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, 2003

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
000-22461

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

|MICHIGAN
(State of other jurisdiction of
incorporation or organization) | 38-2817345
(I.R.S. Employer
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 S-K is not contained herein, and
will not be contained, to the best of Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [X].

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12-b-2). Yes [___] No
[X].

State the aggregate market value of
the voting and nonvoting common equity held by non-affiliates of the registrant computed
by reference to the price at which the common equity was sold, or the average bid and
asked prices of such common equity, as of the last business day of the registrants
most recently completed second quarter.

Aggregate Market Value
as of June 30, 2003: $67,295,036

As of February 26, 2004, there were
outstanding 2,035,191 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 15, 2004 are
incorporated by reference into Part III of this report.

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# PART I

# Item 1. Business.

# The Company

O.A.K.
          Financial Corporation (the Company), was incorporated under the laws
          of the State of Michigan on October 13, 1988, for the purpose of becoming a bank
          holding company. The Company is registered under the Bank Holding Company Act of
          1956, as amended, and owns the outstanding stock of Byron Center State Bank (the
          Bank), which is organized under the laws of the State of Michigan.
          Aside from the Bank, the Company has no other substantial assets. The Company
          conducts no business except for the provision of certain management and
          operational services to the Bank, the collection of dividends from the Bank and
          the payment of dividends to the Companys stockholders. The executive
          office of the Company is located at 2445 84th Street, S.W., Byron Center,
          Michigan 49315. While the Companys chief decision makers monitor the
          revenue streams of various products and services, operations are managed and
          financial performance is evaluated on a company wide basis. Accordingly, all of
          the Companys operations are considered by Management to be aggregated in
          one reportable operating segment.

Beginning
January 1, 2001 the Company and all its subsidiaries are provided staff resources through
O.A.K. ELC, an employee leasing company. O.A.K. ELC provides staffing solely to the
Company and its subsidiaries.

# The Bank

The
Bank was organized in 1921 as a Michigan banking corporation. The executive office of the
Bank is 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 a total of 12
branch offices and one mortgage operations center. The Banks offices are located in
Kent County, 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 suburban
population as the Grand Rapids Metropolitan Area expands.

The
Bank provides a broad range of financial products and services through its branch network
in West Michigan. A typical branch includes a full service lobby, most with drive-thru
service and automatic teller machines. The Bank provides a wide range of commercial and
personal banking services, including but not limited to: real estate, consumer and
commercial loans, checking accounts, savings accounts, certificates of deposit, safe
deposit boxes, U.S. Savings Bonds, internet banking, electronic ATM banking, telephone
banking and other electronic banking services. Currently, the Bank does not offer trust
services.

The
Bank owns a subsidiary, O.A.K. Financial Services, which offers mutual fund products,
securities brokerage services, retirement planning services, investment management and
advisory services. O.A.K. Financial Services in turn owns Dornbush Insurance Agency, which
offers property and casualty, life, disability and long-term care insurance products.

# Effect of Government
Monetary Policies

Our
earnings are affected by domestic economic conditions and the monetary and fiscal policies
of the United States government, its agencies, and the Federal Reserve Board. The Federal
Reserve Boards monetary policies have had, and will likely continue to have, an
important impact on the operating results of commercial banks through its power to
implement national monetary policy in order to, among other things, curb inflation or
avoid a recession. The policies of the Federal Reserve Board have a major effect upon the
levels of bank loans, investments and deposits through its open market operations in
United States government securities, and through its regulation of, among other things,
the discount rate on borrowings of member banks and the reserve requirements against
member bank deposits. It is not possible to predict the nature and impact of future
changes in monetary and fiscal policies.

# Bank Competition

The
Bank has twelve offices, one within each of the communities it serves. Within these
communities, its principal competitors are Comerica Bank, Bank One, Fifth-Third Bank,
Flagstar Bank, National City Bank,

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Huntington Bank, Macatawa Bank, Mercantile Bank, United
Bank of Michigan , and various credit unions. 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 Macatawa Bank, Mercantile
Bank, United Bank of Michigan and the credit unions.

The
financial services industry continues to be increasingly competitive. Principal methods of
competition include loan and deposit pricing and the 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
traditionally have been deposited with commercial banks. However, with the enactment of
the Gramm-Leach-Bliley Act of 1999, which permits the combinations of banks, insurance
companies, and securities firms, and the increased use of internet banking, it is expected
that competition may become more intense. Management continues to evaluate the
opportunities for the expansion of products and services and additional branching
opportunities.

# Source of Revenue

The
Banks principal source of revenue includes net interest income, fees from the sale
of loans, and non-interest income. The net interest revenue is the difference between the
interest the Bank earns on loans and investments and the interest the Bank pays on
deposits and other interest bearing borrowed funds. Non-interest revenue includes deposit
service charges, insurance premium income, brokerage fees and other fees collected for
services provided. Loan sales revenue is a result of the origination and sale of mortgage
loans. The sources of income for the three most recent years are as follows:

|% of total revenue:      | 2003  | 2002  | 2001 
|------------------------ | ----- | ----- | -----
|                         |      
|Net interest revenue     | 73.0% | 74.4% | 78.8%
|Non-interest revenue     | 19.2% | 14.8% | 13.3%
|Mortgage banking revenue | 7.8%  | 10.8% | 7.9% 

# Employees

As
of December 31, 2003, the Registrant and subsidiaries employed 171 full-time and 50
part-time persons. Management believes that relations with employees are good.

# 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

On
October 16, 2003, OAK Financial Corporation and Byron Center State Bank were released from
the written agreement that was entered into on October 4, 2002 with the Federal Reserve
Bank of Chicago and the Michigan Office of Financial and Insurance Services. Release from
the written agreement followed managements compliance with all of the provisions of
the written agreement. The Written Agreement addressed issues including management and
asset quality. While the Written Agreement was in effect, the Company and the Bank
required prior regulatory approval to pay dividends, add new directors, employ new senior
executive officers, and to pay certain severance or related compensation.

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 Michigan Office of Financial and Insurance Services (OFIS), the Internal
Revenue Service, and state taxing

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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 stockholders 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
OFIS deems the Banks capital to be impaired, the OFIS 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.

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. In addition, in certain such cases an application to, and the prior
approval of, the Federal Reserve Board under the BHCA and/or the OFIS under the Michigan
Banking Code, may be required.

With
certain limited exceptions, the BHCA prohibits any bank holding 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, such
permissible non-banking activities include such things as mortgage banking, equipment
leasing, securities brokerage, and consumer and commercial finance company operations.
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 holding
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 holding company.

Eligible
bank holding companies that elect to operate as financial holding companies may engage in,
or own shares in companies engaged in, a wider range of non-banking activities, including
securities and insurance activities and any other activity that the Federal Reserve Board,
in consultation with the Secretary of the Treasury, determines by regulation or order is
financial in nature, incidental to any such financial activity or complementary to

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any
such financial activity and does not pose a substantial risk to the safety or soundness of
depository institutions or the financial system generally. The Bank Holding Company Act
generally does not place territorial restrictions on the domestic activities of non-bank
subsidiaries of bank or financial holding companies.

The
Companys common stock is registered under the Securities Exchange Act of 1934, as
amended (the Exchange Act). It is therefore subject to the information, proxy
solicitation, insider trading and other restrictions and requirements of the SEC under the
Exchange Act. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act provides for numerous changes to the reporting, accounting,
corporate governance and business practices of companies as well as financial and other
professionals who have involvement with the U.S. public markets. The SEC continues to
issue new and proposed rules implementing various provisions of the Sarbanes-Oxley Act.

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 holding 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 average 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
stockholders equity) to total average 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.

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 stockholders is
          indirectly limited by statutory restrictions on the Banks ability to pay
          dividends described below. Further, in a policy statement, the Federal Reserve
          Board expressed its view that a bank holding company experiencing earnings
          weaknesses should not pay cash dividends exceeding its net income or which can
          only be funded in ways that weaken the bank holding 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 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s Articles of Incorporation do not
authorize the issuance of preferred stock and there are no current plans to seek such
authorization.

# The Bank

General.
          The Bank is a Michigan banking corporation, is a member of the Federal Reserve
          System and its deposit accounts are insured by the Bank Insurance Fund (the
          BIF) of the FDIC. As a Federal Reserve System member and a Michigan
          chartered bank, the Bank is subject to the examination, supervision, reporting
          and enforcement requirements of the Federal Reserve Board as its primary federal
          regulator and OFIS, as the chartering authority for Michigan banks. 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.

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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. For several years, the BIF reserve
ratio has been at or above the mandated ratio and assessments have ranged from 0% of
deposits for institutions in the lowest risk category to .27% of deposits in the highest
risk category.

FICO
Assessments.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 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. From now until 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.

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

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

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:

|Well capitalized              
Adequately capitalized        
Undercapitalized              
Significantly undercapitalized
Critically undercapitalized | Total        
Risk-Based   
Capital Ratio
10% or above 
 8% or above 
Less than 8% 
Less than 6% 
     -- | Tier 1
Risk-Based
Capital Ratio
6% or above  
4% or above  
Less than 4% 
Less than 3% 
     -- | Leverage Ratio
5% or above
4% or above
Less than 4%
Less than 3%
A ratio of tangible
equity to total assets
of 2% or less
|------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------

As
of December 31, 2003, the Banks ratios exceeded minimum requirements for the well
capitalized category. (See Liquidity and Capital Resources.)

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

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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
          income after deducting its losses and bad debts. A Michigan state bank may not
          declare or pay a dividend unless the bank will have surplus amounting to at
          least 20% of its capital after the payment of the dividend.

As
a member of the Federal Reserve System, the Bank is required by federal law to obtain the
prior approval of the Federal Reserve Board for the declaration or payment of a dividend,
if the total of all dividends declared by the Banks Board of Directors in any year
will exceed the total of (i) the Banks retained net income (as defined and
interpreted by regulation) for that year plus (ii) the retained net income for the
preceding two years, less any required transfers to surplus. Federal law generally
prohibits a depository institution from making any capital distribution (including payment
of a dividend) or paying any management fee to its holding company if the depository
institution would thereafter be undercapitalized. Further, federal regulatory agencies can
prohibit a banking institution or bank holding company from engaging in unsafe and unsound
business practices and could prohibit payment of dividends if such payment could be deemed
an unsafe and unsound business 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 stockholders of the Company, and to related
interests of such directors, officers and principal stockholders. In addition,
federal law and regulations may affect the terms upon which any person becoming a director
or officer of the Company or 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. Pursuant to FDICIA, the FDIC adopted guidelines to establish
operational and managerial standards to promote the safety and soundness of federally
insured depository institutions. The 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.

Investments
and Other Activities.Under federal law and regulations, Federal Reserve System member
banks and 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 regulations, also
prohibits 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 banks primary federal regulator 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 banks primary federal regulator 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, including the privacy of consumer financial information
provisions of the Gramm-Leach-Bliley Act and regulations under, 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 regulations 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

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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.

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.

Banks
may establish interstate branch networks through acquisitions of other banks. The
establishment of de novo interstate branches or the acquisition of individual branches of
a bank in another state (rather than the acquisition of an out-of-state bank in its
entirety) is allowed only if specifically authorized by state law.

Michigan
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 Michigan
Office of Financial and Insurance Services, Division of Financial Institutions, (1)
acquisition of Michigan banks by FDIC-insured banks, savings banks or savings and loan
associations located in other states, (2) sale by a Michigan bank of branches to an
FDIC-insured bank, savings bank or savings and loan association located in a state in
which a Michigan bank could purchase branches of the purchasing entity, (3) consolidation
of Michigan banks and FDIC-insured banks, savings banks or savings and loan associations
located in other states having laws permitting such consolidation, (4) establishment of
branches in Michigan by FDIC-insured banks located in other states, the District of
Columbia or U.S. territories or protectorates having laws permitting a Michigan bank to
establish a branch in such jurisdiction, and (5) establishment by foreign banks of
branches located in Michigan.

Our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
and all amendments to those reports are available free of charge through a link on our
website at www.bcsbank.com to the SEC website. The reports are also available through the
SEC website.

# Item 2. Properties.

The
Company and the Bank own and operate a total of 13 facilities in Michigan. The facilities
are located in Kent, Ottawa, and Allegan Counties. The individual properties are not
materially significant to the Companys or the Banks business or to the
consolidated financials.

With
the exception of the potential remodeling of certain facilities to provide for the
efficient use of work space or to maintain an appropriate appearance, each property is
considered adequate for current and anticipated needs.

During
2002 the Bank moved its Grandville branch to a new location and also purchased an existing
bank facility in Jenison, which was opened under the Byron Center State Bank name in 2003.

# Item 3. Legal
Proceedings.

From
time to time, we may be involved in various legal proceedings that are incidental to our
business. In the opinion of management, we are not a party to any current legal
proceedings that are material to our financial condition, either individually or in the
aggregate.

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

None.

# Executive Officers of
the Company

The
Board of Directors appoints the executive officers of the Bank. 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 executive officers (included for information purposes only) as of
December 31, 2003:

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|Name                                                         |  | Age    |  | Position with Company                                                                                                                                                                                                                               |  | Year Becamean Executive Officer | 
|------------------------------------------------------------ |  | ------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | 
|                                                             |  |        |  |                                                                                                                                                                                                                                                     |  |                                
|Patrick K. Gill     James A. Luyk       Thomas L. Fitzgerald |  | 524158 |  | President, Chief Executive Officer and      
Director of the Company and the Bank
Executive Vice President and Chief Financial
Officer of the Company and the Bank
Executive Vice President and Chief Lending  
Officer of the Company and the Bank |  | 2002
2000
2002                  | 

Prior
to being named  President  and Chief  Executive  Officer in 2002,  Mr. Gill served as
President  and Chief Executive Officer of Pavilion Bancorp, Inc. for more than five (5)
years.

Prior
to being named Executive Vice President and Chief Financial Officer in 2000, Mr. Luyk
served as regional controller for Huntington National Bank.

Prior
to being named Executive Vice President and Chief Lending Officer in 2002, Mr. Fitzgerald
served as Executive Vice President, in charge of business development, at National City
Bank for more than five (5) years.

# PART II

# Item 5.  Market Price
and Dividends for Registrant's Common Equity and Related Stockholder Matters.

There
is no active market for the Companys Common Stock, and there is limited published
information with respect to its market price. There are occasional sales through brokers
and direct sales by stockholders of which the Companys management may, or may not be
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.

The
following table sets forth the range of high and low sales prices of the Companys
common stock during 2003 and 2002, 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:

|                                                        | Sales Prices              | CashDividends Declared   
|------------------------------------------------------- | ------------------------- | -------------------------
|
|First QuarterSecond Quarter
Third QuarterFourth Quarter | $39.75
 40.00 41.00 41.25 | $38.00
 37.25 37.00 38.50

|2002                                                    | High                        | Low                         |            
|------------------------------------------------------- | --------------------------- | --------------------------- | -----------
|First QuarterSecond Quarter
Third QuarterFourth Quarter | $44.75
 44.65
 42.50
 40.35 | $44.00
 41.00
 39.00
 39.00 | $0.48
$0.24

The
Company has approximately 1,050 holders of record of its common stock. The common stock is
traded as a pink-sheet company and quoted on the Over-the-Counter Bulletin
Board under the symbol OKFC.

We
are a holding company and substantially all of our assets are held by our subsidiaries.
Our ability to pay dividends to our shareholders depends primarily on our banks
ability to pay dividends to us. Dividend payments and extensions of credit to us from our
bank are subject to legal and regulatory limitations, generally based on capital levels
and current and retained earnings imposed by law and regulatory agencies with authority
over our bank. The ability of our

-8-

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bank to pay dividends is also subject to its
profitability, financial condition, capital expenditures and other cash flow requirements.

Item 6. Selected Financial Data
(dollars in thousands, except per share data).

SUMMARY OF SELECTED
CONSOLIDATED FINANCIAL DATA

Year Ended December 31,

|                                      | 2003 | 2002 | 2001 | 2000    | 1999
|------------------------------------- | ---- | ---- | ---- | ------- | ----
|Consolidated Results of Operations:   |      |      |      |         |     
|Interest income                       |      |      | $    | 26,611  |     
|Interest expense                      |      |      |      | 9,733   |     
|                                      |      |      |      |         |     
|Net interest income                   |      |      |      | 16,878  |     
|Provision for loan losses             |      |      |      | 625     |     
|Non-interest income                   |      |      |      | 6,235   |     
|Non-interest expenses                 |      |      |      | 16,766  |     
|                                      |      |      |      |         |     
|Income before federal income taxes    |      |      |      | 5,722   |     
|Federal income taxes                  |      |      |      | 1,564   |     
|                                      |      |      |      |         |     
|Net income                            |      |      | $    | 4,158   |     
|                                      |      |      |      |         |     
|                                      |      |     
|Per Share Data:                       |      |     
|Net income                            |      |      | $    | 2.04    |     
|Cash dividends declared               |      |      | $    | .54     |     
|Book Value                            |      |      | $    | 27.06   |     
|Weighted average shares outstanding   |      |      |      | 2,035   |     
|                                      |      |     
|Consolidated Balance Sheet Data:      |      |     
|Total assets                          |      |      | $    | 508,533 |     
|Loans, net of unearned income         |      |      |      | 363,565 |     
|Allowance for loan losses             |      |      |      | 8,390   |     
|Deposits                              |      |      |      | 371,064 |     
|Stockholders' equity                  |      |      |      | 55,080  |     
|                                      |      |     
|Consolidated Financial Ratios:        |      |     
|Tax equivalent net interest income to |      |     
|average earning assets                |      |      |      | 3.59    | %   
|Return on average equity              |      |      |      | 7.75    |     
|Return on average assets              |      |      |      | .80     |     
|Non-performing loans to total loans   |      |      |      | .58     |     
|Efficiency ratio                      |      |      |      | 71.70   |     
|Dividend payout ratio                 |      |      |      | 26.43   |     
|Equity to asset ratio                 |      |      |      | 10.83   |     
|Tier 1 leverage ratio                 |      |      |      | 10.56   |     

# FORWARD LOOKING
STATEMENTS

This
report includes forward-looking statements as that term is used in the
securities laws. All statements regarding our expected financial position, business and
strategies are forward-looking statements. In addition, the words anticipates,
believes, estimates, seeks, expects,
plans, intends, and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. The presentation and
discussion of the provision and allowance for loan losses and statements concerning future
profitability or future growth or increases, are examples of inherently forward looking
statements in that they involve judgments and statements of belief as to the outcome of
future events. Our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse affect on
our operations and our future prospects include, but are not limited to, changes in:
interest rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve Board, the quality or composition of the loan or investment portfolios,
demand for loan products, deposit flows, competition, demand for financial services in our
market area and accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. Further information concerning us and
our

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business,  including
additional  factors  that could  materially  affect our  financial  results,  is
included in our other  filings  with the  Securities  and  Exchange  Commission.

