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

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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number 0-22461O.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)

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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. YesX 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
The aggregate market value
of the voting and non-voting common stock held by non-affiliates (for this
purpose only, the affiliates of the Registrant have been assumed to be the
executive officers, directors and two beneficial owners, related to the
Registrant's President, who each own more than 5% of the Registrant's stock) of
the Registrant, based on a per share price of $44.50 as of February 26, 2002,
was approximately $72,046,524 (common stock, $1.00 par value). As of February 26
2002, there were outstanding 2,034,007 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 18, 2002
are incorporated by reference into Part III of this report.

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PART I

Item 1. Business.

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

              The Company  transacts  business in a single  industry of  commercial  banking.  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 and dividends from the bank and the payment of
dividends to the Company's stockholders.

              The Bank was  organized in 1921 as a Michigan  banking  corporation.  The principal  executive  offices of
the Company and the Bank are located at 2445 84th Street,  S.W.,  Byron  Center,  Michigan  49315.  The Bank's main
office is located  in Byron  Center  and it serves  other  communities  with a total of 10 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  urban  population  as the Grand Rapids
Metropolitan Area expands south and west.

              The Company  provides a broad range of financial  products and services through its branch network in West
Michigan.  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.

              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 was acquired  February 1,  1999.  Dornbush Insurance Agency
sells property and casualty, life, disability and long-term care insurance products.

              Beginning  January 1, 2001 the Company and all it's  subsidiaries  are provided  staff  resources  through
O.A.K. ELC, an employee leasing company.

Bank Services

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

              The Bank's  deposits are  generated in the normal  course of business,  and the loss of any one  depositor
would not have a materially  adverse effect on the business of the Bank.  The source of repayment of  approximately
24% of the loan portfolio is generated from cash flows from developers and owners of commercial real estate.

              The Bank  provides  real estate,  consumer and  commercial  loans to customers in its market.  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,  collateral,
capital and  alternative  sources

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of repayment.  Loan  applications  are accepted at all the Bank's offices and are
approved within the limits of 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
Executive Loan Committee for review and approval.

              The  Bank  regularly  sells  fixed  rate and  conforming  adjustable  rate  residential  mortgages  to the
Federal Home Loan Mortgage  Corporation  ("Freddie  Mac").  Those  residential  real estate  mortgage loan requests
that do not meet Freddie Mac criteria are reviewed by the Bank for approval  and, if approved,  are retained in the
Bank's loan portfolio. The Bank has the ability to purchase loans which meet its normal credit standards.

Bank Competition

The Bank has eleven  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,
Huntington  Bank,  Standard  Federal Bank,  Macatawa  Bank,  Mercantile  Bank and United Bank of Michigan.  Each of
these financial  institutions,  which are headquartered in larger  metropolitan  areas, have significantly  greater
assets and financial  resources than the Company,  with the exception of Macatawa Bank,  Mercantile Bank and United
Bank of Michigan.

              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.

              The Bank's principal  sources of revenue include interest on loans and investments,  fees from the sale of
loans and  insurance  plans,  investment  products,  deposit  account fees,  loan fees and other banking fees.  The
sources of income for the three most recent years are as follows:

`% of total revenue:                 2001          2000           1999
                                        ----------------------------------------
         Net interest revenue               78.8%          83.1%         82.5%
         Fee based revenue                  13.3%          15.2%         14.2%
         Loan sales revenue                  7.9%           1.7%          3.2%`

Growth of Bank

As of December 31, 2001,  the  Registrant and  subsidiaries  had 172 full-time  employees and 47 part time
employees.

SUPERVISION AND REGULATION

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

General

Financial  institutions  and their holding  companies are  extensively  regulated  under federal and state
law.  Consequently,  the growth and  earnings  performance  of the Company and the Bank can be affected not only by
management  decisions  and  general  economic  conditions,  but  also  by the  statutes  administered  by,  and the
regulations and policies of, various governmental  regulatory  authorities.  Those authorities include, but are not
limited to, the Board of Governors of the Federal  Reserve  System (the "Federal  Reserve  Board"),  the FDIC,  the
Commissioner  of the Michigan Office of Financial and Insurance  Services  ("Commissioner"),  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  Commissioner  deems  the  Bank's  capital  to be  impaired,  the
Commissioner  may require the Bank to restore  its capital by a special  assessment  upon the Company as the Bank's
sole  shareholder.  If the Company  were to fail to pay any such  assessment,  the  directors  of the Bank would be
required,  under  Michigan  law, to sell the shares of the Bank's stock owned by the Company to the highest  bidder
at either a public or private auction and use the proceeds of the sale to restore the Bank's capital.

