,010,703             7,715,346
         Less accumulated depreciation                                         3,476,422             3,061,873
                                                                           -------------         -------------
         Premises and equipment, net                                       $   4,534,281         $   4,653,473
                                                                           =============         =============
</TABLE>
6.   DEPOSITS

The following is a summary of the distribution of deposits at December 31:
<TABLE>
                                                                                 1997                 1996
                                                                                 ----                 ----
         <S>                                                              <C>                  <C>
         Interest bearing
             NOW accounts............................................     $   13,114,691       $   12,381,650
             Savings.................................................         31,576,744           30,514,376
             Money market demand.....................................         19,984,192           21,201,249
             Time, $100,000 and over.................................         11,367,451            6,768,833
             Other time..............................................         82,200,893           75,576,284
                                                                          --------------       --------------
         Total interest bearing......................................        158,243,971          146,442,392
         Noninterest bearing demand..................................         26,456,357           23,778,515
                                                                          --------------       --------------
         Total deposits..............................................     $  184,700,328       $  170,220,907
                                                                          ==============       ==============
</TABLE>
                                       40
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                    FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


6.   DEPOSITS (Concluded)

At December 31, 1997, scheduled maturities of time deposits are as follows:
<TABLE>
         <S>                                                               <C>
         1998   .....................................................      $  65,980,464
         1999   .....................................................         15,484,389
         2000   .....................................................         10,057,027
         2001   .....................................................            638,832
         2002   .....................................................          1,407,632
                                                                           -------------
         Total time deposits.........................................      $  93,568,344
                                                                           =============
</TABLE>

Deposits of Bank directors,  executive officers and their related interests were
approximately   $1,127,000  and  $1,282,000  at  December  31,  1997  and  1996,
respectively.  Interest  expense on time  deposits  issued in  denominations  of
$100,000  or more  was  approximately  $520,000  in 1997,  $270,000  in 1996 and
$227,000 in 1995.


7.   BORROWED FUNDS

Borrowed funds at December 31, consist of the following amounts:
<TABLE>
                                                                              1997                1996
                                                                              ----                ----
         <S>                                                                <C>                 <C>
         Federal funds purchased.....................................       $  3,300,000        $  1,300,000
         Federal Home Loan Bank advances.............................          6,000,000           1,500,000
         Treasury tax and loan note option...........................          2,000,000             400,994
                                                                            ------------        ------------
         Total borrowed funds........................................       $ 11,300,000        $  3,200,994
                                                                            ============        ============
</TABLE>

Federal funds are generally  purchased  for a one-day  period.  The Federal Home
Loan Bank borrowings are  collateralized  by U.S.  government  agency securities
with a fair value of  approximately  $6,892,000  and  $1,954,000 at December 31,
1997 and 1996, respectively. The Federal Home Loan Bank advances at December 31,
1997 are comprised of three $2,000,000 advances with an average interest rate of
6.13%.  Two of the  advances  are due in  December  1999 with the third due July
2000. The Federal Home Loan advance at December 31, 1996 is a $1,500,000 advance
with an interest rate of 5.92%.

The  Treasury  Tax and Loan Note  option is  collateralized  by U.S.  Government
agency  securities with a fair value of approximately  $2,822,000 and $1,286,000
at December  31, 1997 and 1996,  respectively.  The  Treasury  Tax and Loan Note
option is a daily borrowing with the Federal Reserve Bank, due on demand,  at 25
basis points below the national  federal fund  interest  rate (5.25% at December
31, 1997).


8.   SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities  sold under  agreements  to  repurchase at December 31, 1997 and 1996
mature  within one day from the  transaction  date and have an average  interest
rate of 3.93% and 3.6%,  respectively.  The U.S.  government  agency  securities
underlying the agreements  have a fair value of  approximately  $13,573,000  and
$11,164,000 at December 31, 1997 and 1996, respectively.  Such securities remain
under the control of the Bank. The maximum  amount  outstanding at any month end
during the years ended December 31, 1997 and 1996 was $9,661,240 and $9,131,354,
respectively  with the daily average  balance being  $8,157,784 and  $7,524,513,
respectively.