# ITEM 7.

# MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 2003, 2002 AND 2001

The
following financial review presents managements discussion and analysis of
consolidated financial condition and results of operations during the period of 2001
through 2003. The discussion should be read in conjunction with the Companys
consolidated financial statements and accompanying notes thereto.

# Critical Accounting
Policies

As
described under Supervision and Regulation, the financial services industry is
highly regulated. Furthermore, the nature of the financial services industry is such that,
other than described below, the use of estimates and management judgment are not likely to
present a material risk to the financial statements. In cases where estimates or
management judgment are required, internal controls and processes are established to
provide assurance that such estimates and management judgments are materially correct to
the best of managements knowledge.

Allowance
for loan losses  Accounting for loan classifications, accrual status, and
determination of the allowance for loan losses is based on regulatory guidance. This
guidance includes, but is not limited to, generally accepted accounting principles, the
uniform retail credit classification and account management policy issued by the Federal
Financial Institutions Examination Council, and the joint policy statement on the
allowance for loan losses methodologies, issued by the Federal Financial Institutions
Examination Council, Federal Deposit Insurance Corporation, and various other regulatory
agencies. Accordingly, the allowance for loan losses includes a reserve calculation based
on an evaluation of loans determined to be impaired, risk ratings, historical losses,
loans past due, general and local economic conditions, trends, portfolio concentrations,
collateral value and other subjective factors.

Commercial
loan rating system and identification of impaired loans  The Company has a defined
risk rating system that is designed to assess the risk of individual loans and overall
risk of the commercial loan portfolio. The system assigns a risk weighting to factors such
as cash flow, collateral, financial condition, operating performance, repayment history,
management, and strength of the industry. An assessment of risk is performed as a part of
the loan approval process as well as periodic updates based on the circumstances of the
individual loan. The Company employs both internal and external loan review services to
assess risk ratings.

Originated
mortgage-servicing rights (OMSR)  The Company records the original
OMSR based on market data. The OMSR is amortized into non-interest
income, in proportion to the period of the estimated future net servicing income of the
underlying financial asset. Additionally, an independent third party valuation is
performed to determine potential impairment of the OMSR as a result of changes
in interest rates and expected future loan repayment speeds. Significant changes in
interest rates or repayment speeds could have a significant impact on the carrying value
of the mortgage servicing assets.

# FINANCIAL CONDITION

# Summary

Total
assets declined 5% during 2003 as a direct result of managements effort to improve
asset quality. Total loans declined 4% largely due to a decline in consumer indirect
lending, which the bank has exited, and a decline in non performing commercial loans.
Total loans represent 71% of the Banks total assets followed by investments and fed
funds sold, which comprise approximately 22% of the Banks assets. The surplus
funding that resulted from the decline in assets was redeployed from loans and fed funds
sold to the investment portfolio. Total deposits also declined in 2003 as the Bank did not
compete as aggressively for rate sensitive deposits and decreased the reliance on deposits
outside its market area. A discussion of changes in balance sheet amounts by major
categories follows:

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# Securities (in
thousands)

The
Bank maintains a diversified securities portfolio, which includes obligations of
government sponsored agencies, securities issued by states and political subdivisions,
corporate securities, and mortgage-backed securities. The primary objective of the
Companys investing activities is to provide for safety of the principal invested, as
a source of liquidity and management of exposure to changes in interest rates. A
relatively high percent of the Banks security portfolio is pledged. The majority of
the securities pledged are to secure borrowing arrangements for Federal Home Loan Bank
borrowings and securities sold under agreements to repurchase or for other purposes as
required or permitted by law. For administrative purposes, the Bank generally pledges more
securities than required. The Bank was required to have approximately $58 million pledged
at December 31, 2003 compared to $64 million at December 31, 2002.

All
of the Companys securities are classified as available-for-sale. As a result,
changes in market value are recognized as adjustments to carrying amount on the balance
sheet and gains or losses are reported, net of tax, as an adjustment to the Banks
stockholders equity. The Companys total holdings increased approximately $22
million in 2003. The increase is a result of the liquidity provided by exiting consumer
indirect lending and the reduction in non-performing commercial loans combined with a
redeployment of fed fund funds sold at December 31, 2002 to achieve a higher yield and
reduce the Banks exposure to falling interest rates.

|Securities available-for-sale: | AmortizedCost | FairValue | AmountPledged
|------------------------------ | ------------- | --------- | -------------
|December 31, 2003              |               |           | $            
|December 31, 2002              |               |           | $            

# Schedule of Maturities
of Investment Securities and Weighted Average Yields

The
following is a schedule of contractual maturities and their weighted average yield of each
category of investment securities as of December 31, 2003. 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.

|                    | Maturing
|------------------- | --------
|
|
|
|Available for Sale: |         
|US government       |         
|securities          |         
|Mortgage-backed     |         
|securities          |         
|States and          |         
|Political           |         
|Subdivisions        |         
|Other Securities    |         
|                    |         
|                    |         
|                    |         

# The Loan Portfolio

The
Banks lending policy is intended to reduce credit risk, enhance earnings and guide
the lending officers in making credit decisions. The Board of Directors of the Bank
approves the loan authority for each lender and 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. The loan review officer submits periodic reviews
to the Chief Lending Officer and these reviews are submitted to the Audit/Compliance
Committee on a quarterly basis. Requests to the Bank for credit are considered on the
basis of creditworthiness of each applicant, without consideration of 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 based on cashflow, collateral, capital and alternative sources of
repayment. Loan applications are accepted at all the Banks offices and are approved
within the limits of

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each lending officers authority. Secured loan requests in
excess of $1,250,000 or unsecured loan requests in excess of $400,000, are required to be
presented to the Board of Directors or the Director Loan Committee for review and
approval.

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. The Banks largest concentration of
loans is to businesses in the form of commercial loans and real estate mortgages.
Management reviews the concentration, and changes in concentrations of loans, using the
method of coding the commercial loan portfolio by Standard Industrial Classification
(S.I.C.) code. Total consumer loans continue to decline as a result of zero percent
financing provided by the auto industry and the Banks substantial exit from the
consumer indirect business. As of December 31, 2003, the Bank had indirect loans totaling
approximately $18 million, down 42% from $31 million at December 31, 2002. Management
expects the indirect consumer loan portfolio to continue to decline during 2004. During
2003, total residential real estate loans increased 26%, largely comprised of floating
rate and fixed rate mortgages with maturities of 10 years or less. The historically low
rates provided an opportunity to add some shorter-term mortgages to the loan portfolio and
decrease the Banks sensitivity to declining interest rates.

It
is the Banks general practice to sell residential real estate loans with maturities
over 10 years to Freddie Mac . The Bank retains servicing rights on substantially all such
loans sold. At December 31, 2003 and 2002, the Bank was servicing loans for Freddie Mac
totaling approximately $257 million and $258 million, respectively. During 2003, the Bank
also established a relationship with Washington Mutual Inc. to sell residential real
estate loans, with servicing released. During 2003, the Bank sold approximately $5 million
in residential real estate loans with servicing released.

In
addition to the communities served by the Banks branches, principal lending markets
include nearby communities and metropolitan areas. Subject to established underwriting
criteria, 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.

# Loan Portfolio
Composition (in thousands)

|                        | Year ended December 31,
|----------------------- | -----------------------
|
|                        |                        
|                        |                        
|Commercial Real Estate  |                        
|Residential Real Estate |                        
|Commercial              |                        
|Consumer                |                        
|                        |                        
|Total loans             |                        
|                        |                        

Commercial
and Commercial Real-Estate Loans: Business loans are originated for a variety of purposes
including working capital financing, machinery and equipment acquisition and the financing
of commercial real-estate. The loans are generally secured by all assets of the borrower
and are underwritten based on an assessment of the industry in which the borrower
operates, management, economic conditions, cash flow, owners equity and collateral.
Commercial real-estate loans are secured by properties located in the Banks primary
market area.

Residential
Real-Estate Loans:Residential single family real-estate loans are originated in the
Banks primary market area. Generally, the Bank sells the loans in the secondary
market. The loans are underwritten using the guidelines and standards in the Federal Home
Loan Mortgage Corporation Sellers and Servicers Guide. On occasion single family
real-estate loans will be retained in the Banks portfolio and such loans will
generally have maturities less than fifteen years.

Consumer
Loans:Consumer loans are originated for a variety of purposes including the acquisition
of new and used automobiles, boats and recreational vehicles. Personal loans secured by
the equity on the borrowers residence are also granted for a variety of needs.
Consumer loans are underwritten based on the borrowers credit history, monthly income,
stability of employment, the amount of the down payment and the type of collateral.

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The
low interest rate environment resulted in a significant amount of re-financing during 2002
and 2003. Consumers refinanced mortgage loans to lock in the lower interest rates. This
activity increased net gains on sales of loans held for sale compared to previous years.
The Company does not expect this abnormally high volume to continue. The Company also
experienced a significant amount of fixed rate commercial loan re-financing. A significant
number of these customers re-financed from higher fixed interest rates to lower variable
interest rates. For discussion regarding interest rate risk exposure and management of
this risk see the Interest Rate Risk and Asset/Liability Gap
Position sections.

Management
has taken significant steps in the loan administration area to improve underwriting
standards. These changes have improved asset quality, which management expects to
continue. However, asset quality is also dependent on general and local economic
conditions, which continue to show signs of weakness, although improving.

# Non-performing Assets
(in thousands)

Non-performing
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 and other real
estate, which has been acquired primarily through foreclosure and is awaiting disposition.
Loans, including loans considered impaired under SFAS No. 118 and SFAS No. 114, are
generally placed on a non-accrual 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.

|                                                         | December 31,
|-------------------------------------------------------- | ------------
|                                                        
|                                                         |             
|Non-accrual loans                                        |             
|90 days or more past due & still accruing                |             
|                                                         |             
|Total non-performing loans                               |             
|Other real estate                                        |             
|                                                         |             
|Total non-performing assets                              |             
|                                                         |             
|                                                         |             
|As a percentage of portfolio loans                       |             
|Non-performing loans                                     |             
|Non-performing assets                                    |             
|Allowance for loan losses                                |             
|Allowance for loan losses as a % of non-performing loans |             

The
Banks ratio of non-performing loans to total loans at December 31, 2003 was
significantly lower than at December 31, 2002, which reflects managements aggressive
approach to credit management. A significant portion of the improvement is the result of
the customers finding alternative financing and repaying their loan to the Bank. In some
instances, non-performing assets have been sold to a new borrower of the Bank. The
non-performing assets listed in other real estate consist of two commercial properties,
which the bank is currently in the process of marketing. As of December 31, 2003 there
were no other interest bearing assets, which required classification.

During
2002, management, with the assistance of outside consultants, conducted a complete and
comprehensive review of the lending process. The outcomes include an improvement in
workflow, improvement in processes and procedures, standardization of loan quality
assessment, and improvement in the management of non-performing credits. These changes
have improved asset quality and credit management.

The
table below presents the interest income that would have been earned on non-performing
loans outstanding at December 31, 2003, 2002 and 2001 had those loans been accruing
interest in accordance with the original terms of the loan agreements (pro forma interest)
and the amount of interest income actually included in net interest income for those
years.

-13-

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# Foregone Interest on
Non-Performing Loans (in thousands)

|                         | For the Year Ended December 31,
|------------------------ | -------------------------------
|
|
|                        
|Pro forma interest       |                                
|Interest earned          |                                
|                         |                                
|Foregone interest income |                                
|                         |                                

# Allowance for Loan
Losses (dollars in thousands)

|                                              | Year Ended December 31,
|--------------------------------------------- | -----------------------
|
|Balance at beginning of year                  |                        
|                                              |                        
|Charge-offs:                                  |                        
|Commercial real estate                        |                        
|Residential real estate                       |                        
|Commercial                                    |                        
|Consumer                                      |                        
|                                              |                        
|                                              |                        
|                                              |                        
|Recoveries:                                   |                        
|Commercial real estate                        |                        
|Residential real estate                       |                        
|Commercial                                    |                        
|Consumer                                      |                        
|                                              |                        
|                                              |                        
|                                              |                        
|                                              |                        
|Net charge-offs                               |                        
|                                              |                        
|Additions to allowance charged to operations  |                        
|                                              |                        
|Balance at end of year                        |                        
|                                              |                        
|Net charge-offs as a percent of average loans |                        

For
the year ended December 31, 2003 versus 2002, net loans charged off decreased from .68% of
average loans outstanding to .18%. During the year ended December 31, 2003, management
added $625,000 to the loan loss provision and had net charge-offs of $633,000. The
provision for loan losses charged against earnings decreased $3,445,000, or approximately
85% from a year ago. The allowance for loan losses as a percent of total loans increased
from 2.22% at December 31, 2002 to 2.31% at December 31, 2003. This increase reflects the
low level of charge-offs and decline in total loans outstanding. Consumer loan net
charge-offs declined sharply in 2003, falling $828,000 from 2002. This improvement is the
result of exiting indirect consumer lending and improved recovery of prior amounts
charged-off. The improvement in the recovery of prior charge-offs is, in part, due to the
addition of a collector that specializes in the collection of charged-off loans. Net
charge-offs in the Real Estate portfolio continue to be very low.

# Allocation of the
Allowance for Loan Losses (dollars in thousands)

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, reviews past loss experience, the local economy and a number of other
factors. Management believes that the allowance for loan losses is adequate.

-14-

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|                          | Year ended December 31,
|------------------------- | -----------------------
|
|
|Commercial and commercial |                        
|real estate               |                        
|Real estate mortgages     |                        
|Consumer                  |                        
|Subjective                |                        
|                          |                        
|Total                     |                        
|                          |                        

In
determining the adequacy of the allowance for loan losses, management determines (i) a
specific allocation for loans when a loss is probable, (ii) allocation based on credit
risk rating for individual commercial loans, (iii) allocation based principally on
historical losses for various categories of loans, and (iv) subjective factors including
local and general economic factors and trends. Managements assessment of a slow down
in economic activity, increase in unemployment, sustained decline in business spending,
and increase in non-performing loans is reflected in the recent increase in the allowance
for loan losses as a percent of total loans.

The
first element reflects our estimate of probable losses based upon our systematic review of
specific loans. These estimates are based upon a number of objective factors, such as
payment history, financial condition of the borrower, and discounted collateral exposure.

The
second element reflects the application of our loan rating system. This rating system is
similar to those employed by state and federal banking regulators. Loans that are rated
below a certain predetermined classification are assigned a loss allocation factor for
each loan classification category.

The
third element is determined by assigning allocations based principally upon the three-year
average of loss experience for each type of loan. Additionally, an allocation is provided
based on the current delinquency rate for some loan categories. Loss analyses are
conducted at least annually.

The
fourth element is based on factors that cannot be associated with a specific credit or
loan category and reflects our attempt to ensure that the overall allowance for loan
losses appropriately reflects a margin for the imprecision necessarily inherent in the
estimates of expected credit losses. We consider a number of subjective factors when
determining the unallocated portion, including local and general economic business factors
and trends, portfolio concentrations and changes in the size, mix and the general terms of
the loan portfolios.

Actual
losses experienced in the future could significantly vary from the estimated allocation of
the loan loss reserve. Changes in local and national economic factors could significantly
affect the adequacy of the allowance for loan losses. While amounts are allocated to
various portfolios as directed by Statement of Financial Accounting Standards No. 114, the
entire allowance for loan losses is available to absorb losses from any portfolio segment.

# Sources of Funds

The
primary sources of funding for the Bank are deposits, which includes brokered deposits,
securities sold under agreements to repurchase and Federal Home Loan Advances. Non deposit
sources of funding decreased approximately 5% or $4 million from December 31, 2002 to
December 31, 2003. Total deposits declined approximately $26 million or 7% from December
31, 2002 to December 31, 2003. The entire decline can be attributed to a decline in
certificates of deposit, which declined by approximately $34 million, or 17%, from
December 31, 2002 to December 31, 2003. The decline in certificates of deposit reflect a
decreased reliance on certificates over $100,000, which declined 20%, or approximately $20
million and a decline in certificates of deposit under $100,000 totaling $14 million, or
approximately 14% as the result of not offering as many premium priced certificates in
2003 as in the years leading up to 2003.

Excluding
certificates of deposit, total deposits increased approximately 4% from December 31, 2002
to December 31, 2003. The increase in 2003 approximates the overall growth of deposits in
the Banks market area. Due to the decline in funding needs, the Bank was able to
reduce its use of brokered time deposits from $53 million at December 31, 2002 to $47
million at December 31, 2003. The average cost of funds for brokered deposits is at least
30 basis points higher than local deposits. The Banks plan of decreasing dependence
on brokered deposits

-15-

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will lower the average cost of funds. The Bank will continue to use
of brokered deposits as part of its asset & liability management plan.

Deposits
are gathered from the communities the Bank serves. Increasing core deposits is a key
element of the Banks strategic plan. The checking and savings product mix has also
been realigned to reward customers with special values if they maintain at least two
accounts with the Bank. This is designed to improve the level of core deposits.
Improvement in the equity markets has resulted in some deposit outflow back into the
equity market. The largest percentage of growth has been from acquiring more of existing
customers relationships. The Bank expects this trend to continue. The Company is
developing a more comprehensive sales focus, which includes the newly created personal
banker positions at each of the companys offices. Additional sales training and
measurement tools are being implemented to better assess our strengths and weaknesses in
the selling process. In addition to the traditional bank offices, the Company provides a
wide array of alternative electronic methods to serve customers. New cash management
products are expected to be offered in early 2004. During the third quarter of 2003 the
Bank launched Mobile Banking, a courier service in West Michigan that provides convenient,
safe, and reliable pick-up and delivery for a variety of items including cash, checks and
important Bank documents. The Mobile Banking vans are staffed by experienced Bank
employees and a professional armed guard. Deposits are kept secure within a vault inside
the van.