     Investments and Activities.  In general,  any direct or indirect  acquisition by the Company of any voting
shares of any bank which would result in the Company's  direct or indirect  ownership or control of more than 5% of
any class of voting  shares of such  bank,  and any  merger or  consolidation  of the  Company  with  another  bank
company, will require the prior written approval of the Federal Reserve Board under the BHCA.

               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  Commissioner  under
the Michigan Banking Code, may be required.

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

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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 nonbanking  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 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.  While the Company  believes it is eligible to elect to operate as a financial  holding  company,  as of
the date of this filing, it has not applied for approval to operate as a financial holding company.

         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  Commissioner,  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.
         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

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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.  However,  there is  speculation  that the reserve may fall below the  mandated  ratio
resulting in increased assessments beginning in the second half of 2002.


         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.

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

          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:

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

As of December  31,  2001,  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

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institution  from  accepting  deposits  from
correspondent  banks;  requiring  the  institution  to divest  certain  subsidiaries;  prohibiting  the  payment of
principal or interest on subordinated debt; and ultimately, appointing a receiver for the institution.

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

         Dividends.  Under  Michigan law, the Bank is  restricted as to the maximum  amount of dividends it may pay
on its common  stock.  The Bank may not pay dividends  except out of net 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.  The federal  banking  agencies  have adopted  guidelines to promote the
safety and  soundness of federally  insured  depository  institutions.  These  guidelines  establish  standards for
internal controls, information systems, internal audit systems, loan documentation,  credit underwriting,  interest
rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

         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 promulgated  thereunder,  the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in
Lending Act, the Real Estate Settlement  Procedures Act, and the Home Mortgage  Disclosure Act, and the regulations
promulgated  thereunder,  which prohibit  discrimination,  specify  disclosures  to be made to borrowers  regarding
credit and  settlement  costs,  and regulate the mortgage  loan  servicing  activities  of the Bank,  including the
maintenance and operation of escrow accounts and the

-6-

---

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.
Item 2.  Properties.

              The  Company  and the Bank own and  operate a total of 12  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  reasonably adequate for current
and anticipated needs.

              During the fourth  quarter  of 2001 the  Company  purchased  a  facility  in Byron  Center to serve as the
company's mortgage operations center.  Subject to regulatory  approval,  the Bank plans to open a branch in Wayland
late in 2002 and purchase an existing  bank  facility in Jenison,  which is expected to open under the Byron Center
State Bank name in the summer of 2002.
Item 3. Legal Proceedings.

              Due to the  nature  of its  business,  the Bank is  subject  to a number  of legal  actions.  These  legal
actions,  whether  pending or  threatened,  arise  through  the normal  course of business  and are not  considered
unusual or material.
Item 4.  Submission of Matters to Vote of Security Holders.

Not applicable.
Additional Item - Executive Officers

              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.

-7-

---

The following table sets forth certain  information with respect to the Company's  officers  (included for
information purposes only) as of December 31, 2001:

|Name               | Age | Position with Company                                                            | Year Becamean Officer
|------------------ | --- | -------------------------------------------------------------------------------- | ---------------------
|John A. Van Singel | 47  | President, Chief Executive Officer and
Director of the Company and the Bank      | 1976                 
|John Peterson      | 53  | Executive Vice President and Director of the
Company and the Bank                | 1983                 
|James A. Luyk      | 39  | Executive Vice President and Chief Financial
Officer of the Company and the Bank | 2000                 

PART II

The  following  table  sets forth the range of high and low sales  prices of the  Company's  Common  Stock
during 2000 and through  February 26, 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:

`Cash
                                                      Sales Prices                  Dividends Declared
=======================================================================================================
                 2000                       High                    Low
-------------------------------------------------------------------------------------------------------
First Quarter......................      $  60.00                $  55.00
-------------------------------------------------------------------------------------------------------
Second Quarter.....................         69.00                   56.50                 $   .42
-------------------------------------------------------------------------------------------------------
Third Quarter......................         65.00                   55.00
-------------------------------------------------------------------------------------------------------
Fourth Quarter.....................         61.00                   52.00                 $   .45
-------------------------------------------------------------------------------------------------------
                 2001                       High                    Low
-------------------------------------------------------------------------------------------------------
First Quarter......................        $55.00                  $50.00
-------------------------------------------------------------------------------------------------------
Second Quarter.....................         49.50                   46.00                   $0.45
-------------------------------------------------------------------------------------------------------
Third Quarter......................         46.00                   43.75
-------------------------------------------------------------------------------------------------------
Fourth Quarter.....................         45.75                   43.00                   $0.48
-------------------------------------------------------------------------------------------------------
                 2002                       High                    Low
-------------------------------------------------------------------------------------------------------
First Quarter......................        $44.75                $  44.00
=======================================================================================================`

The Company has  approximately  1,050  holders of record of its common  stock.  The common stock is traded
as a "pink-sheet" company under the symbol "OKFC".

              The holders of the  Company's  Common  Stock are  entitled to  dividends  when,  as and if declared by the
Board of Directors of the Company out of funds legally  available for that purpose.  Cash  dividends have been paid
on a  semi-annual  basis.  In  determining  dividends,  the Board of  Directors  considers  the  earnings,  capital
requirements  and  financial  condition  of the  Company  and the Bank,  along with  other  relevant  factors.  The
Company's  principal  source of funds for

-8-

---

cash  dividends  is the  dividends  paid by the Bank.  The ability of the
Company and the Bank to pay dividends is subject to regulatory  restrictions and  requirements.  See the discussion
under "Business-Supervision and Regulation" above.

Item 6.  Selected Financial Data.

`SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
                                       (in thousands, except per share data)
                                             Year Ended December 31,
                                             -----------------------
                                            2001          2000           1999         1998          1997
Income Statement Data:
  Interest income                       $  36,120     $  33,172      $  25,080    $  21,134    $  18,624
  Interest expense                         16,809        16,491         10,528        8,916        7,693
  Net interest income                      19,311        16,681         14,552       12,218       10,931
  Provision for loan losses                 3,025         3,120          1,250          400           50
  Non-interest income                       5,382         3,598          3,621        2,659        1,542
  Non-interest expenses                    14,008        12,057         10,603        7,334        5,782
  Income before federal income taxes        7,660         5,102          6,320        7,144        6,641
  Net income                                6,016         3,970          4,529        5,076        4,626
Per Share Data (1):
  Net income                                $2.96          $1.95         $2.23        $2.54        $2.30
  Cash dividends declared (2)                 .93            .87           .82         1.18         1.55
  Book Value                                24.24          21.95         20.31        19.98        18.37
  Weighted average shares outstanding       2,035          2,034         2,031        2,000        2,010
Balance Sheet Data at year end:
  Total assets                           $500,782      $457,004       $376,073     $301,494     $243,088
  Loans, net of unearned income           379,345       347,293        287,830      222,133      168,953
  Allowance for loan losses                 6,983         4,874          3,551        2,879        2,565
  Deposits                                358,954       338,153        254,166      217,291      184,700
  Stockholders' equity                     49,283        44,629         41,258       39,953       36,915
Ratios:
  Tax equivalent net interest income
     to average earning assets               4.40%          4.38%         4.89%        5.02%        5.24%
  Return on average equity                  12.64           9.37         11.08        13.28        13.08
  Return on average assets                   1.26            .96          1.38         1.90         2.03
  Non-performing loans to total loans        1.41            .77          1.90         0.26         0.14
  Efficiency ratio                          56.28          58.79         58.62        48.48        45.15
  Dividend payout ratio                     31.58          44.55         36.97        46.30        67.35
  Equity to asset ratio                      9.84           9.77         10.97        13.25        15.19
  Tier 1 leverage ratio                     10.01          10.52         12.64        14.74        15.03`

|(1) | As restated for a 2-for-1 common stock split effected in the form of a dividend in 1998.         
|--- | -------------------------------------------------------------------------------------------------
|(2) | Special dividends of $.50 per share and $1.00 per share were paid in 1998 and 1997, respectively.