                                       41
<PAGE>
O.A.K. FINANCIAL CORPORATION                            NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                   FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


9.  FEDERAL INCOME TAXES

    The  provision  (benefit)  for  federal  income  taxes for the  years  ended
December 31 consists of:
<TABLE>
                                                              1997                1996               1995
                                                              ----                ----               ----
         <S>                                               <C>                <C>                <C>
         Current.....................................      $  1,953,700       $  1,859,000       $  1,725,000
         Deferred....................................            61,300             (7,000)            35,000
                                                           ------------       -------------      ------------
         Federal income taxes........................      $  2,015,000       $  1,852,000       $  1,760,000
                                                           ============       ============       ============
</TABLE>
      A  reconciliation  of the income tax provision and the amount  computed by
      applying the  statutory  federal  income tax rate of 34% to income  before
      taxes for the years ended December 31, is as follows:
<TABLE>
                                                              1997                1996               1995
                                                              ----                ----               ----
         <S>                                               <C>                <C>                <C>
         Statutory rate applied to
             income before income taxes..............      $  2,257,829       $  2,117,279       $  1,959,919
         Effect of tax-exempt interest
             income..................................          (355,031)          (294,221)          (308,941)
         Change in valuation allowance...............            64,000             25,000            110,000
         Other - net.................................            48,202              3,942               (978)
                                                            -----------       ------------       -------------
         Federal income taxes........................      $  2,015,000       $  1,852,000       $  1,760,000
                                                           ============       ============       ============
</TABLE>
     The net  deferred  income  tax  asset  (liability)  as of  December  31, is
     comprised of the tax effect of the following temporary differences:
<TABLE>
                                                                                 1997                 1996
                                                                                 ----                 ----
         <S>                                                                 <C>                  <C>         
         Deferred tax assets:
             Allowance for possible loan losses......................        $   770,000          $   706,000
             Deferred compensation plan..............................            224,000              187,000
             Deferred loan fees......................................              7,000               28,000
                                                                             -----------          -----------
         Total deferred tax assets...................................          1,001,000              921,000
                                                                             -----------          -----------
         Deferred tax liability:
             Discount accretion......................................            (19,000)             (14,000)
             Deferred loan servicing.................................            (72,000)                   -
                                                                             ------------         -----------
         Total deferred tax liabilities..............................            (91,000)             (14,000)
                                                                             ------------         ------------
         Valuation allowance.........................................           (719,000)            (655,000)
                                                                             ------------         ------------
         Net deferred tax assets entering into the determination of
           the provision for federal income taxes....................            191,000              252,000
         Additional deferred tax liability related to
             the net unrealized gain on available-for-sale
             securities..............................................           (270,000)            (125,000)
                                                                             ------------         ------------
         Net deferred tax (liability) asset included in other
           (liabilities) assets on the accompanying balance sheet....        $   (79,000)         $   127,000
                                                                             ============         ===========
</TABLE>

                                       42
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                    FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


10.    REGULATORY MATTERS

The Bank is subject to various regulatory capital  requirements  administered by
its primary regulator, the Federal Reserve Bank ("FRB"). Failure to meet minimum
capital requirements can initiate certain mandatory and/or discretionary actions
by the FRB. These actions could have a material  effect on the Bank's  financial
statements.  Under FRB capital adequacy guidelines and the regulatory  framework
for prompt  corrective  action,  the Bank must meet specific capital  guidelines
that involve quantitative  measures of the Bank's assets,  liabilities,  certain
off- balance-sheet  items and capital as calculated under regulatory  accounting
standards. The Bank's required capital is also subject to regulatory qualitative
judgment  regarding  the Bank's  interest  rate risk  exposure  and credit risk.
Measurements  established by regulation to ensure capital  adequacy  require the
Bank to maintain minimum ratios of total capital to risk weighted assets, Tier 1
capital to risk weighted assets and Tier 1 capital to average assets. Management
believes,  as of December  31,  1997,  that the Bank meets all capital  adequacy
requirements to which it is subject.

As of December 31, 1997, the most recent  notification  from the FRB categorized
the  Bank  as  well  capitalized  under  the  regulatory  framework  for  prompt
corrective  action.  To remain  categorized as well  capitalized,  the Bank must
maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios
as set forth in the  following  table.  The Bank's  actual  capital  amounts and
ratios  are  presented  in  the  table  (dollars  in  thousands).  There  are no
conditions or events since the most recent notification that management believes
has changed the Bank's category.
<TABLE>
                                                                                               To Be Well
                                                                                               Capitalized Under
                                                                     For Capital            Prompt Corrective
                                           Actual               Adequacy Purposes           Action Provisions
                                    Amount        Ratio          Amount         Ratio       Amount        Ratio
<S>                                <C>            <C>            <C>            <C>        <C>           <C>   
As of December 31, 1997
Total capital (to
  risk weighted assets)........    $ 36,147         19.93%     $  14,629        >=8.0%    $  18,287      >=10.0%
Tier 1 capital (to
  risk weighted assets)........    $ 33,880         18.68%     $   7,256        >=4.0%    $  10,884      >=6.0%
Tier 1 capital (to
  average assets) .............    $ 33,880         14.13%     $   9,591        >=4.0%    $  11,989      >=5.0%