# Average Deposit Balances
(dollars in thousands)

The
following table lists the total average deposit balances during 2003 and 2002 and the
weighted average rates paid on the funds provided.

|                            | Average for the Year
|--------------------------- | --------------------
|
|
|Non-interest bearing demand |                     
|NOW Accounts                |                     
|MMDA/Savings                |                     
|Time - negotiable brokered  |                     
|Time                        |                     
|
|Total Deposits              |                     
|

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 meet the needs of
its customers. The Bank offers business and consumer checking accounts, regular and money
market savings accounts, and certificates of deposit having many options in their terms.

# Repurchase Agreements,
Federal Funds Purchased and Borrowed Funds (dollars in thousands)

|                        | December 31, 2003 | December 31, 2002
|----------------------- | ----------------- | -----------------
|
|Repurchase agreements   |                   |                  
|FHLB Borrowings         |                   |                  
|Federal funds purchased |                   |                  
|Other borrowings(1)     |                   |                  
|                        |                   |                  
|                        |                   |                  
|                        |                   |                  

(1)    
          Other borrowings included two separate loans that were paid off in 2002 at
          interest rates of 8.0% and 6.5%.

Repurchase agreements are a variable
interest rate borrowing with a 1 day maturity, these borrowings are from local customers
of the Bank. The FHLB borrowings have a substantial prepayment penalty that almost
prohibits early replacement. These borrowings have a fixed term and fixed interest rate.

-16-

---



# RESULTS OF OPERATIONS

# Summary

The
Company achieved net income of $4.16 million in 2003, an increase of 10.1% from $3.78
million in 2002. Diluted earnings per share increased 9.7%, from $1.86 per share in 2002
to $2.04 per share in 2003. The growth in net income for the year reflects the significant
progress made in improving asset quality. Non-performing assets declined by $7.2 million,
or 77%, from a year ago. Net loan losses charged against the allowance for loan losses
declined from .68% of total loans in 2002 to .18% of total loans in 2003. As a result, the
provision for loan losses was reduced from $4,070,000 in 2002 to $625,000 in 2003.

Net
interest income declined approximately 12% in 2003. The decrease was a result of declines
in the net interest margin and earning assets. The net interest margin compression is a
direct result of the significant commercial loan refinancing activity and the
exceptionally low interest rate environment. The net interest margin was 3.59% in 2003
compared to 4.06% in 2002. The decline in earning assets is directly attributable to the
improvement in asset quality, which is discussed below.

Non-interest
income declined 5% in 2003, which is the result of a 35% decline in mortgage banking
related fees. As previously reported, this decline is due to a significant increase in the
amortization of mortgage servicing rights due to the significant mortgage refinance
activity in 2003.

The
growth of non-interest expenses was held to approximately 2% in 2003. The increase in
salary expense includes the cost associated with building a highly qualified and
experienced management team. Non-employment related expenses declined 4% in 2003. This
decline represents the efforts to reduce operating expenses in 2003. The organization-wide
effort to lower total operating expenses will continue in 2004 and is expected to enhance
performance results.

# Earnings Performance (in
thousands, except per share data)

|                          | Year Ended December 31,
|------------------------- | -----------------------
|
|Net income                |                        
|Per share of common stock |                        
|                          |                        
|Earnings ratios:          |                        
|                          |                        
|Return on average assets  |                        
|Return on average equity  |                        

Net
income increased approximately 10% in 2003. A significant improvement in asset quality
resulted in a lower provision for loans losses during 2003, offsetting a decline in net
interest income resulting from a decline in earning assets and compression of the net
interest margin as due to the low interest rate environment, a 5% decline in non-interest
income, primarily due to a decline in mortgage fees and 2% increase in non-interest
expense.

Net
income declined $2.2 million, or 37%, from 2001 to 2002. Loan sales continued to increase
during 2002, but were offset by an increase in the loan loss provision, an increase in
non-interest expense and a declining trend in net interest margin due to the low interest
rate environment.

# 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:

-17-

---



Interest Yields and Costs
(in thousands)

|                              | Year ended December 31,
|----------------------------- | -----------------------
|
|
|Assets                        |                        
|Fed. funds sold               |                        
|Securities:                   |                        
|Taxable                       |                        
|Tax-exempt(3)                 |                        
|Loans and leases(1)(2)        |                        
|                              |                        
|Total earning assets/total    |                        
|interest income               |                        
|                              |                        
|Cash and due from banks       |                        
|Unrealized gain               |                        
|All other assets              |                        
|Allowance for loan loss       |                        
|                              |                        
|Total assets                  |                        
|                              |                        
|Liabilities and               |                        
|Stockholders' Equity          |                        
|Interest bearing deposits:    |                        
|MMDA, Savings/NOW accounts    |                        
|Time                          |                        
|Securities sold under         |                        
|agreements to repurchase      |                        
|and federal funds purchased   |                        
|Other borrowed money          |                        
|                              |                        
|Total interest bearing        |                        
|liabilities/ total            |                        
|interest expense              |                        
|                              |                        
|Non-interest bearing deposits |                        
|All other liabilities         |                        
|                              |                        
|Total liabilities             |                        
|Stockholders' Equity:         |                        
|Total equity                  |                        
|                              |                        
|Total liabilities and equity  |                        
|                              |                        
|Net interest income-FTE       |                        
|                              |                        
|Net interest margin as a      |                        
|percentage of average earning |                        
|assets - FTE                  |                        
|                              |                        

| | (1) | Non-accrual
loans and leases and loans held for sale have been included in the                average
loans and lease balances. Average non-accrual loans were approximately
               $3,605,000, $6,156,000 and $2,574,000 in 2003, 2002 and 2001 respectively.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Interest
on loans includes net origination fees totaling $226,000 in 2003,                $355,000
in 2002 and $257,000 in 2001.
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (3) | Interest
income on tax-exempt securities and loans is presented on a fully tax
               equivalent basis assuming a marginal tax rate of 34%.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Net
interest income is the principal source of income for the Company. In the current year,
tax equivalent net interest income declined approximately $2.2 million, to $17.3 million,
an 11.3% decrease from 2002.

In
2003, the yield on total earning assets decreased 115 basis points, compared to a 72 basis
point decline in the total interest bearing liabilities cost of funds. Both the net
interest spread and net interest margin decreased in 2003 due to lower interest rates and
interest earning assets repricing faster than interest bearing liabilities. The
compression is a result of significant commercial loan refinancing from long-term fixed
rates to short-term variable rates combined with the lowest interest rates in 45 years,
which reduces the spread and margin on the Banks non-interest bearing deposits and
other funding sources, known as free funds.

In
2002, the yield on total earning assets decreased 140 basis points, compared to a 129
basis point decline in the total interest bearing liabilities cost of funds. Both the net
interest spread and net interest margin decreased in 2002 due to lower interest rates and
interest earning assets repricing faster than interest bearing liabilities. The
compression is a result of significant commercial loan refinancing from long-term fixed
rates to short-term variable rates and an increase in the dollar amount of loans for which
the Bank stopped accruing interest, combined with the lowest interest rates in 40 years,
which compressed the Banks net interest margin.

-18-

---



Management
expects the declining trend in the fully taxable-equivalent (FTE) net interest margin to
moderate as the decline in general interest rates appears to have slowed with an improving
economy. However, the net interest margin is expected to remain below past levels as a
result of the continued low rate environment and continued fierce competition for deposits
in its local market. Management does not expect the net interest margin to decline
significantly from its current level, but also does not anticipate a substantial
improvement during 2004. The net interest margin is significantly affected by the monetary
policies of the U.S. government, local competition and level of economic activity. There
is no assurance regarding rates and the Banks net interest margin.

# Change in Tax Equivalent
Net Interest Income (in thousands)

|                            | 2003 Compared to 2002 | 2002 Compared to 2001
|--------------------------- | --------------------- | ---------------------
|
|Increase (decrease) in      |                       |                      
|interest income (1)         |                       |                      
|Federal funds sold          |                       |                      
|Securities:                 |                       |                      
|Taxable                     |                       |                      
|Tax Exempt (2)              |                       |                      
|Loans (2)                   |                       |                      
|                            |                       |                      
|Total interest income       |                       |                      
|                            |                       |                      
|                            |                       |                      
|Increase (decrease) in      |                       |                      
|interest income (1)         |                       |                      
|Interest bearing deposits:  |                       |                      
|Savings/NOW Accounts        |                       |                      
|Time                        |                       |                      
|Securities sold under       |                       |                      
|agreements to repurchase    |                       |                      
|and federal funds purchased |                       |                      
|Other Borrowed Money        |                       |                      
|                            |                       |                      
|Total Interest Expense      |                       |                      
|                            |                       |                      
|                            |                       |                      
|Net interest income (FTE)   |                       |                      
|                            |                       |                      

| | (1) | The
change in interest due to changes in both balance and rate has been
               allocated between the factors in proportion to the relationship of the
absolute                dollar amounts of change in each.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Interest
income on tax-exempt securities and loans is presented on a fully tax
               equivalent basis assuming a marginal tax rate of 34%.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Interest
from loans continues to be the primary source of interest income, accounting for 84.7%,
87.5% and 86.0% of total interest income for 2003, 2002 and 2001, respectively. Net
interest income is significantly influenced by results of the Banks lending
activities. During the past two years interest income has declined $9.5 million while
interest expense has declined $7.1 million over the same period. The primary reason
interest income has declined faster than interest expense is due to the significant shift
of long-term fixed rate commercial loans to floating rate commercial loans. Furthermore,
many of the Banks customers paid prepayment penalties to refinance their long-term
fixed rate commercial loans. Although the Bank collected prepayment penalties of
approximately $170,000 and $467,000 in 2002 and 2003 respectively, the decline in interest
income was significantly higher. The use of prepayment language in commercial loans is a
competitive issue and is being further reviewed by Bank management. Interest income also
declined in 2003 as a result of a decline in earning assets.

Total
interest expense decreased 24.9%, or $3.2 million from 2002 to 2003 and declined 23.2% or
$3.9 million from 2001 to 2002. The $3.2 million decline in the cost of funds is largely
due the low interest rate environment, and, to a lesser degree, the decline in total
deposits. Cost of funds is influenced by economic conditions and activities of the Federal
Reserve and local competition. 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.

-19-

---



# Composition of Average
Earning Assets and Interest Paying Liabilities

|                                                                                               | Year ended December 31,
|---------------------------------------------------------------------------------------------- | -----------------------
|
|As a percent of average earning assets                                                         |                        
|Loans                                                                                          |                        
|Other earning assets                                                                           |                        
|
|Average earning assets                                                                         |                        
|                                                                                               |                        
|Savings and NOW accounts                                                                       |                        
|Time deposits                                                                                  |                        
|Securities sold under agreements to repurchase, 
     fed funds purchased and other borrowings |                        
|
|Average interest bearing liabilities                                                           |                        
|                                                                                               |                        
|Average earning asset ratio                                                                    |                        
|Free funds ratio                                                                               |                        

The
Banks earning asset ratio rebounded in 2003 due to the reduction in loans on
non-accrual, which resulted in a decline in the earning asset ratio in 2002 compared to
2001.

The
free funds ratio, funds on which the bank does not pay interest, increased from 12% in
2002 to 16% in 2003. The improvement reflects an increase in the Banks
stockholders equity percent to average earning assets

# Provision and Allowance
for Loan Loss

The
provision for loan losses charged to earnings was $625,000 in 2003, compared to $4.1
million for 2002 and $3.0 million for 2001. The decrease in the provision reflects a
substantial improvement in asset quality and significant reduction in net loan losses
during 2003. Although asset quality is substantially improved, loans originated prior to
managements adoption of new underwriting standards still present a higher level of
risk than loans made after adoption of these standards. Based upon the most recent review
of the loan portfolio, it is unlikely that a provision for loan losses will be required in
the early part of 2004. However, conditions can change suddenly, and a provision for loan
losses will be charged against earnings if, and when it becomes necessary.

As
previously reported, management has taken significant steps to improve underwriting
standards, and loan administration and has exited the indirect consumer loan business.
These changes have improved asset quality. Future changes in asset quality will be subject
to continued adherence to established policies and the general economic conditions of the
markets in which the Bank operates.

-20-

---



Non-interest Income (in
thousands)

|                                          | Year ended December 31,
|----------------------------------------- | -----------------------
|
|Service charges on deposit accounts       |                        
|Net gains on asset sales:                 |                        
|Loans                                     |                        
|Securities                                |                        
|Amortization of mortgage servicing rights |                        
|Impairment of mortgage servicing rights   |                        
|Loan servicing fees                       |                        
|Insurance premium revenue                 |                        
|Brokerage revenue                         |                        
|Other                                     |                        
|
|Total non-interest income                 |                        
|

Non-interest
income declined 5%, or approximately $0.4 million from 2002 to 2003, compared to an
increase of 22%, or approximately $1.2 million from 2001 to 2002. Service charges on
deposits increased 16% due to deposit account growth and changes in the Banks fee
structure. The gain on sale of mortgages declined $0.7 million, or 20%, despite a 7%
increase in the volume of mortgage loans sold during 2003. The decline in gains on sale of
loans reflects a lower sales price on loans due to a more aggressive pricing strategy.
Additionally, the decrease reflects the sale of some mortgages at a loss during the third
quarter. It is the Banks practice to obtain rate locks on nearly all of the mortgage
production that is sold, however, the overwhelming volume of mortgages in the third
quarter prevented the Bank from closing all mortgage production within the rate lock time
period. At December 31, 2003, the Bank had approximately $1.7 million of loans available
for sale, which are reported at the lower of cost or market value of those loans. As a
result of the low rates and record mortgage refinancing activity, the mortgage servicing
asset of the Bank was reduced by an 87% increase in the amortization of the Banks mortgage
servicing asset. Late in 2003, the level of amortization slowed substantially as the
mortgage volume declined. The slower prepayments and upward movement in rates also
resulted in a reduction of the valuation allowance attributed to the mortgage servicing
asset. The Bank employs an independent third party to determine the fair value of the
mortgage servicing asset.

# Net Gains on the Sale of
Real Estate Mortgage Loans (in thousands)

|                                                            | Year ended December 31,
|----------------------------------------------------------- | -----------------------
|
|Total real estate mortgage loan originations                |                        
|                                                            |                        
|Real estate mortgage loan sales, servicing retained         |                        
|                                                            |                        
|Real estate mortgage loan sales, servicing released         |                        
|                                                            |                        
|Net gains on the sale of real estate mortgage loans         |                        
|                                                            |                        
|Net gains as a percent of real estate mortgage loan sales . |                        

The
decrease in gains on sale of real estate loans is a result of a lower sales price on loans
due to a more aggressive pricing strategy and the sale of some mortgages at a loss in the
third quarter of 2003. Net gains on the sale of loans are generally a function of the
volume of loans sold. The volume of loans sold is dependent upon the Banks ability
to originate loans, which is particularly sensitive to the absolute level of interest
rates. Net gains on the sale of real estate mortgage loans are also dependant upon
economic and competitive factors as well as managements ability to effectively
manage the Banks exposure to changes in interest rates. The Bank intends to
aggressively market its services in the real estate area.

-21-

---



# Realized Gains and
Losses on the Sale of Securities (in thousands)

|     | Year ended December 31,
|---- | -----------------------
|
|2003 |                        
|2002 |                        
|2001 |                        

Generally,
securities are purchased with the anticipation that the Company would hold them to
maturity. However, occasionally securities are sold for asset & liability management
planning, or to take advantage of changes in the yield curve. Approximately $138,000 of
the gain in 2003 is due to the sale of equity securities, predominately other bank stocks,
held at the parent company.

# Non-interest Expense

Non-interest
expense increased $391,000 or 2.4% in 2003, compared to 2002. The Companys salary
expense increased 9.5%, or $701,000 during 2003, compared to 2002. The increase includes
the addition of several key management positions and significantly higher mortgage
commissions due to the increased volume and change in compensation structure. The average
number of employees declined by one, from 200 in 2002 to 199, including the new Jenison
Office, in 2003. Employee benefits declined 1.6%, or $28,000 during 2003 compared to a
year earlier. An increase in employment taxes was off-set by a slight decline in the
employee health benefits and profit sharing plan. The Companys medical plan is
self-insured and medical claims and participation fluctuate from year to year. Management
has implemented strategies to contain health benefit costs. In November, the Bank opened a
new office in Jenison, Michigan. The new office is not expected to significantly increase
non-interest expense. Data processing and software expense increased approximately 20% in
2003, following an increase of approximately 25% during 2002. The Bank has completed
significant software and hardware upgrades over the past two years. Significant additional
investments are not expected in the near-term, however, the Bank anticipates a continued
investment in technology to remain competitive and to maintain existing systems.
Professional and legal fees decreased 13% compared to 2002, as a result of a reduction in
the remediation cost attributed to the prior Supervision and Regulation issues.
Professional and legal fees are expected to continue to decline in 2004. Printing &
Supplies, Marketing and Other non-interest expenses declined approximately 14% in
aggregate. The decrease reflects managements effort to reduce operating cost and
decrease in remediation costs associated with loan collection cost and legal fees. The
decrease includes the recapture of approximately $210,000 of director deferred
compensation benefit plan expense due to the early retirement of a participating director.
Management will continue to explore opportunities to become more efficient and reduce
operating expenses that are not directly related to revenue production or necessary for
the safe operation of the Bank. Management anticipates that total non-interest expense
should be within a range of up 5% to down 5% in 2004.

Non-interest
expense increased $2,367,000 or 16.9% in 2002, compared to 2001. The Companys salary
expense increased 18.4%, or $1,141,000 during 2002, compared to 2001. The increase
includes the addition of several key management positions and an increase in the number of
employees due to the Banks past growth. Employee benefits increased 18.4%, or
$278,000 during 2002 compared to a year earlier. The Companys medical plan is
self-insured and there were higher medical claims and more employees enrolled in the plan.
Health benefits increased 44.0% over 2001. Data processing and software expense increased
25.3%, or $194,000 during 2002, compared to 2001. Professional and legal fees increased
56.1% or $244,000, compared to 2001. This increase was largely due to issues discussed
under Supervision and Regulation. Other non-interest expenses increased 8.7%, or $196,000
in 2002, compared to a year earlier. This increase includes higher postage, lending costs
due to growth as well as higher director fees and FDIC fees due to issues discussed under
Supervision and Regulation.