FORWARD LOOKING STATEMENTS

This  report  contains  certain  forward-looking  statements  within  the  meaning of  Section 27A  of the
Securities  Act of 1933,  as amended,  and Section 21E of the  Securities  Exchange  Act of 1934,  as amended.  The
Company intends such  forward-looking  statements to be covered by the safe harbor  provisions for  forward-looking
statements  contained in the Private  Securities  Reform Act of 1995,  and is including this statement for purposes
of these safe harbor provisions.  Forward-looking  statements,  which are based on certain assumptions and describe
future  plans,  strategies  and  expectations  of the  Company,  are  generally  identifiable  by use of the words;
"believe," "expect," "intend,"  "anticipate,"  "estimate," "project" or similar expressions.  The Company's 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 the operations  and future  prospects of the Company and the  subsidiaries
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 the Company's market area and accounting

-9-

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  the
Company and its  business,  including  additional  factors that could  materially  affect the  Company's  financial
results, is included in the Company's 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, 2001, 2000 AND 1999

The following  financial review presents  management's  discussion and analysis of consolidated  financial
condition  and results of  operations  during the period of 1999 through  2001.  The  discussion  should be read in
conjunction with the Company's consolidated financial statements and accompanying notes thereto.
Summary

              Net income totaled $6.0 million in 2001, compared to $4.0 million and $4.5 million in 2000 and 1999,
respectively.

RESULTS OF OPERATIONS

`Year Ended December 31,
                                         ---------------------------------------
                                              2001        2000          1999
                                              ----        ----          ----
Net income.................................  $6,016      $3,970        $4,529
  Per share of common stock................   $2.96       $1.95         $2.23

Earnings ratios:
  Return on average assets.................   1.26%        .96%         1.38%
  Return on average equity.................  12.64%       9.37%        11.08%`

Net income  increased $2.0 million,  or 52% in 2001. The increase is  attributable  to a refinancing  boom
as a result of lower  interest  rates,  which  resulted in a  significant  increase  in gains on loan sales,  a 15%
growth in average  earning  assets in 2001 and the net interest  margin  improvement  resulting from a shift in the
yield curve to a "normal" slope (short term rates are lower than long-term rates).

              Net income declined  approximately  $.6 million,  or 12% from 1999 to 2000. The decline is attributed to a
significant  increase in the provision for loan losses,  resulting from loan growth, an increase in net charge-offs
and  additional  provision  to reflect  the risk  inherent in the  portfolio.  Another  contributing  factor to the
decline in  profitability  in 2000,  relates to both the increase in general  interest  rates during 1999 and 2000,
combined  with a change in the slope of the yield curve from  "normal"  to  inverted.  During much of 2000,  it was
more expensive for the bank to borrow short-term funds than the yield on longer-term assets.

-10-

---

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:
Interest Yields and Costs (in thousands)