As of December 31, 1996
Total capital (to
  risk weighted assets)........    $ 35,714         22.77%     $  12,548        >=8.0%    $  15,685      >=10.0%
Tier 1 capital (to
  risk weighted assets)........    $ 33,753         21.52%     $   6,274        >=4.0%    $   9,411      >=6.0%
Tier 1 capital (to
  average assets) .............    $ 33,753         15.45%     $   9,593        >=4.0%    $  11,991      >=5.0%
</TABLE>

The Bank is required to deposit  certain  amounts with the Federal Reserve Bank.
These  reserve  balances  vary  depending  upon the  level of  certain  customer
deposits in the Bank.  At December  31, 1997 and 1996,  those  required  reserve
balances were $986,000 and $912,000, respectively.

The Bank is also  subject to  limitations  under the Federal  Reserve Act on the
amount  of loans  or  advances  that  can be  extended  to the  Corporation  and
dividends  that can be paid to the  Corporation.  Approval  is  needed  if total
dividends  declared in any calendar  year exceed the  retained  "net profit" (as
defined in the Federal  Reserve Act) of that year plus the retained "net profit"
of the preceding two years.  The amount that was not subject to this restriction
is approximately $7,300,000 at January 1, 1998.

                                       43
<PAGE>
O.A.K. FINANCIAL CORPORATION                            NOTES TO CONSOLIDATED
       AND SUBSIDIARY                                   FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


11.    RETIREMENT PLANS

Profit Sharing - The Bank maintains a profit sharing plan for  substantially all
employees. Under the plan, employees may make voluntary contributions based on a
percentage  of  covered  compensation.  The plan also  allows  the Bank,  at the
discretion of the Board of  Directors,  to provide an annual  contribution.  The
Bank's  contributions  to the profit sharing plan were $203,055,  $191,459,  and
$151,102 for the years ended December 31, 1997, 1996 and 1995, respectively.

Deferred  Compensation - The Bank sponsors a deferred  compensation plan for all
directors who wish to  participate.  The projected  benefit  obligation for this
plan was $659,448  and $549,778 as of December 31, 1997 and 1996,  respectively,
and is included in other  liabilities.  The Bank has  purchased  life  insurance
policies on participating directors.

12.    CONTINGENCIES

The Bank is party to litigation arising in the normal course of business. In the
opinion of management,  based on  consultation  with legal counsel,  liabilities
from  such  litigation,  if  any,  would  not  have  a  material  effect  on the
Corporation's consolidated financial statements.

As a result of acquiring real estate from foreclosure  proceedings,  the Bank is
subject  to  potential   claims  and  possible   legal   proceedings   involving
environmental matters. No such claims have been asserted at December 31, 1997.

13.    FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation utilized quoted market prices,  where available,  to compute the
fair value of its  financial  instruments.  In cases where quoted  market prices
were not  available,  the Bank used present  value  methods to estimate the fair
values  of  its  financial  instruments.  These  estimates  of  fair  value  are
significantly  affected  by  the  assumptions  made  and,  accordingly,  do  not
necessarily  indicate  amounts  which  could be  realized  in a  current  market
exchange.  The fair values of certain financial instruments and all nonfinancial
instruments including, among other elements, the estimated earning power of core
deposit accounts, the trained workforce, customer goodwill and similar items are
not required to be  determined.  Accordingly,  the aggregate net fair values are
not necessarily indicative of the underlying value of the Bank.

The following methods and assumptions were used by the Corporation in estimating
the fair value disclosures for financial instruments:

Cash and Cash  Equivalents - The carrying amounts reported in the balance sheets
for cash and federal funds sold approximate those assets' fair values.

Investment  Securities  - Fair  values for  investment  securities  are based on
quoted market prices.

Loans  Receivable - For variable rate loans that reprice  frequently and with no
significant change in credit risk, fair values approximate  carrying values. The
fair values for other loans are estimated  using  discounted cash flow analysis,
using  interest  rates  currently  being offered for loans with similar terms to
borrowers  of similar  credit  quality.  The  resulting  amounts are adjusted to
estimate  the effect of  declines,  if any, in the credit  quality of  borrowers
since the loans were originated.