-22-

---



|                             | Year ended December 31,
|---------------------------- | -----------------------
|
|Salaries                     |                        
|Employee benefits            |                        
|Occupancy                    |                        
|Equipment                    |                        
|Data processing and software |                        
|Professional and legal fees  |                        
|Printing and supplies        |                        
|Marketing                    |                        
|Other                        |                        
|
|Total non-interest expense   |                        
|

# Provision for Income
Taxes

The
provision for income taxes was $1,564,000 in 2003, compared with $1,490,000 in 2002and
$1,644,000 in 2001. The Companys effective tax rate approximated 27% in 2003, 28% in
2002 and 21% in 2001. The lower effective tax rate for the year 2001 reflects the
utilization of a valuation allowance from earlier periods. As of December 31, 2001 the
valuation allowance was zero. Excluding the valuation allowance credit, the provision for
income taxes would have been $2,083,000, or 27% in 2001.

# LIQUIDITY AND CAPITAL
RESOURCES

# Capital

Capital
provides the foundation for future growth and expansion. The major component of capital is
stockholders equity. Stockholders equity was $55.1 million as of December 31,
2003, an increase of $2.5 million, or 4.7% from a year ago. The increase is primarily from
the retention of earnings. The Company will fund future growth with current capital and
retention of future earnings.

In
2003, the Company paid cash dividends totaling $1.1 million, approximately 26% of
earnings. In 2002, the Company paid cash dividends totaling $1.5 million, or approximately
39% of earnings. The higher percentage was the result of lower earnings in 2002 and not a
change in the dividend policy.

Under
the regulatory risk-based capital guidelines in effect for both banks and bank
holding companies, minimum capital levels are based upon perceived risk in the
Companys various asset categories. These guidelines assign risk weights to
on-balance sheet and off-balance sheet categories in arriving at total risk-adjusted
assets. Regulatory capital is divided by the computed total of risk adjusted assets to
arrive at the minimum levels prescribed by the Federal Reserve Board as of December 31,
2003, as shown in the table below:

# Capital Resources (in
thousands)

|                          | Regulatory Requirements | December 31,
|------------------------- | ----------------------- | ------------
|
|
|
|Tier 1 capital            |                         |             
|Tier 2 capital            |                         |             
|
|Total qualifying capital  |                         |             
|
|                          |                         |             
|Tier 1 leverage ratio     |                         |             
|Tier 1 risk-based capital |                         |             
|Total risk-based capital  |                         |             

-23-

---



# Interest Rate Risk

The
primary components of the balance sheet are interest-earning assets, which are funded by
interest-bearing liabilities. The differences in cash flows of these rate sensitive assets
and liabilities, combined with shifts, or changes in the overall market yield curve result
in interest rate risk. Interest rate risk is the change in net interest income due to
interest rate changes. Interest rate risk is inherent to banking and cannot be eliminated.

The
Asset and Liability Management Committee (ALCO) is responsible for overseeing the
financial management of net interest income, liquidity, investment activities, and other
related activities. In regard to interest rate risk, management has relied on re-pricing
GAP analysis, which is a traditional method of assessing interest rate risk. Recognizing
that there is no single measure that absolutely measures current or future risk,
management also relies on a simulation analysis to assess risk in dynamic interest rate
environments.

# Maturities and
Sensitivities of Loans to Changes in Interest Rates

The
following table shows the amount of total loans outstanding as of December 31, 2003, which
based on scheduled maturity dates, are due in the periods indicated.

|                            | Maturing
(in thousands)
|--------------------------- | -----------------------
|
|Residential Real Estate     |                        
|Installment                 |                        
|Commercial Real Estate      |                        
|Other Commercial            |                        
|
|Totals                      |                        
|
|Allowance for Loan Losses   |                        
|                            |                        
|Total Loans Receivable, Net |                        
|                            |                        

Below
is a schedule of the amounts maturing or re-pricing, which are classified according to
their sensitivity to changes in interest rates.

|                                    | Interest Sensitivity
(in thousands)
|----------------------------------- | -----------------------------------
|
|Due within 3 months                 |                                    
|Due after 3 months within 1 year    |                                    
|Due after one but within five years |                                    
|Due after five years                |                                    
|
|Total                               |                                    
|
|Allowance for loan losses           |                                    
|
|Total loans receivable, net         |                                    
|

-24-

---



# Asset/Liability Gap
Position (in thousands)

|                                           | December 31, 2003
|------------------------------------------ | -----------------
|                                           |                  
|
|Interest earning assets:                   |                  
|Fed Funds Sold                             |                  
|Loans                                      |                  
|Securities (including restricted           |                  
|investments)                               |                  
|Loans held for sale                        |                  
|                                           |                  
|Total interest earning assets              |                  
|                                           |                  
|Non-interest earning assets:               |                  
|Cash and due from banks                    |                  
|Allowance for loan losses                  |                  
|Accrued interest receivable                |                  
|Premises and equipment (net)               |                  
|Other assets                               |                  
|                                           |                  
|Total non-interest earning assets          |                  
|                                           |                  
|Total Assets                               |                  
|                                           |                  
|                                           |                  
|Interest bearing liabilities:              |                  
|Savings & NOW                              |                  
|Time                                       |                  
|                                           |                  
|Total deposits                             |                  
|Other borrowings                           |                  
|                                           |                  
|Total interest bearing liabilities .       |                  
|                                           |                  
|                                           |                  
|Non-interest bearing liabilities           |                  
|and equity:                                |                  
|Non-interest bearing deposits              |                  
|Other liabilities                          |                  
|Stockholders' equity                       |                  
|                                           |                  
|Total non-interest bearing liabilities     |                  
|and equity:                                |                  
|                                           |                  
|Total liabilities and stockholders' equity |                  
|                                           |                  
|                                           |                  
|Rate sensitivity gap and ratios:           |                  
|Gap for period                             |                  
|Cumulative gap                             |                  
|Period gap ratio                           |                  
|Cumulative gap ratio                       |                  
|Gap /Total Earning assets                  |                  
|Period                                     |                  
|Cumulative                                 |                  

The
asset/liability gap reflects the scheduled repayment and maturities of the Banks
loans and investments. Management has made a number of assumptions to improve the
usefulness of the gap analysis and to manage interest rate risk. The assumptions include,
but are not limited to, prepayments on loans, repayment speeds on certain investment
securities, and the likelihood of certain call and put features on financial instruments
being exercised. Also, savings and NOW accounts, which have a variable interest rate, are
treated as not immediately sensitive to changes in interest rates, based on the
Banks historical experience and future intentions. Management attempts to reflect
the sensitivity of assets and liabilities, however, customer behavior in different rate
and economic environments is not entirely predictable. As such, interest rate risk cannot
be eliminated.

-25-

---



As
of December 31, 2003 the cumulative one year gap position was approximately 11.4% of
earning assets. The table above reflects that the Bank has an asset repricing gap of
approximately $89 million at 3 months and an asset repricing gap of $54 million at one
year. The Banks asset sensitive position has increased from a year ago as a result
of the significant commercial refinance activity in which customers moved from long-term
fixed to floating rate loans. In an effort to mitigate this shift by our customers, the
Bank has increased its investment in fixed rate mortgages and securities. The Banks
gap position indicates that within one year the net interest margin should decrease if
interest rates decline and increase if interest rates rise. Management recognizes that GAP
analysis alone is not a reliable measure of interest rate risk. Management is comfortable
with the Banks current GAP position and interest rate exposure and will continue to
invest in assets and fund liabilities with the intent of maintaining a neutral GAP
position. Management regularly reviews the asset liability gap position and other
available information to manage the overall interest rate risk of the Bank.

# 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 brokered 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.

# Changes in Market Value
of Portfolio Equity and Net Interest Income (dollars in thousands)

|Change in Interest Rates | Market Value of Portfolio
Equity(1) | Percent
Change | Net Interest
Income(2) | Percent
Change
|------------------------ | ----------------------------------- | -------------- | ---------------------- | --------------
|300 basis point rise     |                                     |                | $                      | 41,134        
|200 basis point rise     |                                     |                |                        | 44,093        
|100 basis point rise     |                                     |                |                        | 46,924        
|Base rate                |                                     |                |                        | 49,571        
|100 basis point decline  |                                     |                |                        | 52,185        
|200 basis point decline  |                                     |                |                        | 55,238        
|300 basis point decline  |                                     |                |                        | 58,148        

| | (1) | Simulation
analyses calculate the change in the net present value of the                Companys
assets and liabilities, under parallel shifts in interest rates,                by
discounting the estimated future cash flows.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Simulation
analyses calculate the change in net interest income, under parallel
               shifts in interest rates over the next 12 months, based on a static
balance                sheet.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Simulation
models are useful tools, but require numerous assumptions that have a significant impact
on the measured interest rate risk. The use of a simulation models require numerous
assumptions, which could impact the results. Simulation models require the ability to
accurately predict customer behavior to interest rate changes, changes in the competitive
environment, and other economic factors.

# Liquidity

Liquidity
is measured by our ability to raise funds through deposits, borrowed funds, capital or
cash flow from the repayment of loans and investment securities. These funds are used to
meet deposit withdrawals, maintain reserve requirements, fund loans and operate our
company. Liquidity is primarily achieved through the growth of deposits and liquid assets
such as securities available for sale, matured securities, and federal funds sold. Asset
and liability management is the process of managing the balance sheet to achieve a mix of
earning assets and liabilities that maximizes profitability, while providing adequate
liquidity.

The
Companys liquidity strategy is to fund loan growth with deposits, and other borrowed
funds and to maintain an adequate level of short- and medium-term investments to meet
typical daily loan and deposit activity. The effort to improve asset quality led to a
decline in the total loans outstanding in 2003. This resulted in an increased amount of
liquidity, which was invested in securities and used to reduce the Banks use of FHLB

-26-

---



borrowed funds, brokered certificates and certificates of deposit over $100,000. Advances
from the Federal Home Loan Bank decreased by $1 million, the use of brokered certificates
of deposit decreased by $6 million and certificates of deposit over $100,000 declined by
$13.5 million in 2003 compared to 2002.

We
have the ability to borrow money on a daily basis through correspondent banks using
established federal funds purchased lines; however, this is generally viewed as only a
secondary and temporary source of funds. During 2003, our federal funds sold position
averaged $27 million and our federal funds purchased position averaged $0. At December 31,
2003, our established unsecured federal funds purchased lines totaled $27 million. In
addition, as a member of the Federal Home Loan Bank of Indianapolis (FHLBI),
our bank has access to the FHLBIs borrowing programs. Based on available collateral
at December 31, 2003, our bank could borrow up to an additional $6.8 million. At December
31, 2003, FHLBI advances totaled $33 million.

Net
cash flows from operating activities fluctuate sharply from year to year due to the dollar
amount of mortgage loans originated and the amount of mortgage loans sold. The significant
changes from 2001 to 2002 and from 2002 to 2003 are largely due to mortgage loan related
activity. Cash flows from investing activities reflect cash provided from a reduction in
total loans and use of cash to increase the available for sale securities portfolio. Net
loan growth declined from $1 million in 2002 to a $13 million reduction in 2003. This
decline reflects the economic slow down and tightening of credit standards on consumer and
commercial loans. The sharp decline in interest rates has resulted in an increase of
principal repayments on mortgage-backed securities. The increased cash flows were
re-invested in securities with maturities of two to five years.

The
significant change in cash flows from financing activities from providing approximately
$32 million in 2002 to using approximately $32 million in 2003 is the result of the
Banks lower funding needs resulting from the decline in net loan growth explained
above. The Bank did not need to compete as aggressively for funding that is typically
considered volatile. As such, certificates of deposit over $100,000, which includes
brokered certificates, declined approximately $20 million and other time deposits, which
are subject to local promotions in the market area, declined by $14 million. Management
believes that these sources of funding continue to be available to the Bank, subject to
offering more aggressive interest rates.

The
Companys cash and cash equivalents declined approximately $37 million during 2003 to
$20 million at December 31, 2003. The decrease in liquidity is reflected in the
Companys December 31, 2003 federal funds balance, which declined approximately $33
million. Overall liquidity is significantly determined by deposit and loan growth in
addition to borrowing and security investment activity.

# Contractual Obligations
(dollars in thousands)

|                                   | Payments Due by Period
|---------------------------------- | ----------------------
|
|Long-term debt                     |                       
|
|Total contractual cash obligations |                       

The
long-term debt obligations consist entirely of fixed rate advances from the Federal Home
Loan Bank that were purchased to fund growth in the loan portfolio.

# Other Commercial
Commitments

|                             | Amount of Commitment Expiration Per Period
|---------------------------- | ------------------------------------------
|
|Lines of credit              |                                           
|Standby letters of credit    |                                           
|Other commercial commitments |                                           
|
|Total commercial commitments |                                           

All
of the commercial commitments are underwritten using the commercial loan underwriting
guidelines.

-27-

---



# 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.

# Selected Quarterly
Financial Data (Unaudited):   (in thousands, except per share data)

|                               | Three Months Ended
|------------------------------ | ------------------
|
|Periods Ended, 2003            |                   
|Total Assets                   |                   
|Net Interest Income            |                   
|Provision for Loan Losses      |                   
|Net Income                     |                   
|                               |                   
|Earnings per Share             |                   
|Book Value per Share           |                   
|Return on Average Assets       |                   
|Return on Stockholders' Equity |                   
|Efficiency Ratio               |                   
|                               |                   
|Periods Ended, 2002            |                   
|Total Assets                   |                   
|Net Interest Income            |                   
|Provision for Loan Losses      |                   
|Net Income                     |                   
|                               |                   
|Earnings per Share             |                   
|Book Value per Share           |                   
|Return on Average Assets       |                   
|Return on Stockholders' Equity |                   
|Efficiency Ratio               |                   

-28-

---



# ITEM 7A: Quantitative
and Qualitative Disclosures About Market Risk

A
derivative financial instrument includes futures, forwards, interest rate swaps, option
contracts, and other financial instruments with similar characteristics. The Company
currently does not enter into futures, forwards, swaps, or options. However, the Company
is party to financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit. These instruments involve to
varying degrees, elements of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. Commitments to extend credit are agreements
to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates and may require collateral
from the borrower if deemed necessary by the Company. Standby letters of credit are
conditional commitments issued by the Company to guarantee the performance of a customer
to a third party up to a stipulated amount and with specified terms and conditions.

Commitments
to extend credit and standby letters of credit are not recorded as an asset or liability
by the Company until the instrument is exercised.

The
Companys exposure to market risk is reviewed on a regular basis by the
Asset/Liability Committee (See Market Risk from Item 7). Interest rate risk is
the potential of economic losses due to future interest rate changes. These economic
losses can be reflected as a loss of future net interest income and/or a loss of current
fair market values. The objective is to measure the effect on net interest income and to
adjust the balance sheet to manage the inherent risk while at the same time maximize
income. Management realizes certain risks are inherent and that the goal is to identify
and minimize the risks. Tools used by management include the standard GAP report and a
simulation model. The Company has no market risk sensitive instruments held for trading
purposes.

# ITEM 8. Financial
Statements and Supplementary Data

The
Consolidated Financial Statements, Notes to Consolidated Financial Statements and the
Report of the Independent Public Accountants are included in the following pages.

-29-

---



Independent
Auditors Report

To the Board of Directors
and StockholdersO.A.K Financial Corporation and Subsidiary

We have audited the accompanying
consolidated balance sheet of O.A.K Financial Corporation and Subsidiary as of December
31, 2003 and 2002 and the related consolidated statements of income, comprehensive income,
changes in stockholders equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the 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 auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the 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
consolidated financial position of O.A.K Financial Corporation and Subsidiary as of
December 31, 2003 and 2002, and the consolidated results of their operations, and their
cash flows for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

| | /s/ Plante & Moran, PLLC
| | ------------------------

Grand Rapids, MichiganJanuary
30, 2004

-30-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | CONSOLIDATED BALANCE SHEETS
|------------------------------------------ | ---------------------------
|                                          

(dollars in thousands, except per
share data)

|                              | December 31,
|----------------------------- | ------------
|
|                             
|Cash and due from banks       |             
|Federal funds sold            |             
|                              |             
|Cash and cash equivalents     |             
|                             
|Available-for-sale securities |             
|Total Loans                   |             
|Allowance for loan losses     |             
|                              |             
|Net Loans                     |             
|                             
|Loans held for sale           |             
|Accrued interest receivable   |             
|Premises and equipment, net   |             
|Restricted investments        |             
|Other assets                  |             
|                              |             
|Total assets                  |             
|                              |             

|LIABILITIES AND STOCKHOLDERS' EQUITY                    
|--------------------------------------------------------
|                                                        
|Deposits                                                
|Interest bearing                                        
|Non-interest bearing                                    
|                                                        
|Total deposits                                          
|                                                        
|Securities sold under agreements to repurchase          
|FHLB advances                                           
|Other borrowed funds                                    
|Other liabilities                                       
|                                                        
|Total liabilities                                       
|                                                        
|Stockholders' equity                                    
|Common stock, $1 par value; 4,000,000 shares authorized,
|shares issued and outstanding: 2,035,191 at December 31,
|2003 and 2,040,780 at December 31, 2002                 
|Additional paid-in capital                              
|Retained earnings                                       
|Accumulated other comprehensive income                  
|Unallocated common stock held by ESOP                   
|                                                        
|Total stockholders' equity                              
|                                                        
|Total liabilities and stockholders' equity              
|                                                        

The accompanying notes
are an integral part of these consolidated financial statements.