`Year ended December 31,
                                                2001                           2000                           1999
                                                ----                           ----                           ----
                                     Average               Yield/    Average             Yield/    Average               Yield/
                                     Balance    Interest    Cost     Balance   Interest   Cost     Balance    Interest    Cost
Assets
Fed. funds sold                       $3,285      $140     4.26%       $387       $25    6.35%     $1,079         $53    4.91%
Securities:
  Taxable                             54,034     3,292     6.09%     44,770     3,017    6.74%     36,551       2,280    6.23%
  Tax-exempt(3)                       24,723     1,705     6.90%     23,491     1,601    6.82%     20,885       1,514    7.25%
Loans and leases(1)(2)               368,456    31,482     8.54%    322,166    28,972    8.99%    248,440      21,691    8.73%
                                    --------    ------     -----   --------    ------    -----   --------      ------    -----
Total earning assets/total
interest income                      450,498    36,619     8.13%    390,814    33,615    8.59%    306,955      25,538    8.32%
                                                ------                         ------                          ------
Cash and due from banks               10,781                          9,320                         8,601
Unrealized gain                        1,451                         (1,099)                          212
All other assets                      21,635                         18,331                        14,968
Allowance for loan loss               (5,563)                        (3,999)                       (2,936)
                                    --------                       --------                      --------
  Total assets                      $478,802                       $413,367                      $327,800
                                    ========                       ========                      ========
Liabilities and
  Stockholders' Equity
Interest bearing deposits:
  MMDA, Savings/NOW accounts         $98,001    $2,048     2.09%    $89,052    $2,518    2.83%    $83,740     $ 2,153    2.57%
  Time                               203,699    11,045     5.42%    159,326     9,370    5.88%    120,114       6,215    5.17%
  Securities sold under
     agreements to repurchase
     and federal funds purchased      41,117     1,238     3.01%     41,876     2,268    5.42%     28,901       1,242    4.30%
  Other Borrowed Money                39,054     2,478     6.34%     37,825     2,335    6.17%     15,342         918    5.98%
                                    --------    ------             --------    ------            --------      ------
  Total interest bearing
     liabilities/ total
     interest expense                381,871    16,809     4.40%    328,079    16,491    5.03%    248,097      10,528    4.25%
                                                ------                         ------                          ------
Non-interest bearing deposits         44,685                         40,109                        36,452
All other liabilities                  4,638                          2,797                         2,369
Stockholders' Equity:
Accumulated other comprehensive
  income                               1,011                           (725)                          361
Common Stock, Paid-in Capital,
   Retained Earnings                  46,597                         43,107                        40,521
                                    --------                       --------                      --------
Total liabilities and
  stockholder's equity              $478,802                       $413,367                      $327,800
                                    ========                       ========                      ========
Net interest income-FTE                        $19,810                        $17,124                         $15,010
                                               =======                        =======                         =======
Net Interest Margin as a
Percentage of Average Earning
Assets - FTE                                               4.40%                         4.38%                           4.89%
                                                           =====                         =====                           =====`

|(1) | Non-accrual  loans and leases and loans held for sale have been  included in the  average  loans and lease
         balances.  Non-accrual  loans were  approximately  $2,574,000,  $2,468,000 and $352,000 in 2001,  2000 and
         1999 respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Interest on loans includes net origination fees totaling  $256,932 in 2001,  $165,791 in 2000 and $190,720
         in 1999.                                                                                                                              
|(3) | Interest  income on  tax-exempt  securities  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  Corporation.  In the current  year,  tax
equivalent net income  increased  $2,686,000 to $19,810,000,  a 15.7% increase from 2000. The increase was a result
of the growth of the  Corporation's  average  earning assets,  which grew 15.3% from a year earlier.  The growth in
earning assets was fueled by a 14.4% growth in average loan balances.  The Bank's  investment  portfolio grew 15.4%
over the prior year.

-11-

---

In 2001,  the yield on total  earning  assets  decreased  46 basis  points,  compared  to a 63 basis point
decline in the total interest  bearing  liabilities  cost of funds.  Both the net interest  spread and net interest
margin  increased  in 2001 due to lower  interest  rates and interest  bearing  liabilities  repricing  faster than
interest earning assets.

              In 2000,  the yield on total  earning  assets  increased  27 basis  points,  compared  to a 78 basis point
increase in the total interest bearing liabilities cost of funds.

              Both the net  interest  spread and net  interest  margin  were  compressed  in 2000 due to higher  general
interest rates and an increased  reliance on purchased  funding.  Purchased  funding  includes  borrowings from the
Federal  Home Loan Bank and brokered  certificates  from outside the Bank's  market  area.  The Bank's  exceptional
loan growth precipitated the need for purchased funding.

     
         Management  expects the  declining  trend in the fully  taxable-equivalent  (FTE) net  interest  margin to
continue  because of fierce  competition  for deposits in its local  markets and shift of deposit  funding  sources
from low cost funds to higher cost funds.  This is a result of high funding  needs,  increased  local  competition,
and increased  sophistication  of funds  management  by the Bank's  customers.  Management  does not expect the net
interest margin of the Bank to change  significantly in 2002.  However,  there is no assurance  regarding rates and
the Bank's net interest margin.
Change in Tax Equivalent Net Interest Income (in thousands)

`2001 Compared to 2000                2000 Compared to 1999
                                       ---------------------                ---------------------
                                    Volume         Rate        Net       Volume     Rate       Net
                                    ------         ----        ---       ------     ----       ---