Loans Held for Sale - The fair value of loans held for sale,  including the fair
value of associated mortgage servicing rights, is estimated based on the present
value of estimated  future cash flows of the loan and related  servicing  rights
using a discount rate commensurate with the risks associated with the respective
financial instruments.

Deposit  Liabilities  - The fair values  disclosed  for demand  deposits  (e.g.,
interest and noninterest checking,  passbook savings, and money market accounts)
are, by definition,  equal to the amount  payable on demand.  The fair values of
approximately  52% and 47% of the Bank's deposits at December 31, 1996 and 1995,
respectively  were equal to their  carrying  values.  Fair values for fixed rate
time deposits and other time deposits  with stated  maturities  are based on the
discounted value of contractual cash flows, using interest rates currently being
offered for deposits of similar remaining maturities.

Securities  Sold Under  Agreements to  Repurchase  Fair value  approximates  the
carrying value since the majority of these  instruments were entered into at our
near December 31, 1997 and 1996.

Borrowed Funds - The carrying  amount is a reasonable  estimate of fair value of
other  borrowings  as these  financial  instruments  are tied to  floating  rate
indices such as prime and LIBOR, and reprice frequently.

                                       44
<PAGE>
O.A.K. FINANCIAL CORPORATION                             NOTES TO CONSOLIDATED
      AND SUBSIDIARY                                     FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


13.    FAIR VALUES OF FINANCIAL INSTRUMENTS (Concluded)

Off-Balance-Sheet  Instruments - Commitments to extend credit were evaluated and
fair value was estimated using the fees currently  charged to enter into similar
agreements,  taking into account the remaining  terms of the  agreements and the
present  credit   worthiness  of  the   counterparties.   For  fixed-rate   loan
commitments,  fair value also considers the difference between current levels of
interest  rates and the  committed  rates.  As the Bank does not charge fees for
lending  commitments,  it is not practicable to estimate the fair value of these
instruments.

The estimated  fair values of the Bank's  financial  instruments at December 31,
are as follows:
<TABLE>
                                                                              Carrying               Fair
                                                                               Amount                Value
                1997
         <S>                                                               <C>                   <C>
         Financial assets:
            Cash and cash equivalents.................................    $     5,367,937       $    5,367,937
            Available-for-sale securities.............................         61,792,674           61,792,674
            Loans receivable, net.....................................        166,387,650          168,077,719
            Loans held for sale.......................................          1,345,615            1,345,615
            Accrued interest receivable...............................          1,513,146            1,513,146
         Financial liabilities:
            Deposits..................................................        184,700,328          185,197,789
            Borrowed funds............................................         11,300,000           11,314,409
            Securities sold under agreements
                to repurchase.........................................          8,657,583            8,657,583
            Other liabilities.........................................          1,515,231            1,515,231

                1996

         Financial assets:
            Cash and cash equivalents.................................    $     6,799,085       $    6,799,085
            Available-for-sale securities.............................         58,071,403           58,071,403
            Loans receivable, net.....................................        142,693,370          144,692,000
            Loans held for sale.......................................          1,933,000            1,933,000
            Accrued interest receivable...............................          1,453,398            1,453,398
         Financial liabilities:
            Deposits..................................................        170,220,907          170,700,000
            Borrowed funds............................................          2,800,000            2,802,000
            Securities sold under agreements
                to repurchase.........................................          7,336,298            7,336,298
            Other liabilities.........................................          1,625,709            1,625,709
</TABLE>
                                       45
<PAGE>
O.A.K. FINANCIAL CORPORATION                              NOTES TO CONSOLIDATED
      AND SUBSIDIARY                                      FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


14.    SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Cash paid for interest  and income taxes during the years ended  December 31, is
as follows:
<TABLE>
                                                               1997                 1996                1995
                                                               ----                 ----                ----
             <S>                                            <C>                  <C>                <C>
             Interest................................       $  7,583,946         $  7,216,223       $  6,475,906
                                                            ============         ============       ============
             Income taxes............................       $  1,941,029         $  1,916,713       $  1,683,171
                                                            ============         ============       ============
</TABLE>

15.  SUBSEQUENT EVENT

Effective  January 22, 1998,  the Board of Directors  declared a $1.00 per share
dividend.