-31-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | CONSOLIDATED STATEMENTS OF INCOME
|------------------------------------------ | ---------------------------------
|                                          

(dollars in thousands, except
earnings per share)

|                                                   | Year Ended December 31,
|-------------------------------------------------- | -----------------------
|                                                   |                        
|                                                   |                        
|Interest income                                    |                        
|Interest and fees on loans                         |                        
|Available-for-sale securities                      |                        
|Restricted investments                             |                        
|Federal funds sold                                 |                        
|                                                   |                        
|                                                   |                        
|Total interest income                              |                        
|                                                   |                        
|                                                   |                        
|Interest expense                                   |                        
|Deposits                                           |                        
|Securities sold under agreements to repurchase     |                        
|FHLB Advances                                      |                        
|Borrowed funds                                     |                        
|                                                   |                        
|                                                   |                        
|Total interest expense                             |                        
|                                                   |                        
|                                                   |                        
|Net interest income                                |                        
|                                                   |                        
|Provision for loan losses                          |                        
|                                                   |                        
|                                                   |                        
|Net interest income after provision for            |                        
|loan losses                                        |                        
|                                                   |                        
|                                                   |                        
|Non-interest income                                |                        
|Service charges on deposit accounts                |                        
|Net gain on sales of loans held for sale           |                        
|Amortization of mortgage servicing rights          |                        
|Change in impairment of mortgage servicing rights  |                        
|Loan servicing fees                                |                        
|Net gain on sales of available for sale securities |                        
|Insurance premiums                                 |                        
|Brokerage fees                                     |                        
|Other                                              |                        
|                                                   |                        
|                                                   |                        
|Total non-interest income                          |                        
|                                                   |                        
|                                                   |                        
|Non-interest expenses                              |                        
|Salaries                                           |                        
|Employee benefits                                  |                        
|Occupancy (net)                                    |                        
|Furniture and fixtures                             |                        
|Other                                              |                        
|                                                   |                        
|                                                   |                        
|Total non-interest expenses                        |                        
|                                                   |                        
|                                                   |                        
|Income before federal income taxes                 |                        
|                                                   |                        
|Federal income taxes                               |                        
|                                                   |                        
|                                                   |                        
|Net income                                         |                        
|                                                   |                        
|Income per common share:                           |                        
|                                                   |                        
|Basic                                              |                        
|                                                   |                        
|Diluted                                            |                        
|                                                   |                        

The accompanying notes
are an integral part of these consolidated financial statements.

-32-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | CONSOLIDATED STATEMENTS OFCHANGES IN STOCKHOLDERS' EQUITY
|------------------------------------------ | ---------------------------------------------------------
|                                          

(in thousands)

|                                              | Year Ended December 31,
|--------------------------------------------- | -----------------------
|                                              |                        
|                                              |                        
|Shares of common stock issued and outstanding |                        
|Balance, beginning of year                    |                        
|Common stock forfeitures                      |                        
|Common stock issued                           |                        
|Redemption of unallocated ESOP shares         |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Common stock                                  |                        
|Balance, beginning of year                    |                        
|Common stock forfeitures                      |                        
|Common stock issued                           |                        
|Redemption of unallocated ESOP shares         |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Additional paid-in-capital                    |                        
|Balance, beginning of year                    |                        
|Common stock issued                           |                        
|Redemption of unallocated ESOP shares         |                        
|Allocation of ESOP shares                     |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Retained earnings                             |                        
|Balance, beginning of year                    |                        
|Net income                                    |                        
|Cash dividends                                |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Accumulated other comprehensive income        |                        
|Balance, beginning of year                    |                        
|Other comprehensive (loss) income             |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Unallocated common stock held by ESOP         |                        
|Balance, beginning of year                    |                        
|Redemption of unallocated ESOP shares         |                        
|Allocation of ESOP shares                     |                        
|                                              |                        
|                                              |                        
|Balance, end of year                          |                        
|                                              |                        
|                                              |                        
|Total stockholders' equity                    |                        
|                                              |                        

The accompanying notes
are an integral part of these consolidated financial statements.

-33-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | CONSOLIDATED STATEMENTS OFCASH FLOWS
|------------------------------------------ | ------------------------------------
|                                          

(dollars in thousands)

|                                                     | Year Ended December 31,
|---------------------------------------------------- | -----------------------
|                                                     |                        
|                                                     |                        
|Cash flows from operating activities                 |                        
|Net income                                           |                        
|Adjustments to reconcile net income to net           |                        
|cash provided by operating activities                |                        
|Depreciation and amortization                        |                        
|Provision for loan losses                            |                        
|Proceeds from sales of loans held for sale           |                        
|Originations of loans held for sale                  |                        
|Net gain on sales of available-for-sale securities   |                        
|Net gain on sales of loans held for sale             |                        
|Net amortization of investment premiums              |                        
|(Gain) loss on sales of property and equipment       |                        
|Deferred federal income taxes                        |                        
|Changes in operating assets and liabilities          |                        
|which (used) provided cash                           |                        
|Accrued interest receivable                          |                        
|Stock dividends received from restricted investments |                        
|Other assets                                         |                        
|Other liabilities                                    |                        
|                                                     |                        
|Net cash (used in) provided by operating activities  |                        
|                                                     |                        
|                                                     |                        
|Cash flows from investing activities                 |                        
|Available-for-sale securities                        |                        
|Proceeds from maturities                             |                        
|Proceeds from sales                                  |                        
|Purchases                                            |                        
|Purchase of restricted investments                   |                        
|Net decrease (increase) in loans held for investment |                        
|Purchases of premises and equipment                  |                        
|Proceeds from the sale of premises and equipment     |                        
|                                                     |                        
|Net cash used in investing activities                |                        
|                                                     |                        
|Cash flows from financing activities                 |                        
|Net (decrease) increase in deposits                  |                        
|Net increase (decrease) in TT&L note                 |                        
|Proceeds from FHLB borrowings                        |                        
|Repayments of FHLB borrowings                        |                        
|Net other borrowed funds (repayments)                |                        
|Net (decrease) increase in securities sold under     |                        
|agreements to repurchase and fed funds purchased     |                        
|Dividends paid                                       |                        
|Proceeds from issuance of common stock               |                        
|                                                     |                        
|Net cash (used in) provided by financing activities  |                        
|                                                     |                        
|Net (decrease) increase in cash and cash equivalents |                        
|Cash and cash equivalents, beginning of year         |                        
|                                                     |                        
|Cash and cash equivalents, end of year               |                        
|                                                     |                        
|Supplementary cash flows information                 |                        
|Interest paid                                        |                        
|Income taxes paid                                    |                        
|                                                    
|Non-cash activities                                  |                        
|Loans transferred to other real estate               |                        

The accompanying notes
are an integral part of these consolidated financial statements.

-34-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 1.  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The
consolidated financial statements include the accounts of the Corporation, and its
subsidiaries, OAK ELC and Byron Center State Bank (the Bank), and its subsidiary, OAK
Financial Services, and its subsidiary, Dornbush Insurance Agency, after elimination of
significant intercompany transactions and accounts.

Nature of Operations: The bank
provides a variety of financial services to individuals and businesses in the western
Michigan area through its twelve branches located in Byron Center, Jamestown, Cutlerville,
Hudsonville, Grandville, Moline, Dorr, Hamilton, Allendale, Zeeland, Kentwood and Jenison.
Active competition, principally from other commercial banks and credit unions, exists in
all of the Banks principal markets. The Bank is a state chartered bank and a member
of the Federal Reserve Bank (FRB). Deposits are insured by the Federal Deposit
Insurance Corporations (FDIC) Bank Insurance Fund. The Bank is subject
to the regulations and supervision of the FDIC, the FRB and the Michigan Office of
Financial Institutions and Insurance Services (OFIS) and undergoes periodic
examinations by these regulatory authorities.

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. O.A.K. Financial Services offers mutual fund products, securities
brokerage services, retirement planning services, investment management and advisory
services. Dornbush Insurance Agency offers property and casualty, life, disability and
long-term care insurance products.

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

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

Available-For-Sale Securities:
Securities available-for-sale consists of those securities, which might be sold prior to
maturity due to changes in interest rates, prepayment risks, yield and availability of
alternative investments, liquidity needs or other factors. Securities classified as
available for sale are reported at fair value with unrealized gains or losses reported in
other comprehensive income, net of tax. Declines in the fair value of securities below
cost that are determined to be other than temporary are reflected in earnings as realized
losses.

Premiums and discounts are recognized
in interest income using the interest method over the period to maturity. Gains or losses
on the sale of available-for-sale securities are determined using the specific
identification method.

Loans: Loans are reported at their
outstanding unpaid principal balances adjusted for any charge-offs, the allowance for loan
losses, and any deferred fees or costs on originated loans. Interest on loans is accrued
over the term of the loan based on the principal amount outstanding. The accrual of
interest on impaired loans is discontinued when, in the opinion of management, the
borrower may be unable to meet payments as scheduled. When the accrual of interest is
discontinued, all uncollected accrued interest is reversed. Interest income on such loans
is recognized only to the extent cash payment is received. Loans are returned to accrual
status when all the principal and interest amounts contractually due are brought current
and future payments are reasonably assured. For impaired loans not classified as
non-accrual, interest income continues to be accrued over the term of the loan based on
the principal amount outstanding. Loan origination fees, net of certain direct loan
origination costs, are deferred and recognized as an adjustment of the related loan yield
using the interest method.

The Corporation grants commercial
real estate, residential real estate, commercial, and consumer loans to customers. A
substantial portion of the loan portfolio is represented by commercial real estate loans
throughout West-Michigan. The ability of the Corporations debtors to honor their
contracts is dependant upon the real estate and general economic conditions in this area.

-35-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 1.  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Allowance for Loan Losses: The
allowance for loan losses is established as losses are estimated to have occurred through
a provision for loan losses charged to earnings.  Loan losses are charged
against the allowance when management believes the uncollectibility of the loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for
loan losses is evaluated on a regular basis by management and is based upon
managements periodic review of the collectibility of the loans in light of
historical experience, the nature and volume of the loan portfolio, adverse situations
that may affect the borrowers ability to repay, estimated value of any underlying
collateral and prevailing economic conditions. This evaluation is inherently subjective as
it requires estimates that are susceptible to significant revision as more information
becomes available.

The allowance consists of specific,
general and unallocated components. The specific components relates to loans that are
classified as doubtful, substandard or special mention. For such loans that are also
classified as impaired, an allowance is established when the discounted cash flows (or
collateral value or observable market price) of the impaired loan is lower than the
carrying value of that loan. The general component covers non-classified loans and is
based on historical loss experience adjusted for qualitative factors. An unallocated
component is maintained to cover uncertainties that could affect managements
estimate of probable losses. The unallocated component of the allowance reflects the
margin of imprecision inherent in the underlying assumptions used in the methodologies for
estimating specific and general losses in the portfolio.

A loan is considered impaired when
full payment under the loan or lease terms is not expected. Impairment is evaluated by
assessing payment status, collateral value, and the probability of collecting scheduled
principal and interest payments when due. Loans are evaluated for impairment when payments
are delayed, typically 90 days or more, or when the internal grading system indicates a
doubtful classification. Impairment is measured on a loan by loan basis for commercial and
construction loans by either the present value of expected future cash flows discounted at
the loans effective interest rate, the loans obtainable market price, or the
fair value of the collateral if the loan is collateral dependent. Large groups of smaller
balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank
does not separately identify individual consumer and residential loans for impairment
disclosures.

Loans Held for Sale: Loans originated
and intended for sale in the secondary market are carried at the lower of cost or
estimated fair value in the aggregate. Net unrealized losses, if any, are recognized in a
valuation allowance by charges to income.

Premises and Equipment: Land is
carried at cost. Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using both the straight-line and accelerated methods over the
useful lives of the respective assets. Maintenance, repairs and minor alterations are
charged to current operations as expenditures occur and major improvements are
capitalized. These assets are reviewed for impairment.

Servicing: Servicing assets are
recognized as separate assets when rights are acquired through purchase or through sale of
financial assets. Capitalized servicing rights are reported in other assets and are
amortized into non-interest income in proportion to, and over the period of, the estimated
future net servicing income of the underlying financial assets. Servicing assets are
evaluated for impairment based upon the fair value of the rights as compared to amortized
cost. Impairment is determined by stratifying rights by predominant characteristics, such
as interest rates and terms. Fair value is determined using prices of similar assets with
similar characteristics, when available, or based upon discounted cash flows using
market-based assumptions. Impairment is recognized through a valuation allowance.

Income Taxes: Income tax expense is
the sum of the current years income tax due or refundable and the change in deferred tax
assets and liabilities. Deferred tax assets and liabilities are the expected future tax
consequence of temporary differences between the carrying amounts and tax bases of assets
and liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized. The Corporation and its
subsidiary file a consolidated federal income tax return on a calendar year basis.

-36-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 1.  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)

Off Balance Sheet Instruments:In the
ordinary course of business, the Bank has entered into commitments to extend credit,
including commitments under credit card arrangements, commercial letters of credit, and
standby letters of credit. Such financial instruments are recorded when they are funded.

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

Fair Values of Financial Instruments:
Fair values of financial instruments are estimated using relevant market information and
other assumptions, as more fully disclosed separately. Fair value estimates involve
uncertainties and matters of significant judgment regarding interest rates, credit risk,
prepayments and other factors, especially in the absence of broad markets for particular
items. Changes in assumptions or in market conditions could significantly affect the
estimates. The fair value estimates of existing on  and off-balance sheet financial
instruments do not include the value of anticipated future business or the values of
assets and liabilities not considered financial instruments.

Earnings Per Share: Basic earnings
per share is net income divided by the weighted average number of common shares
outstanding during the period. Diluted earnings per common share includes the dilutive
effect of additional potential common shares that could be issued under the stock option
plan.

Comprehensive Income: Comprehensive
income consists of net income and other comprehensive income, which includes the
unrealized gains and losses on available-for-sale securities. The unrealized gains and
losses on available-for-sale securities are reported as a separate component of the equity
section of the balance sheet, net of tax.

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

Stock Compensation Plans: The
Corporation accounts for stock option plans using the intrinsic value based method. No
compensation cost related to stock options was recognized during 2003, 2002 or 2001, as
all options granted had an exercise price equal to or greater than the market price of the
underlying common stock at the date of the grant. Had compensation cost for stock options
been measured using the fair value method, net income and basic and diluted earnings per
share would have been the pro forma amounts indicated below (dollars in thousands except
per share data).

|                                                     |  |  |   | 2003  |  |   | 2002  |   |   | 2001  |  
|---------------------------------------------------- |  |  | - | ----- |  | - | ----- | - | - | ----- | -
|                                                     |  |  |   |       |  |  
|Net Income as reported                               |  |  | $ | 4,158 |  | $ | 3,778 |   | $ | 6,016 |  
|                                                     |  | 
|Stock based compensation credit (expense) determined |  | 
|under fair value method, net of related tax effect   |  |  |   | 46    |  |   | (41   | ) |   | (76   | )
|                                                     |  | 
|Pro-forma net income                                 |  |  | $ | 4,204 |  | $ | 3,737 |   | $ | 5,940 |  
|                                                     |  | 
|Basic earnings per share as reported                 |  |  | $ | 2.04  |  | $ | 1.86  |   | $ | 2.96  |  
|Pro-forma basic earnings per share                   |  |  | $ | 2.06  |  | $ | 1.84  |   | $ | 2.92  |  
|                                                     |  | 
|Diluted earnings per share as reported               |  |  | $ | 2.04  |  | $ | 1.86  |   | $ | 2.96  |  
|Pro-forma diluted earnings per share                 |  |  | $ | 2.06  |  | $ | 1.84  |   | $ | 2.92  |  

The
fair value of each option grant is estimated on the date of the grant using the
Black-Scholes option-pricing model with the following weighted average assumptions:

-37-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

|                                                 |  |  |  | 2003 |  |   | 2002    |  |   | 2001    | 
|------------------------------------------------ |  |  |  | ---- |  | - | ------- |  | - | ------- | 
|                                                 |  |  |  |      |  |  
|Dividend yield                                   |  |  |  | -    |  |   | 1.71%   |  |   | 1.97%   | 
|Expected life                                    |  |  |  | -    |  |   | 9 years |  |   | 9 years | 
|Expected volatility                              |  |  |  | -    |  |   | 4.96%   |  |   | 4.80%   | 
|Risk-free interest rate                          |  |  |  | -    |  |   | 3.83%   |  |   | 5.07%   | 
|Weighted-average fair value per share of options |  | 
|granted during the year                          |  |  |  | -    |  | $ | 9.63    |  | $ | 16.77   | 

Segment Reporting: While management
monitors the revenue streams of various products and services offered, operations are
managed and financial performance is evaluated on a company wide basis. Accordingly, all
of the Corporations operations are considered by management to be aggregated in one
reportable operating segment.

Restricted Investments: The Bank is a
member of the Federal Home Loan Bank System and is required to invest in capital stock of
the Federal Home Loan Bank of Indianapolis (FHLB). The amount of the required
investment is determined and adjusted annually by the FHLB. The investment is carried at
cost plus the value assigned to stock dividends.

The Bank is also a member of the
Federal Reserve Bank System. The amount of the required investment is determined by the
FRB at the time the Bank becomes a member. The amount of the investment may be adjusted
thereafter and is carried at cost.

Reclassifications: Some items in the
prior year financial statements were reclassified to conform to the current presentation.

# NOTE 2.  COMPREHENSIVE
INCOME (in thousands)

The
components of comprehensive income and related tax effects for the year ended December
31, are as follows:

|                                            |  |  |   | 2003  |   |   | 2002  |  |   | 2001  | 
|------------------------------------------- |  |  | - | ----- | - | - | ----- |  | - | ----- | 
|                                            |  |  |   |       |   |  
|Unrealized (losses) gains on available-     |  | 
|for-sale securities arising during the year |  |  | $ | (701  | ) | $ | 1,520 |  | $ | 955   | 
|                                            |  | 
|Reclassification adjustment for realized    |  | 
|gains included in net income                |  |  |   | 236   |   |   | 80    |  |   | 300   | 
|                                            |  |  |   |       |   |  
|                                            |  | 
|Other comprehensive (loss) income           |  | 
|before income taxes                         |  |  |   | (937  | ) |   | 1,440 |  |   | 655   | 
|                                            |  | 
|Income taxes related to                     |  | 
|other comprehensive income                  |  |  |   | (317  | ) |   | 488   |  |   | 223   | 
|                                            |  |  |   |       |   |  
|                                            |  | 
|Other comprehensive (loss) income           |  |  |   | (620  | ) |   | 952   |  |   | 432   | 
|                                            |  | 
|Net income                                  |  |  |   | 4,158 |   |   | 3,778 |  |   | 6,016 | 
|                                            |  |  |   |       |   |  
|                                            |  | 
|Comprehensive income                        |  |  | $ | 3,538 |   | $ | 4,729 |  | $ | 6,448 | 
|                                            |  |  |   |       |   |  

-38-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 3.  RESTRICTIONS ON
CASH AND AMOUNTS DUE FROM BANKS

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, 2003 and 2002, those required reserve balances were $899,000
and $3,346,000, respectively.

# NOTE 4.
 AVAILABLE-FOR-SALE SECURITIES (in thousands)

The
amortized cost, gross unrealized gains, gross unrealized losses and fair value of
investment securities, all of which are classified as available-for-sale as of
December 31, are as follows:

|2003                              | Amortized
Cost | Gross
Unrealized
Gains | Gross
Unrealized
Losses | Fair
Value
|--------------------------------- | -------------- | ---------------------- | ----------------------- | ----------
|
|U S government securities         |                |                        | $                       | 23,814    
|Mortgage-backed securities        |                |                        |                         | 42,695    
|States and political subdivisions |                |                        |                         | 30,837    
|Other                             |                |                        |                         | 4,158     
|                                  |                |                        |                         |           
|Total                             |                |                        | $                       | 101,504   
|                                  |                |                        |                         |           
|                                  |                |                       
|2002                              |                |                        |                         |           
|U S government securities         |                |                        | $                       | 13,395    
|Mortgage-backed securities        |                |                        |                         | 41,519    
|States and political subdivisions |                |                        |                         | 20,191    
|Other                             |                |                        |                         | 3,192     
|                                  |                |                        |                         |           
|Total                             |                |                        | $                       | 78,297    
|                                  |                |                        |                         |           

Investment
securities with carrying values of approximately $85.1 million and $74.7 million at
December 31, 2003 and 2002, respectively, were pledged to secure borrowing arrangements
disclosed in notes 9 and 10 or for other purposes as required or permitted by law.

The
amortized cost and fair value of available-for-sale securities by contractual maturity at
December 31, 2003 is shown below. Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay obligations with or
without call or prepayment penalties.

|                                       |  |  |   | Amortized |  |   | Fair    | 
|-------------------------------------- |  |  | - | --------- |  | - | ------- | 
|                                       |  |  |   | Cost      |  |   | Value   | 
|                                       |  |  |   |          
|Due in one year or less                |  |  | $ | 13,985    |  | $ | 14,079  | 
|Due after one year through five years  |  |  |   | 35,562    |  |   | 36,130  | 
|Due after five years through ten years |  |  |   | 8,435     |  |   | 9,137   | 
|Due after ten years                    |  |  |   | 827       |  |   | 1,029   | 
|                                       |  |  |   |          
|                                       |  | 
|Subtotal                               |  |  |   | 58,809    |  |   | 60,375  | 
|Mortgage-backed securities             |  |  |   | 42,695    |  |   | 43,020  | 
|                                       |  |  |   |          
|                                       |  | 
|Total                                  |  |  | $ | 101,504   |  | $ | 103,395 | 
|                                       |  |  |   |          

-39-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

The gross gains and gross losses
realized on sales for the years ended December 31 are as follows:

|                              |  |  |   | 2003 |   |   | 2002 |   |   | 2001 |  
|----------------------------- |  |  | - | ---- | - | - | ---- | - | - | ---- | -
|                              |  |  |   |      |   |  
|Gross realized gains          |  |  | $ | 239  |   | $ | 82   |   | $ | 301  |  
|Gross realized losses         |  |  |   | (3   | ) |   | (2   | ) |   | (1   | )
|                              |  |  |   |      |   |  
|                              |  | 
|Net realized gain on sales of |  | 
|available-for-sale securities |  |  | $ | 236  |   | $ | 80   |   | $ | 300  |  
|                              |  |  |   |      |   |  

# NOTE 5.  LOANS AND
ALLOWANCE FOR LOAN LOSSES (in thousands)

Major loan classifications at
December 31, are as follows:

|                        |  |  |   | 2003    |  |   | 2002    | 
|----------------------- |  |  | - | ------- |  | - | ------- | 
|                        |  |  |   |        
|Commercial real estate  |  |  | $ | 196,147 |  | $ | 209,174 | 
|Residential real estate |  |  |   | 82,524  |  |   | 65,322  | 
|Commercial              |  |  |   | 48,866  |  |   | 49,913  | 
|Consumer                |  |  |   | 36,028  |  |   | 53,158  | 
|                        |  |  |   |        
|                        |  | 
|Total loans             |  |  | $ | 363,565 |  | $ | 377,567 | 
|                        |  |  |   |        

The following is an analysis of
changes in the allowance for loan losses for the years ended December 31:

|                           |  |  |   | 2003   |   |   | 2002   |   |   | 2001   |  
|-------------------------- |  |  | - | ------ | - | - | ------ | - | - | ------ | -
|                           |  |  |   |        |   |  
|Balance, beginning of year |  |  | $ | 8,398  |   | $ | 6,983  |   | $ | 4,874  |  
|                           |  | 
|Provision for loan losses  |  |  |   | 625    |   |   | 4,070  |   |   | 3,025  |  
|Recoveries                 |  |  |   | 603    |   |   | 272    |   |   | 263    |  
|Loans charged off          |  |  |   | (1,236 | ) |   | (2,927 | ) |   | (1,179 | )
|                           |  |  |   |        |   |  
|Balance, end of year       |  |  | $ | 8,390  |   | $ | 8,398  |   | $ | 6,983  |  
|                           |  |  |   |        |   |  

The following is a summary of
information pertaining to impaired loans as of December 31:

|                                              |  |  |   | 2003   |  |   | 2002   | 
|--------------------------------------------- |  |  | - | ------ |  | - | ------ | 
|                                              |  |  |   |       
|Impaired loans without a valuation allowance  |  |  | $ | 4,250  |  | $ | 14,546 | 
|Impaired loans with a valuation allowance     |  |  |   | 8,743  |  |   | 11,639 | 
|                                              |  |  |   |       
|Total impaired loans                          |  |  |   | 12,993 |  | $ | 26,185 | 
|                                              |  | 
|Valuation allowance related to impaired loans |  |  | $ | 2,551  |  | $ | 3,149  | 
|Total non-accrual loans                       |  |  | $ | 466    |  | $ | 8,290  | 
|Total loans past due ninety days or more and  |  | 
|still accruing                                |  |  | $ | 94     |  | $ | 1,018  | 

-40-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

The following is a summary of
information pertaining to impaired loans for the years ended December 31:

|                                                             |  |  |   | 2003   |  |   | 2002   |  |   | 2001  | 
|------------------------------------------------------------ |  |  | - | ------ |  | - | ------ |  | - | ----- | 
|                                                             |  |  |   |        |  |  
|Average investment in impaired loans                         |  |  | $ | 17,962 |  | $ | 27,577 |  | $ | 8,731 | 
|                                                             |  | 
|Interest income recognized on impaired loans                 |  |  | $ | 1,048  |  | $ | 2,208  |  | $ | 580   | 
|                                                             |  | 
|Interest income recognized on a cash basis on impaired loans |  |  |   | -      |  | $ | 4      |  |   | -     | 

No additional funds are committed to
be advanced in connection with impaired loans.

# NOTE 6.  PREMISES AND
EQUIPMENT (in thousands)

A summary of premises and equipment
at December 31 follows:

|                              |  |  |   | 2003   |  |   | 2002   | 
|----------------------------- |  |  | - | ------ |  | - | ------ | 
|                              |  |  |   |       
|Land                          |  |  | $ | 3,466  |  | $ | 3,158  | 
|Building and improvements     |  |  |   | 11,979 |  |   | 12,263 | 
|Furniture and equipment       |  |  |   | 7,119  |  |   | 6,702  | 
|                              |  |  |   |       
|Total premises and equipment  |  |  |   | 22,564 |  |   | 22,123 | 
|                              |  | 
|Less accumulated depreciation |  |  |   | 8,136  |  |   | 7,113  | 
|                              |  |  |   |       
|Premises and equipment, net   |  |  | $ | 14,428 |  | $ | 15,010 | 
|                              |  |  |   |       

Depreciation expense was $1.1
million, $ 1.0 million and $ 1.0 million for each of the years ending December 31, 2003,
2002 and 2001.

# NOTE 7. SERVICING (in
thousands)

The
mortgage servicing rights, MSR, value is a present value of the future income
stream attained from mortgage servicing fees, ancillary income from processing mortgage
related payments, delinquency effects and overnight income of processing,
float. The value is the sum of the present value of these future income
streams, which is impacted by assumptions on prepayment or decay rates, mortgage
classifications and the applied discount rate.

The
process is to classify the serviced mortgages into groups based on maturity, payment
terms, seasoning and interest rate. The result is a series of mortgage pools with
homogeneous characteristics, which are then subjected to appropriate prepayment speeds to
derive a future stream of expected cash flows for each pool. The current industry accepted
rate is used to discount the future cash flows. The sum of the present value of each pool
is the mortgage servicing portion of the valuation. The Bank employs an independent third
party to determine the fair value of the mortgage servicing rights.

Loans
serviced for others are not included on the accompanying consolidated balance sheets. The
unpaid principal balances of mortgage and other loans serviced for others were $257
million and $263 million at December 31, 2003 and 2002, respectively.

-41-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

The
balance of capitalized servicing rights, net of valuation allowance, included in other
assets at December 31, 2003 and 2002, was $2.4 million and $2.5 million respectively. The
fair value of these rights was $2.4 million and $2.5 million, respectively. The fair value
of servicing rights was determined using a discount rate of 7.25 percent and prepayment
speeds ranging from 10.5 percent to 20.1 percent.

The
following table summarizes mortgage servicing rights capitalized and amortized, along with
the aggregate activity in related valuation allowances:

|                                      |  |  |   | 2003    |   |   | 2002    |   |   | 2001  | 
|------------------------------------- |  |  | - | ------- | - | - | ------- | - | - | ----- | 
|                                      |  |  |   |         |   |  
|Mortgage servicing rights capitalized |  |  | $ | 1,447   |   | $ | 1,758   |   | $ | 1,162 | 
|                                      |  |  |   |         |   |  
|                                      |  | 
|Mortgage servicing rights amortized   |  |  | $ | 1,754   |   | $ | 940     |   | $ | 445   | 
|                                      |  |  |   |         |   |  
|                                      |  | 
|Valuation Allowances:                 |  | 
|Balance at beginning or year          |  |  |   | ($  233 | ) | $ | -       |   | $ | -     | 
|                                     
|Net change in valuation allowance     |  |  |   | 146     |   |   | (233    | ) |   | -     | 
|                                      |  |  |   |         |   |  
|Balance at end of year                |  |  |   | ($   87 | ) |   | ($  233 | ) | $ | -     | 
|                                      |  |  |   |         |   |  

# NOTE 8.  DEPOSITS
(dollars in thousands)

Deposits at year-end were as follows:

|                                        |  |  |   | 2003    |  |   | 2002    | 
|--------------------------------------- |  |  | - | ------- |  | - | ------- | 
|                                        |  |  |   |        
|Noninterest-bearing demand              |  |  | $ | 49,814  |  | $ | 52,622  | 
|Interest-bearing checking               |  |  |   | 48,285  |  |   | 41,874  | 
|Money market                            |  |  |   | 51,129  |  |   | 53,113  | 
|Savings                                 |  |  |   | 51,782  |  |   | 45,758  | 
|Certificates of deposit, under $100,000 |  |  |   | 92,046  |  |   | 106,515 | 
|Certificates of deposit, over $100,000  |  |  |   | 78,008  |  |   | 97,530  | 
|                                        |  |  |   |        
|                                        |  | 
|Total deposits                          |  |  | $ | 371,064 |  | $ | 397,412 | 
|                                        |  |  |   |        

At December 31, 2003, scheduled
maturities of certificates of deposit are as follows:

|2004                |  |  | $ | 91,586  | 
|------------------- |  |  | - | ------- | 
|2005                |  |  |   | 39,646  | 
|2006                |  |  |   | 15,498  | 
|2007                |  |  |   | 15,562  | 
|2008                |  |  |   | 4,647   | 
|2009                |  |  |   | 2,048   | 
|2010                |  |  |   | 1,067   | 
|                    |  | 
|Total time deposits |  |  | $ | 170,054 | 
|                    |  | 

Brokered
deposits, which are included in certificates of deposit, over $100,000 totaled
approximately $47.4 million and $53.3 million at December 31, 2003 and 2002.

-42-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 9.  SECURITIES SOLD
UNDER AGREEMENTS TO REPURCHASE

Securities
sold under agreements to repurchase at December 31, 2003 and 2002 mature
within one day from the transaction date and have an average interest
rate of 0.99% and 1.63%, respectively. The U.S. government agency securities
underlying the agreements have a carrying value and a fair value of approximately
$61.5 million and $56.7 million at December 31, 2003 and 2002, respectively. Such
securities remain under the control of the Bank.

The
maximum amount of repurchase borrowings outstanding at any month end during the years
ended December 31, 2003 and 2002 was $58.6 million and $50.9 million,
respectively; the daily average balance was $47.1 million and $43.1 million, respectively.

# NOTE 10.  FEDERAL HOME
LOAN ADVANCES  (in thousands)

Each
advance is payable at its maturity date, and is subject to a prepayment fee if paid prior
to the maturity date. Advances with put options held by the Federal Home Loan Bank
amounted to $16.8 million at December 31, 2003 and 2002. At December 31, 2003, the Federal
Home Loan Bank borrowings were collateralized by specific 1 to 4 family residential
mortgage loans with a carrying value of approximately $28.8 million and U.S. government
agency securities with a carrying value of approximately $17.9 million. At December 31,
2002, the Federal Home Loan Bank borrowings were collateralized by blanket lien on all
qualified 1-to-4 family whole mortgage loans with a carrying value of approximately $16.5
million and U.S. government agency securities with a carrying value of approximately $22.9
million. The average interest rate was 5.29% and 5.38%, for 2003 and 2002, respectively.

The
Federal Home Loan Bank advances at December 31, 2003 and their contractual maturities are
as follows:

|            |  |  |   | Balance |  |  | Rates         | 
|----------- |  |  | - | ------- |  |  | ------------- | 
|Due in 2004 |  |  | $ | 10,200  |  |  | 3.69% - 5.07% | 
|Due in 2005 |  |  |   | 3,000   |  |  | 3.93% - 5.74% | 
|Due in 2006 |  |  |   | 2,000   |  |  | 5.03%         | 
|Due in 2007 |  |  |   | 1,000   |  |  | 5.97%         | 
|Due in 2010 |  |  |   | 16,800  |  |  | 5.99%         | 
|            |  | 
|            |  |  | $ | 33,000  | 
|            |  | 

# NOTE 11.  FEDERAL INCOME
TAXES  (in thousands)

The provision for federal income
taxes for the years ended December 31 consists of:

|                           |  |  |   | 2003  |  |   | 2002  |   |   | 2001  |  
|-------------------------- |  |  | - | ----- |  | - | ----- | - | - | ----- | -
|                           |  |  |   |       |  |  
|Current                    |  |  | $ | 1,256 |  | $ | 1,983 |   | $ | 2,549 |  
|Deferred expense (benefit) |  |  |   | 308   |  |   | (493  | ) |   | (905  | )
|                           |  |  |   |       |  |  
|                           |  | 
|Federal income tax expense |  |  | $ | 1,564 |  | $ | 1,490 |   | $ | 1,644 |  
|                           |  |  |   |       |  |  

A
reconciliation between federal income tax expense 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:

-43-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

|                                     |  |  |   | 2003  |   |   | 2002  |   |   | 2001  |  
|------------------------------------ |  |  | - | ----- | - | - | ----- | - | - | ----- | -
|                                     |  |  |   |       |   |  
|Statutory rate applied to income     |  | 
|before income taxes                  |  |  | $ | 1,946 |   | $ | 1,791 |   | $ | 2,604 |  
|Effect of tax-exempt interest income |  |  |   | (327  | ) |   | (337  | ) |   | (407  | )
|Change in valuation allowance        |  |  |   | -     |   |   | -     |   |   | (439  | )
|Other - net                          |  |  |   | (55   | ) |   | 36    |   |   | (114  | )
|                                     |  |  |   |       |   |  
|                                     |  | 
|Federal income tax expense           |  |  | $ | 1,564 |   | $ | 1,490 |   | $ | 1,644 |  
|                                     |  |  |   |       |   |  

The net deferred income tax asset
recorded includes the following amounts of deferred tax assets and liabilities:

|                                                 |  |  |   | 2003   |   |   | 2002   |  
|------------------------------------------------ |  |  | - | ------ | - | - | ------ | -
|                                                 |  |  |   |       
|Deferred tax assets                              |  | 
|Allowance for loan losses                        |  |  | $ | 2,665  |   | $ | 2,614  |  
|Deferred compensation plan                       |  |  |   | 477    |   |   | 507    |  
|Deferred loan fees                               |  |  |   | 84     |   |   | 85     |  
|Non-accrual interest                             |  |  |   | 1      |   |   | 255    |  
|Other                                            |  |  |   | 42     |   |   | 109    |  
|                                                 |  |  |   |       
|                                                 |  | 
|Total deferred tax assets                        |  |  |   | 3,269  |   |   | 3,570  |  
|                                                 |  |  |   |       
|                                                 |  | 
|Deferred tax liabilities                         |  | 
|Depreciation                                     |  |  |   | (439   | ) |   | (384   | )
|Discount accretion                               |  |  |   | (37    | ) |   | (35    | )
|Unrealized gain on securities available for sale |  |  |   | (643   | ) |   | (960   | )
|Loan servicing rights                            |  |  |   | (805   | ) |   | (855   | )
|                                                 |  |  |   |       
|                                                 |  | 
|Total deferred tax liabilities                   |  |  |   | (1,924 | ) |   | (2,234 | )
|                                                 |  |  |   |       
|                                                 |  | 
|Net deferred tax asset                           |  |  | $ | 1,345  |   | $ | 1,336  |  
|                                                 |  |  |   |       

# NOTE 12.  RELATED PARTY
TRANSACTIONS

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 $6.6 million and
$11.9 million at December 31, 2003 and 2002, respectively; new loans and repayments during
2003 were approximately $5.4 million and $10.7 million, respectively.

# NOTE 13.  OFF-BALANCE
SHEET ACTIVITIES (in thousands)

The
Bank is a party to credit related financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit, standby letters of credit and commercial
letters of credit. Such commitments involve to varying degrees elements of credit and
interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Bank follows the same credit policy to make such commitments, including collateral as
is followed for those loans recorded in the consolidated financial statements; no
significant losses are anticipated as a result of these commitments.

-44-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

The
Banks exposure to credit loss is represented by the contractual amount of these
commitments. The Bank follows the same credit policies in making commitments as it does
for on-balance-sheet instruments.