16.  O.A.K. FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL
     INFORMATION

The following summarizes parent company financial information as of December 31,
1997 and 1996 and the related condensed  statements of income and cash flows for
each of the three years in the period ended December 31, 1997:
<TABLE>
                                            Condensed Balance Sheets
                                                                                    1997               1996
                                                                                    ----               ----
         <S>                                                                  <C>                  <C>
         Assets
           Cash..........................................................     $         2,734     $        6,418
           Investment in subsidiary......................................          35,107,243         34,743,670
           Available-for-sale securities.................................           1,804,801            793,528
                                                                              ---------------     --------------
         Total assets....................................................     $    36,914,778     $   35,543,616
                                                                              ===============     ==============
         Stockholders' equity............................................     $    36,914,778     $   35,543,616
                                                                              ===============     ==============
</TABLE>
                                         Condensed Statements of Income
<TABLE>
                                                               1997                 1996                1995
                                                               ----                 ----                ----
       <S>                                                 <C>                  <C>                 <C>
       Income
         Dividends from subsidiary......................   $   4,543,040        $   1,211,471      $   1,375,539
         Interest from available-for-sale securities....          38,876               22,232             10,126
                                                           -------------        -------------      -------------
       Total income.....................................       4,581,916            1,233,703          1,385,665
       Other expenses...................................          38,876               22,232             10,126
                                                           -------------        -------------      -------------
       Income before equity in undistributed net
         income of subsidiary...........................       4,543,040            1,211,471          1,375,539
       Equity in undistributed net income of
         subsidiary.....................................          82,934            3,163,821          2,628,928
                                                           -------------        -------------      -------------
       Net income.......................................   $   4,625,974        $   4,375,292      $   4,004,467
                                                           =============        =============      =============
</TABLE>
                                       46
<PAGE>
O.A.K. FINANCIAL CORPORATION                          NOTES TO CONSOLIDATED
     AND SUBSIDIARY                                   FINANCIAL STATEMENTS
-------------------------------------------------------------------------------


16.    O.A.K. FINANCIAL CORPORATION (PARENT COMPANY ONLY) FINANCIAL
       INFORMATION (CONTINUED)
<TABLE>
                                       Condensed Statements of Cash Flows

                                                               1997                 1996               1995
                                                               ----                 ----               ----
       <S>                                                 <C>                  <C>                <C>
       Cash flows from operating activities:
         Net income....................................    $   4,625,974        $   4,375,292      $   4,004,467
         Adjustments to reconcile net income
           to net cash from operating activities:
             Undistributed earnings of subsidiary......          (82,934)          (3,163,821)        (2,628,928)
                                                           --------------          -----------        -----------
       Net cash provided by operating
         activities....................................        4,543,040            1,211,471          1,375,539
                                                           -------------        -------------      -------------
       Cash flows from investing activities:
         Available-for-sale securities purchased.......       (1,011,272)            (220,453)          (407,521)
                                                           --------------       --------------     --------------
       Cash flows from financing activities:
         Repurchase and retirement of common
           shares......................................         (419,832)             (48,628)          (217,127)
         Dividends paid................................       (3,115,620)            (942,389)          (750,891)
                                                           --------------       --------------     --------------
       Net cash used in financing activities...........       (3,535,452)            (991,017)          (968,018)
                                                           --------------       --------------     --------------
       Net (decrease) increase in cash and cash
         equivalents...................................           (3,684)                   1                  -
       Cash and cash equivalents,
         beginning of year.............................            6,418                6,417              6,417
                                                           -------------        -------------      -------------
       Cash and cash equivalents,
         end of year...................................    $       2,734        $       6,418      $       6,417
                                                           =============        =============      =============
</TABLE>
                                       47
<PAGE>
Item 9.  Changes in and Disagreements with Accountants on Accounting and 
         Financial Disclosure.

    None


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant.

Directors

     The  information  with respect to Directors and Nominees of the Registrant,
set forth under the caption  "Information About Directors and Nominees" on pages
4 through 5 of the  Company's  definitive  proxy  statement,  as filed  with the
Commission  and dated  March 20,  1998,  relating  to the April 16,  1998 Annual
Meeting of Shareholders, is incorporated herein by reference.

Executive Officers

     The information called for by this item is contained in Part I of this Form
10-K Report.

Item 11.  Executive Compensation.

     The  information  set  forth  under  the  caption  "Executive  Compensation
Summary" on page 6 of the Company's  definitive proxy  statement,  as filed with
the Commission  and dated March 20, 1998,  relating to the April 16, 1998 Annual
Meeting of Shareholders, is incorporated herein by reference.  Information under
the caption "Committee Report on Executive Compensation" on pages 5 and 6 of the
definitive  proxy statement is not  incorporated by reference  herein and is not
deemed to be filed with the Securities and Exchange Commission.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

     The  information  set  forth  under  the  caption  "Voting  Securities  and
Beneficial  Ownership of Management" on page 3 of the Company's definitive proxy
statement,  as filed with the Commission  and dated March 20, 1998,  relating to
the April 16, 1998 Annual Meeting of  Shareholders,  is  incorporated  herein by
reference.

Item 13.  Certain Relationships and Related Transactions.

     The information set forth under the caption "Certain  Transactions" on page
6 of the Company's definitive proxy statement,  as filed with the Commission and
dated  March 20,  1998,  relating  to the  April  16,  1998  Annual  Meeting  of
Shareholders, is incorporated herein by reference.


                                       48
<PAGE>
Item 14.  Exhibits, Financial Statement Schedules and Report on Form 8-K.

(a)    1.    Financial Statements

       Independent Auditors' Report
       Consolidated Financial Statements
            Consolidated Balance Sheet for the Two Years Ended
         December 31, 1997 and 1996
            Consolidated Statements of Income for the Three Years Ended
         December 31, 1997, 1996 and 1995
            Consolidated  Statements of Changes in  Stockholders  Equity for the
         Three Years Ended December 31, 1997, 1996 and 1995
            Consolidated  Statements  of Cash  Flows for the Three  Years  Ended
         December 31, 1997, 1996 and 1995
            Notes to Consolidated Financial Statements

    2. Financial Statement Schedules
       Not applicable

    3. Exhibits  (Numbered in accordance  with Item 601 of  Regulation  S-K) The
       Exhibit Index is located on the final page of this report on Form 10-K.

(b)    Reports on Form 8-K

    No  reports on Form 8-K were  filed  during  the fourth  quarter of the year
ended December 31, 1997.



                                      49
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, dated March 20, 1998.

                                    O.A.K. FINANCIAL CORPORATION

             
                                    /s/John A. Van Singel
                                    John A. Van Singel
                                    President, Chief Executive Officer
                                    (Principal Executive Officer)

                                    /s/Martin S. Braun
                                    Martin R. Braun
                                    (Principal Financial and Accounting Officer)


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed by the following  persons on behalf of the Registrant and
in the capacities and on the dates  indicated.  Each director of the Registrant,
whose signature appears below,  hereby appoints David G. Van Solkema and John A.
Van Singel, and each of them severally, as his or her attorney-in-fact,  to sign
in his or her name and on his or her behalf,  as a director  of the  Registrant,
and to file with the  Commission  any and all  Amendments to this Report on Form
10-K.

       Signature                                                     Date

/s/ Robert Deppe                                               March 20, 1998
Robert Deppe

/s/ Norman Fifelski                                            March 20, 1998
Norman Fifelski

/s/Dellvan Hoezee                                              March 20, 1998
Dellvan Hoezee

/s/Barnard Hull                                                March 20, 1998
Bernard Hull

/s/Lois Smalligan                                              March 20, 1998
Lois Smalligan

/s/John A. Van Singel                                          March 20, 1998
John A. Van Singel

/s/David Van Solkema                                           March 20, 1998
David Van Solkema

/s/Gerald Williams                                             March 20, 1998
Gerald Williams


                                       50
<PAGE>
                                  EXHIBIT INDEX

     The  following  exhibits  are  filed  herewith,  indexed  according  to the
applicable assigned number:

Exhibit
Number                                                                     Page
                                                                       

(21)   Subsidiaries of Registrant.......................................

(27)   Financial Data Schedule..........................................


     The  following  exhibits,  indexed  according  to the  applicable  assigned
number,  were  previously  filed  by the  Registrant  and  are  incorporated  by
reference in this Form 10-K Annual Report.

Exhibit
Number                                             Original Filing Form and Date

3.1 Articles of Incorporation of the Registrant    Exhibit 3.1 of Form 10, filed
                                                   in 1997 ("Form 10")

3.2 Bylaws of the Registrant                       Exhibit 3.2 of Form 10

4.  Form of Registrant's Stock Certificate         Exhibit 4 of Form 10

    Material Contracts:

10  1988 Director Deferred Compensation Plan       Exhibit 10 to From 10



                                       51
<PAGE>
Exhibit 21 - Subsidiairies of Registrant

    Byron Center State Bank - 100% owned
    2445 84th Street, S.W.
    Byron Center, MI  49315



                                       52