At
December 31, 2003 and 2002, the following financial instruments were outstanding whose
contract amounts represent credit risk:

|                                                                | Contract Amount
|--------------------------------------------------------------- | ---------------
|
|
|
|Commitments to grant loans                                      |                
|Unfunded commitments under commercial and other lines of credit |                
|Unfunded commitments under home equity lines of credit          |                
|Commercial and standby letters of credit                        |                

Commitments
to extend credit are agreements to lend to a customer as long as there is no violation of
any condition established in the contract. Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee. The commitments for
equity lines of credit may expire without being drawn upon. Therefore, the total
commitment amounts do not necessarily represent future cash requirements. The amount of
collateral obtained, if it is deemed necessary by the Bank, is based on managements
credit evaluation of the customer.

Unfunded
commitments under commercial lines-of-credit, revolving credit lines and overdraft
protection agreements are commitments for possible future extensions of credit to
existing customers. These lines-of-credit usually do not contain a specified maturity
date and may not be drawn upon to the total extent to which the Bank is committed; a
portion are unsecured.

Commercial
and standby letters-of-credit are conditional commitments issued by the Bank to guarantee
the performance of a customer to a third party. Those letters-of-credit are primarily
issued to support public and private borrowing arrangements. Essentially all letters of
credit issued have expiration dates within one year. The credit risk involved in issuing
letters-of-credit is essentially the same as that involved in extending loan facilities to
customers. The Bank generally holds collateral supporting those commitments if deemed
necessary.

# NOTE 14.  REGULATORY
MATTERS (dollars in thousands)

The
Corporation (on a consolidated basis) and the Bank are subject to various regulatory
capital requirements administered by its primary regulator, the FRB. Failure to meet
minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by the FRB that, if undertaken, could have a direct material effect
on the Corporations and the Banks financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Corporation and
the Bank must meet specific capital guidelines that involve quantitative measures of the
their assets, liabilities, capital and certain off-balance-sheet items as defined in the
regulations and calculated under regulatory accounting practices. The capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors. Prompt corrective action provisions are not
applicable to bank holding companies.

Quantitative
measurements established by regulation to ensure capital adequacy require the Corporation
and the Bank to maintain minimum amounts and ratios (set forth in the following table) of
total capital and Tier 1 capital to risk weighted assets and Tier 1 capital to average
assets. Management believes, as of December 31, 2003, that the Corporation and
the Bank meet all capital adequacy requirements to which they are subject. As of December
31, 2003 the most recent notification from the FRB categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be 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. There are no conditions or
events since the most recent notification that management believes has changed the
Banks category. The Corporations and the Banks actual capital amounts
and ratios as of December 31, 2003 and 2002 are also presented in the table.

-45-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

|                                         | Actual | Minimum Capital
Requirement | Minimum to be well
Capitalized Under
Prompt Corrective
Action Provisions
|---------------------------------------- | ------ | --------------------------- | ------------------------------------------------------------------------
|
|As of December 31, 2003                  |        |                             |                                                                         
|Total capital (to risk weighted assets)  |        |                            
|Consolidated                             |        |                             | $                                                                       
|Bank                                     |        |                             |                                                                         
|Tier 1 capital (to risk weighted assets) |        |                            
|Consolidated                             |        |                             |                                                                         
|Bank                                     |        |                             |                                                                         
|Tier 1 capital (to                       |        |                            
|average assets)                          |        |                            
|Consolidated                             |        |                             |                                                                         
|Bank                                     |        |                             |                                                                         
|                                         |        |                            
|As of December 31, 2002                  |        |                            
|Total capital (to risk weighted assets)  |        |                            
|Consolidated                             |        |                             | $                                                                       
|Bank                                     |        |                             |                                                                         
|Tier 1 capital (to risk weighted assets) |        |                            
|Consolidated                             |        |                             |                                                                         
|Bank                                     |        |                             |                                                                         
|Tier 1 capital (to average assets)       |        |                            
|Consolidated                             |        |                             |                                                                         
|Bank                                     |        |                             |                                                                         

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. Loans or advances are limited to 10 percent of the Banks capital stock
and surplus on a secured basis. Generally, 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. In addition, dividends paid by the Bank to the Corporation would be prohibited if
the effect thereof would cause the Banks capital to be reduced below applicable
minimum capital requirements. At January 1,2004, the corporations subsidiary bank,
without obtaining prior governmental approvals, could declare aggregate dividends of
approximately $5.4 million from retained net profits of the proceeding two years, plus an
amount approximately equal to the net profits (as measured under current regulations), if
any, earned for the period from January 1, 2004 through the date of declaration.

-46-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

On
October 16, 2003, OAK Financial Corporation and Byron Center State Bank were released from
the written agreement that was entered into on October 4, 2002 with the Federal Reserve
Bank of Chicago and the Michigan Office of Financial and Insurance Services. Release from
the written agreement followed managements compliance with all of the provisions of
the written agreement.

# NOTE 15.  EMPLOYEE
BENEFIT PLANS AND POST RETIREMENT BENEFITS

The
Corporation maintains a 401(k) covering substantially all employees. The Corporation
matches employee contributions to the 401(k) up to a maximum of 4% of employees
eligible wages.

The
Corporation maintains a Profit Sharing Plan covering substantially all employees. The
Corporations contribution to the profit sharing plan is based on defined performance
targets established annually by the board of directors.

The
ESOP plan was terminated in the fourth quarter of 2003. The shares allocated to
participants became fully vested as of the termination date. The ESOP returned the 5,589
unallocated shares to the Corporation to satisfy the remaining unpaid loan balance. The
Corporation maintained an internally leveraged Employee Stock Ownership Plan (ESOP)
covering substantially all employees. The Corporation made annual contributions equal to
at least the ESOPs debt service less dividends received by the ESOP. The original
loan has been repaid. The dividends on the allocated shares were distributed to
participants and the dividends on the unallocated shares were used to pay debt service.
The ESOP shares initially were pledged as collateral for its debt. As the debt was repaid,
prior to the termination of the plan, shares were released from collateral and allocated
to active participants. The shares pledged as collateral were reported as unallocated
common stock held by the ESOP in the equity section of the balance sheet. As shares were
released they became outstanding for earnings per share computations.

The ESOP shares as of December 31,
were as follows:

|                               |  |  |  | 2003  |  |  | 2002   |  |  | 2001   | 
|------------------------------ |  |  |  | ----- |  |  | ------ |  |  | ------ | 
|                               |  |  |  |       |  | 
|Allocated Shares               |  |  |  | 4,411 |  |  | 3,475  |  |  | 2,547  | 
|Shares released for allocation |  |  |  | -     |  |  | 936    |  |  | 928    | 
|Unreleased Shares              |  |  |  | -     |  |  | 5,589  |  |  | 6,525  | 
|                               |  |  |  |       |  | 
|Total ESOP Shares              |  |  |  | 4,411 |  |  | 10,000 |  |  | 10,000 | 
|                               |  |  |  |       |  | 

The
total Corporation contributions to the 401(k) match, profit sharing plan and ESOP were
$301,000, $316,000 and $345,000 for 2003, 2002 and 2001, respectively.

Deferred
Compensation: The Bank adopted deferred compensation plans for all directors who wish to
participate. The cost of the plan was $(142,000), $175,000 and $197,000 in 2003, 2002 and
2001, respectively. The credit to expense in 2003 reflects a decrease in the benefit
obligation resulting from the reduction in benefits payable to a former director as
prescribed by the plan. The accrued benefit obligation for this plan was $1,402,000 and
$1,490,000 as of December 31, 2003 and 2002, respectively, and is included in
other liabilities. The Bank has purchased life insurance policies on participating
directors.

# NOTE 16.  STOCK OPTIONS

The
Corporation maintains stock option plans for non-employee directors (the Directors
Plan) and employees and officers of the Corporation and its subsidiary (the
Employees Plan). The stock compensation plans were established in 1999, and
authorize the issue of up to 165,000 options under the Employees Plan and up to
35,000 options under the Directors Plan.

-47-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

Options
under both plans become exercisable after the first anniversary of the award date. The
option exercise price is at least 100% of the market value of the common stock at the
grant date. No options were awarded during 2003. During 2002, 14,747 options were awarded
with an exercise price of $44.50 per share.

The
following tables summarize information about stock option transactions:

|                               | 2003 |  | 2002 |        | 2001
|------------------------------ | ---- |  | ---- | ------ | ----
|
|
|                               |      |  |      |        |     
|Outstanding, beginning of year |      |  |      | 44,130 |     
|                               |      | 
|Granted                        |      |  |      | -      |     
|                               |      | 
|Exercised                      |      |  |      | -      |     
|                               |      | 
|Forfeited/expired              |      |  |      | (7,000 | )   
|                               |      |  |      |        |     
|Outstanding, end of year       |      |  |      | 37,130 |     
|                               |      |  |      |        |     
|Exercisable, end of year       |      |  |      | 37,130 |     
|                               |      |  |      |        |     

|Exercise
Price | Number
Outstanding
December 31, 2003 | Weighted Average
Remaining
Contractual Life | Number of
Options
Exercisable
December 31, 2003 | Weighted Average
Exercise Price
December 31, 2003
|-------------- | ------------------------------------ | ------------------------------------------- | ----------------------------------------------- | -------------------------------------------------
|               |                                      |                                             |                                                 |                                                  
|$44.50         |                                      |                                             | 11,900                                          |                                                  
|$50.00         |                                      |                                             | 16,958                                          |                                                  
|$55.00         |                                      |                                             | 8,272                                           |                                                  
|               |                                      |                                             |                                                 |                                                  
|Total          |                                      |                                             | 37,130                                          |                                                  
|               |                                      |                                             |                                                 |                                                  

All options
expire 10 years after the date of the grant; 137,113 shares are reserved for future
issuance under the Stock Compensation Plan and 25,000 shares are reserved for future
issuance under the Stock Option Plan for non-employee directors.

# NOTE 17.  EARNINGS PER
SHARE (in thousands, except earnings per share)

A
reconciliation of basic and diluted earnings per share for the years ended December 31,
follows:

|                                                 |  |  |   | 2003  |  |   | 2002  |  |   | 2001  | 
|------------------------------------------------ |  |  | - | ----- |  | - | ----- |  | - | ----- | 
|                                                 |  |  |   |       |  |  
|Net income                                       |  |  | $ | 4,158 |  | $ | 3,778 |  | $ | 6,016 | 
|                                                 |  |  |   |       |  |  
|Average common shares outstanding                |  |  |   | 2,035 |  |   | 2,034 |  |   | 2,035 | 
|Assumed exercise of dilutive stock options       |  |  |   | -     |  |   | -     |  |   | -     | 
|                                                 |  |  |   |       |  |  
|Average common shares outstanding, including the |  |  |   | 2,035 |  |   | 2,034 |  |   | 2,035 | 
|assumed exercise of dilutive stock options       |  | 
|                                                 |  |  |   |       |  |  
|Net income per share:                            |  | 
|Basic                                            |  |  | $ | 2.04  |  | $ | 1.86  |  | $ | 2.96  | 
|Diluted                                          |  |  | $ | 2.04  |  | $ | 1.86  |  | $ | 2.96  | 

-48-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# NOTE 18.  FAIR VALUES OF
FINANCIAL INSTRUMENTS (in thousands)

The
carrying amount and estimated fair values of financial instruments at December 31, are as
follows:

|                                       | 2003 | 2002
|-------------------------------------- | ---- | ----
|                                      
|                                       |      |     
|                                       |      |     
|Financial assets                       |      |     
|Cash and cash equivalents              |      |     
|Available-for-sale securities          |      |     
|Loans receivable, net                  |      |     
|Loans held for sale                    |      |     
|Accrued interest receivable            |      |     
|Restricted investments                 |      |     
|                                       |      |     
|Financial liabilities                  |      |     
|Deposits                               |      |     
|FHLB advances and other borrowed funds |      |     
|Securities sold under agreements to    |      |     
|repurchase and federal funds purchased |      |     
|Other liabilities                      |      |     

Carrying
amount is the estimated fair value of cash and cash equivalents, accrued interest
receivable and payable, restricted investments, demand deposits, short-term borrowings,
and variable rate loans or deposits that reprice frequently and fully. Security fair
values are based on market prices or dealer quotes, and if no such information is
available, on the rate and term of security and information about the issuer. For fixed
rate loans or deposits and for variable rate loans or deposits with infrequent repricing
or repricing limits, fair value is based on discounted cash flows using current market
rates applied to the estimated life and credit risk. Fair values for impaired loans are
estimated using discounted cash flow analysis or underlying collateral values. Fair value
of loans held for sale is based on market quotes. Fair value of debt is based on current
rates for similar financing.

# NOTE 19.  O.A.K.
FINANCIAL CORPORATION (PARENT COMPANY ONLY) CONDENSED FINANCIAL INFORMATION (in thousands)

The
following summarizes parent company only condensed balance sheets as of December 31, 2003
and 2002 and the related condensed statements of income and cash flows for each of the
three years in the period ended December 31, 2003, 2002 and 2001:

# Condensed Balance
Sheets

|                                           |  |  |   | 2003   |  |   | 2002   | 
|------------------------------------------ |  |  | - | ------ |  | - | ------ | 
|                                           |  |  |   |       
|Assets                                     |  | 
|Cash                                       |  |  | $ | 253    |  | $ | 109    | 
|Investment in subsidiary                   |  |  |   | 54,318 |  |   | 51,980 | 
|Available-for-sale securities              |  |  |   | 590    |  |   | 907    | 
|                                           |  |  |   |       
|                                           |  | 
|Total assets                               |  |  | $ | 55,161 |  | $ | 52,996 | 
|                                           |  |  |   |       
|                                           |  | 
|Other borrowed funds                       |  |  | $ | -      |  | $ | 326    | 
|Other liabilities                          |  |  |   | 81     |  |   | 64     | 
|Stockholders' equity                       |  |  |   | 55,080 |  |   | 52,606 | 
|                                           |  |  |   |       
|                                           |  | 
|Total liabilities and stockholders' equity |  |  | $ | 55,161 |  | $ | 52,996 | 
|                                           |  |  |   |       

-49-

---



|O.A.K. FINANCIAL CORPORATIONAND SUBSIDIARY | NOTES TO CONSOLIDATEDFINANCIAL
STATEMENTS
|------------------------------------------ | -----------------------------------------
|                                          

# Condensed Statements
of Income

|                                              |  |  |   | 2003  |  |   | 2002  |   |   | 2001  | 
|--------------------------------------------- |  |  | - | ----- |  | - | ----- | - | - | ----- | 
|                                              |  |  |   |       |  |  
|Income                                        |  | 
|Dividends from subsidiary                     |  |  | $ | 1,133 |  | $ | 1,480 |   | $ | 1,972 | 
|Interest from available-for-sale securities . |  |  |   | 33    |  |   | 30    |   |   | 21    | 
|Net realized gain on sale of                  |  | 
|available-for-sale securities                 |  |  |   | 138   |  |   | 41    |   |   | 204   | 
|                                              |  |  |   |       |  |  
|                                              |  | 
|Total income                                  |  |  |   | 1,304 |  |   | 1,551 |   |   | 2,197 | 
|                                              |  | 
|Other expenses                                |  |  |   | 150   |  |   | 193   |   |   | 92    | 
|                                              |  |  |   |       |  |  
|Income before income taxes and equity in      |  | 
|undistributed net income of subsidiary        |  |  |   | 1,154 |  |   | 1,358 |   |   | 2,105 | 
|Applicable income tax provision (benefit)     |  |  |   | 7     |  |   | (42   | ) |   | 45    | 
|                                              |  |  |   |       |  |  
|                                              |  |  |   | 1,161 |  |   | 1,400 |   |   | 2,060 | 
|                                              |  | 
|Equity in undistributed net income of         |  | 
|subsidiary                                    |  |  |   | 3,011 |  |   | 2,378 |   |   | 3,956 | 
|                                              |  |  |   |       |  |  
|                                              |  | 
|Net income                                    |  |  | $ | 4,158 |  | $ | 3,778 |   | $ | 6,016 | 
|                                              |  |  |   |       |  |  

# Condensed Statements
of Cash Flows

|                                             |  |  |   | 2003   |   |   | 2002   |   |   | 2001   |  
|-------------------------------------------- |  |  | - | ------ | - | - | ------ | - | - | ------ | -
|                                             |  |  |   |        |   |  
|Cash flows from operating activities         |  | 
|Net income                                   |  |  | $ | 4,158  |   | $ | 3,778  |   | $ | 6,016  |  
|                                             |  | 
|Adjustments to reconcile net income          |  | 
|to net cash provided by operating activities |  | 
|Net gain on available-for-sale securities    |  |  |   | (138   | ) |   | (41    | ) |   | (205   | )
|Undistributed earnings of subsidiary         |  |  |   | (3,011 | ) |   | (2,420 | ) |   | (3,911 | )
|Changes in other liabilities                 |  |  |   | 3      |   |   | 31     |   |   | (32    | )
|                                             |  |  |   |        |   |  
|                                             |  | 
|Net cash provided by operating activities    |  |  |   | 1,012  |   |   | 1,348  |   |   | 1,868  |  
|                                             |  |  |   |        |   |  
|                                             |  | 
|Cash flows from investing activities         |  | 
|Available-for-sale securities                |  | 
|Proceeds from sales                          |  |  |   | 511    |   |   | 151    |   |   | 709    |  
|Purchases                                    |  |  |   | -      |   |   | (90    | ) |   | (573   | )
|                                             |  |  |   |        |   |  
|                                             |  | 
|Net cash provided by investing               |  | 
|activities                                   |  |  |   | 511    |   |   | 61     |   |   | 136    |  
|                                             |  |  |   |        |   |  
|                                             |  | 
|Cash flows from financing activities         |  | 
|Repayment of long-term debt                  |  |  |   | (326   | ) |   | (46    | ) |   | (94    | )
|Proceeds from allocation of ESOP             |  |  |   | 47     |   |   | 48     |   |   | 60     |  
|Proceeds from common stock issued            |  |  |   | -      |   |   | 10     |   |   | -      |  
|Proceeds from stock options exercised        |  |  |   | -      |   |   | -      |   |   | 38     |  
|Dividends paid                               |  |  |   | (1,100 | ) |   | (1,458 | ) |   | (1,900 | )
|                                             |  |  |   |        |   |  
|                                             |  | 
|Net cash used in financing activities        |  |  |   | (1,379 | ) |   | (1,446 | ) |   | (1,896 | )
|                                             |  |  |   |        |   |  
|                                             |  | 
|Net (decrease) increase in cash and cash     |  | 
|equivalents                                  |  |  |   | 144    |   |   | (37    | ) |   | 108    |  
|                                             |  | 
|Cash and cash equivalents, beginning of year |  |  |   | 109    |   |   | 146    |   |   | 38     |  
|                                             |  |  |   |        |   |  
|                                             |  | 
|Cash and cash equivalents, end of year       |  |  | $ | 253    |   | $ | 109    |   | $ | 146    |  
|                                             |  |  |   |        |   |  

-50-

---



# Item 9.  Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure.

None

# Item 9A Controls and
Procedures

| | (a) | Evaluation  of
Disclosure Controls and Procedures.
| | --- | --------------------------------------------------

The
Corporations Chief Executive Officer and the Chief Financial Officer, after
evaluating the effectiveness of the Corporations disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) as of the end of the period
covered by this Form 10-K Annual Report have concluded that the Corporations
disclosure controls and procedures were adequate and effective to ensure that material
information relating to the Corporation would be made known to them by others within the
Corporation, particularly during the period in which this Form 10-K Annual Report was
being prepared.

| | (b) | Changes
in Internal Controls.
| | --- | -----------------------------

During
the period covered by this report, there have been no changes in the Corporations
internal control over financial reporting that have materially affected or are reasonably
likely to materially affect the Corporations internal control over financial
reporting.

# 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 5 through 7 of the
Companys definitive proxy statement, as filed with the Commission and dated March
15, 2004, relating to the April 15, 2004 Annual Meeting of Shareholders, is incorporated
herein by reference.

# Audit Committee
Financial Expert

The
Board of Directors of the Corporation has determined that Robert F. Dentzman, a director
and member of the Audit Committee, qualifies as an Audit Committee Financial
Expert as defined in rules adopted by the Securities and Exchange Committee pursuant
to the Sarbanes-Oxley Act of 2002.

# Executive Officers

Reference
is made to additional item under Part I of this report on Form 10-K.

# Code of Ethics

The
honesty, integrity and sound judgment of the chief executive officer and senior financial
officers is fundamental to the reputation and success of OAK Financial Corporation. While
all employees, officers, and directors are required to adhere to the OAK Financial
Corporation Code of Ethics, the professional and ethical conduct of the chief executive
officer and senior financial officers is essential to the proper function and success of
OAK Financial Corporation as a leading financial services provider. Executives of OAK
Financial Corporation subject to this Code include the Chief Executive Officer, the Chief
Financial Officer, the Chief Accounting Officer, the Controller, and any other officer
performing accounting, auditing, financial management or similar functions. The Code of
Ethics is filed as an exhibit to this Report on Form 10-K.

-51-

---



# Item 11. Executive
Compensation.

The
information set forth under the caption Executive Compensation Summary on
pages 11 and 12 of the Companys definitive proxy statement, as filed with the
Commission and dated March 15, 2004, relating to the April 15, 2004 Annual Meeting of
Shareholders, is incorporated herein by reference. Information under the caption
Committee Report on Executive Compensation on pages 10 and 11 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 pages 3 and 4 of the Companys definitive proxy statement, as
filed with the Commission and dated March 15, 2004, relating to the April 15, 2004 Annual
Meeting of Shareholders, is incorporated herein by reference.

Securities
Authorized for Issuance Under Equity Compensation Plans. The Company had the following
equity compensation plans at December 31, 2003:

# EQUITY COMPENSATION
PLAN INFORMATION

|Plan Category                         | Number of securities to
be issued upon exercise
of outstanding options | Weighted-average
exercise price of
outstanding options | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
the first column)
|------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by |                                                                        |                                                        |                                                                                                                                                  
|security holders                      |                                                                        |                                                        |                                                                                                                                                  
|Equity compensation plans not         |                                                                        |                                                       
|approved by security holders          |                                                                        |                                                        |                                                                                                                                                  
|
|Total                                 |                                                                        |                                                        |                                                                                                                                                  

These
equity compensation plans are more fully described in Note 16 to the Consolidated
Financial Statements.

# Item 13.  Certain
Relationships and Related Transactions.

The
information set forth under the caption Certain Transactions on page 13 of the
Companys definitive proxy statement, as filed with the Commission and dated March
15, 2004, relating to the April 15, 2004 Annual Meeting of Shareholders, is incorporated
herein by reference.

# Item 14.  Principal
Accountant Fees and Services.

The
information set forth under the heading Fees of Independent Accountants on
page 15 of the Companys definitive proxy statement, as filed with the Commission and
dated March 15, 2004, relating to the April 15, 2004 annual meeting of shareholders,
is incorporated herein by reference.

-52-

---



# Item  15.  Exhibits,
Financial Statement Schedules and Report on Form 8-K.

| | (a) | 1. | Financial
Statements  
Independent Auditors' Report
Consolidated Financial Statements
     Consolidated Balance Sheets as of
        December 31, 2003 and 2002
     Consolidated Statements of Income for the Years Ended
        December 31, 2003, 2002 and 2001
     Consolidated Statements of Comprehensive Income for the
        Years Ended December 31, 2003, 2002 and 2001
     Consolidated Statements of Changes in Stockholders' Equity
        for the Years Ended December 31, 2003, 2002 and 2001
     Consolidated Statements of Cash Flows for each of the Years Ended 
        December 31, 2003, 2002 and 2001
     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
| | --- | -------------------

| | 1. | Report
on Form 8-K dated November 21, 2003 filing dividend declaration news           release.
| | -- | ----------------------------------------------------------------------------------------------

| | 2. | Report
on Form 8-K dated October 24, 2003 reporting our press release dated           October
24, 2003, regarding our earnings during the quarter ended September 30,           2003
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-53-

---



# 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 15, 2004.

| | O.A.K. FINANCIAL CORPORATION
/s/ Patrick K. Gill
Patrick K. Gill
President, Chief Executive Officer
(Principal Executive Officer)
| | ------------------------------------------------------------------------------------------------------------------------------------------------

| | /s/ James A. Luyk
James A. Luyk
Executive Vice President
(Chief Financial 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
Patrick K. Gill and James A. Luyk, 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 F. Dentzman  

Robert F. Dentzman
/s/ Robert J. Deppe     

Robert Deppe
/s/ Patrick K. Gill     

Patrick K. Gill
/s/ Norm J. Fifelski    

Norman Fifelski
/s/ Dellvan J. Hoezee   

Dellvan Hoezee
/s/ Grace O. Shearer    

Grace O. Shearer
/s/ David G. Van Solkema

David Van Solkema
/s/ James B. Meyer      

James B. Meyer | March 15, 2004
March 15, 2004
March 15, 2004
March 15, 2004
March 15, 2004
March 15, 2004
March 15, 2004
March 15, 2004

-54-

---



# EXHIBIT INDEX

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

ExhibitNumber

|14 | Code
of Ethics
|-- | --------------

|21 | Subsidiaries
of Registrant
|-- | --------------------------

|24 | Powers
of Attorney.  Contained on the signature page of this report.
|-- | --------------------------------------------------------------------

|31.1 | Certificate
of Chief Executive  Officer of O.A.K.  Financial  Corporation.  pursuant to 15 U.S.C.
 Section          7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Certificate
of Chief  Financial  Officer of O.A.K.  Financial  Corporation  pursuant to 15 U.S.C.
 Section          7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32.1 | Certificate
 of Chief  Executive  Officer  and Chief  Financial  Officer of O.A.K.  Financial
 Corporation          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

ExhibitNumber

|3.1 | Articles
of Incorporation of the Registrant are incorporated by reference to Exhibit 3.1 of the
Registrants Registration Statement on Form 10, as amended.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 | Amendment
to the Articles of Incorporation of Registrant filed April 28, 1998, increasing
authorized shares of common stock from 2,000,000 to 4,000,000 shares, incorporated by
reference to Exhibit 3 of Registrants Report on Form 10-K for the year ended
December 31, 1998.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 | Bylaws
of the Registrant are incorporated by reference to Exhibit 3.1 of the Registrants
Registration Statement on Form 10, as amended.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|4 | Form
of Registrants Stock Certificate are incorporated by reference to Exhibit 3.1 of
the Registrants Registration Statement on Form 10, as amended.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 | Written
Agreement by and among O.A.K. Financial Corporation, Byron Center State Bank, Federal
Reserve Bank of Chicago, and Michigan Office of Financial and Insurance Services dated
October 4, 2002 is incorporated by reference to Exhibit 99.1 of the Registrants
Report on Form 8-K dated October 4, 2002.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 | 1999
Stock Compensation Plan, incorporated by reference to Appendix A to the Registrants
Definitive Proxy Statement filed with respect to its April 22, 1999 annual meeting of
shareholders.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Nonemployee
Directors Stock Option Plan, incorporated by reference to Appendix A to the
Registrants Definitive Proxy Statement filed with respect to its April 22, 1999
annual meeting of shareholders.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | 1988
Director Deferred Compensation Plan is incorporated by reference to Exhibit 10 of the
Registrants Registration Statement on Form 10, as amended.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------

-55-

---



|10.4 | Director
Deferred Compensation Plan is incorporated by reference to Exhibit 10 of the Registrants
Report on Form 10-K for the year ended December 31, 2000.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 | Income
Protection Agreement between Registrant and James Luyk is incorporated by reference to
Exhibit 10 of Registrants Report on Form 10-K for the year ended December 31, 2001.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Written
Agreement by and among O.A.K. Financial Corporation, Byron Center State Bank, Federal
Reserve Bank of Chicago, and Michigan Office of Financial and Insurance Services dated
October 4, 2002 is incorporated by reference to Exhibit 99.1 of the Registrants
Report on Form 8-K dated October 4, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | Employment
Agreement between Byron Center State Bank and Patrick K. Gill is incorporated by
reference to Exhibit 10.1 to the Registrants Report on Form 10-K for the year ended
December 31, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 | Confidential
Separation and Release Agreement between Byron Center State Bank and John A. Van Singel
is incorporated by reference to Exhibit 10.2 to Registrants Report on Form 10-K for
the year ended December 31, 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9. | Form
of Indemnity Agreement executed between O.A.K. Financial Corporation and
               each of Grace O. Shearer and Robert F. Dentzman is incorporated by
               reference to Exhibit 10.3 to Registrants Report on Form 10-K for the
year                ended December 31, 2002.
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-56-

---



# Exhibit 14  Code
of Ethics

# OAK FINANCIAL
CORPORATION CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS CODE OF ETHICS

General
Philosophy

The honesty, integrity and sound
judgment of the chief executive officer and senior financial officers is fundamental to
the reputation and success of OAK Financial Corporation. While all employees, officers,
and directors are required to adhere to the OAK Financial Corporation Code of Ethics, the
professional and ethical conduct of the chief executive officer and senior financial
officers is essential to the proper function and success of OAK Financial Corporation as a
leading financial services provider.

Executives of OAK Financial
Corporation subject to this Code include the Chief Executive Officer, the Chief Financial
Officer, the Chief Accounting Officer, the Controller, and any other officer performing
accounting, auditing, financial management or similar functions (the Covered
Officers).

Code
of Ethics for Covered Officers

To the best of their knowledge and
ability, Covered Officers must:

| |  | Act
with honesty and integrity, avoid actual or apparent conflicts of interest in personal
and professional relationships.
| | - | --------------------------------------------------------------------------------------------------------------------------

| |  | Provide
colleagues, constituents of OAK Financial Corporation and regulatory agencies with
information that is accurate, complete, objective, relevant, timely, and understandable.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Comply
with applicable laws, rules and regulations of federal, state, and local governments and
other appropriate private and public regulatory agencies.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Act
in good faith, with due care, competence and diligence, without misrepresenting material
facts or allowing independent judgment to be subordinated or otherwise compromised.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Respect
the confidentiality of information acquired in the course of employment and use no
confidential information for personal advantage. Share knowledge and maintain
skills necessary and relevant to OAK Financial Corporation's needs.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Proactively
promote ethical and honest behavior within the OAK Financial Corporation environment.
| | - | -------------------------------------------------------------------------------------------------

| |  | Assure
 responsible  use  of and  control  of all  assets,  resources  and  information  of OAK
 Financial           Corporation.
| | - | ---------------------------------------------------------------------------------------------------------------------------------

| |  | Promptly
report any violation of this Code to the OAK Financial Corporation Audit Committee.
| | - | --------------------------------------------------------------------------------------------

| | All
Covered Officers are expected to adhere to both OAK Financial Corporation Code of Ethics
and the Code of Ethics for Chief Executive Officer and Senior Financial Officers at all
times. The board of directors shall have sole and absolute discretionary authority to
approve any deviation or waiver from the Code of Ethics for Chief Executive Officer and
Senior Financial Officers. Any waiver and the grounds for such waiver for the chief
executive officer or a senior financial officer shall be promptly disclosed through a
filing with the Securities and Exchange Commission on Form 8-K. Additionally, any change
of this Code of Ethics for chief executive officer and senior financial officers shall be
promptly disclosed to stockholders.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-57-

---



# Exhibit 21 Subsidiaries
of Registrant  100% Owned

| | Byron
Center State Bank         2445  84th Street, S.W.         Byron Center, MI  49315
| | ---------------------------------------------------------------------------------------

| | O.A.K. Financial Services, Inc. (100% owned subsidiary of Byron Center State Bank)
          2445 84th Street, S.W.  Byron Center, MI  49315
                  Dornbush Insurance Agency, Inc. (100% owned subsidiary of O.A.K. Financial Services, Inc.)
                  5445  32nd Avenue
                  Hudsonville, MI 49426
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-58-

---



# Exhibit 31.1

# CERTIFICATIONS

I, Patrick K. Gill, certify that:

|1. | I
have reviewed this Annual Report on Form 10-K of O.A.K. Financial Corporation;
|-- | --------------------------------------------------------------------------------

|2. | Based
on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the
statements                made, in light of the circumstances under which such statements
were made, not                misleading with respect to the period covered by this
report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based
on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the
financial                condition, results of operations and cash flows of the
registrant as of, and                for, the periods presented in this report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed
such disclosure controls and procedures, or caused such disclosure           controls and
procedures to be designed under our supervision, to ensure that           material
information relating to the registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this report is being prepared;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated the
effectiveness of the registrants disclosure controls and           procedures and
presented in this report our conclusions about the effectiveness           of the
disclosure controls and procedures, as of the end of the period covered           by this
report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed in this report any change in the registrants internal control
          over financial reporting that occurred during the registrants most recent
          fiscal quarter (the registrants fourth fiscal quarter in the case of an
          annual report) that has materially affected, or is reasonably likely to
          materially affect, the registrants internal control over financial
          reporting; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting,
to the                registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all
significant deficiencies and material weaknesses in the design or operation           of
internal control over financial reporting which are reasonably likely to
          adversely affect the registrants ability to record, process, summarize
and           report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the registrants internal control over
          financial reporting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 15, 2004

| | /s/ Patrick K. Gill

Patrick K. Gill
Chief Executive Officer
| | ---------------------------------------------------------------------------

-59-

---



# Exhibit 31.2

# CERTIFICATIONS

I, James A. Luyk, certify that:

|1. | I
have reviewed this Annual Report on Form 10-K of O.A.K. Financial Corporation;
|-- | --------------------------------------------------------------------------------

|2. | Based
on my knowledge, this report does not contain any untrue statement of a
               material fact or omit to state a material fact necessary to make the
statements                made, in light of the circumstances under which such statements
were made, not                misleading with respect to the period covered by this
report;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based
on my knowledge, the financial statements, and other financial information
               included in this report, fairly present in all material respects the
financial                condition, results of operations and cash flows of the
registrant as of, and                for, the periods presented in this report;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The
registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as
defined in                Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | designed
such disclosure controls and procedures, or caused such disclosure           controls and
procedures to be designed under our supervision, to ensure that           material
information relating to the registrant, including its consolidated
          subsidiaries, is made known to us by others within those entities, particularly
          during the period in which this report is being prepared;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | evaluated
the effectiveness of the registrants disclosure controls and           procedures
and presented in this report our conclusions about the effectiveness           of the
disclosure controls and procedures, as of the end of the period covered           by this
report based on such evaluation; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | disclosed
in this report any change in the registrants internal control           over
financial reporting that occurred during the registrants most recent
          fiscal quarter (the registrants fourth fiscal quarter in the case of an
          annual report) that has materially affected, or is reasonably likely to
          materially affect, the registrants internal control over financial
          reporting; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The
registrants other certifying officers and I have disclosed, based on
               our most recent evaluation of internal control over financial reporting,
to the                registrants auditors and the audit committee of the registrants
               board of directors (or persons performing the equivalent functions):
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | all
significant deficiencies and material weaknesses in the design or operation           of
internal control over financial reporting which are reasonably likely to
          adversely affect the registrants ability to record, process, summarize
and           report financial information; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | any
fraud, whether or not material, that involves management or other employees           who
have a significant role in the registrants internal control over
          financial reporting.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: March 15, 2004

| | /s/ James A. Luyk

James A. Luyk
Chief Financial Officer
| | -----------------------------------------------------------------------

-60-

---



Exhibit 32.1

Each
of Patrick K. Gill, Chief Executive Officer, and James A. Luyk, Chief Financial Officer,
of O.A.K. Financial Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
               the Annual Report on Form 10-K for the fiscal year ended December 31, 2003
which                this statement accompanies fully complies with the requirements of
Section 13(a)                or 15(d) of the Securities Exchange Act of 1934, and

(2)
               the information contained in the Annual Report on Form 10-K for the fiscal
year                ended December 31, 2003 fairly presents, in all material
respects, the                financial condition and results of operations of O.A.K.
Financial Corporation.

Dated: March 15, 2004

| | /s/ Patrick K. Gill

Patrick K. Gill
Chief Executive Officer
| | ---------------------------------------------------------------------------

| | /s/ James A. Luyk

James A. Luyk
Chief Financial Officer
| | -----------------------------------------------------------------------

A signed original of this
certification has been provided to O.A.K. Financial Corporation and will be retained by
O.A.K. Financial Corporation and furnished to the Securities and Exchange Commission upon
request.

-61-