Increase (decrease) in interest income (1)
------------------------------------------
Federal funds sold...........          $126       $(11)       $115        $(44)      $16       $(28)
Securities:
   Taxable...................           584       (309)        275         554       183        737
   Tax Exempt (2)............            86         18         104         178       (91)        87
Loans (2)....................         4,001     (1,491)      2,510       6,628       653      7,281
Total interest income........         4,797     (1,793)      3,004       7,316       761      8,077


Increase (decrease) in interest income (1)
------------------------------------------
Interest bearing deposits:
   Savings/NOW Accounts......           236       (706)       (470)        150       215        365
   Time......................         2,449       (774)      1,675       2,306       849      3,155
   Securities sold under
   agreements to repurchase
   and federal funds purchased          (40)      (990)     (1,030)        703       323      1,026
   Other Borrowed Money......            77         66         143       1,387        30      1,417
   Total Interest Expense....         2,722     (2,404)        318       4,546     1,417      5,963

Net interest income (FTE)....        $2,075       $611      $2,686      $2,770     $(656)    $2,114`

|(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 is presented on a fully tax equivalent basis assuming a
marginal tax rate of 34%.                                                               

Interest from loans  represents  86.0%,  86.2% and 84.9% of total interest income for 2001, 2000 and 1999,
respectively.  Net interest income is strongly influenced by results of the Bank's lending activities.

              Total  interest  expense  increased  1.9% from 2000 to 2001 and also  increased  56.6%  from 1999 to 2000.
Cost  of  funds  is  influenced  by  economic  conditions  and  activities  of  the  Federal  Reserve.  The  Bank's
asset/liability  committee  seeks to manage  sources  and uses of funds,  and to monitor the gap in  maturities  of
these funds to maintain a steady net interest margin in varying market conditions.
Composition of Average Earning Assets and Interest Paying Liabilities

-12-

---

`Year ended December 31,
                                                 -------------------------------------------------------
                                                       2001              2000               1999
                                                       ----              ----               ----
As a percent of average earning assets
  Loans.....................................            82%                82%               81%
  Other earning assets......................            18%                18%               19%
                                                       ----               ----              ----
     Average earning assets.................           100%               100%              100%

  Savings and NOW accounts..................            22%                23%               27%
  Time deposits.............................            45%                41%               39%
  Other borrowings..........................            18%                20%               14%
                                                       ----               ----              ----
     Average interest bearing liabilities...            85%                84%               81%

Average earning asset ratio.................            94%                95%               94%
Free funds ratio............................            15%                16%               19%`

The table above  illustrates  the shift of earning assets into loans and the shift of funding sources from
lower cost savings and NOW accounts to higher costing time and borrowed  funds.  The Bank has been able to maintain
an earning asset ratio of  approximately  94% during the past three years.  Non-earning  assets include cash, fixed
assets and certain other assets.

              The free funds ratio  decreased 1% from 2000 to 2001 as a result of a lower  stockholder's  equity percent
to average earning assets and lower  non-interest  bearing deposits to average earning assets. The free funds ratio
decreased 3% from 1999 to 2000 as a result of a lower  stockholder's  equity percent to average  earning assets and
lower non-interest bearing deposits to average earning assets.

Provision and
Allowance for Loan Loss

The provision for loan losses  charged to earnings was $3.0 million in 2001,  which is slightly lower than
the $3.1  million  for 2000,  but is much  higher  than in past years.  The recent  increase  in the  provision  is
attributed to loan growth, an increase in classified loans and a general weakness in the economy.

     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.

Non-interest Income

`Non-interest Income (in thousands)                          Year Ended December 31,
                                               --------------------------------------------------
                                                      2001           2000            1999
                                                      ----           ----            ----
Service charges on deposit accounts ......           $1,574         $1,353           $811
Net gains on asset sales:
   Loans..................................            1,924            344            600
   Securities.............................              300            213            533
Loan servicing fees.......................               25            153            148
Insurance premium revenue.................            1,007            961          1,043
Brokerage revenue.........................              304            310            322
Other.....................................              248            264            164
                                                     ------         ------         ------
     Total non-interest income............           $5,382         $3,598         $3,621
                                                     ======         ======         ======`

Non-interest  income consists of service  charges on deposit  accounts,  brokerage  fees,  insurance fees,
service  fees,  gains on  investment  securities  available  for sale and gains from loan sales to the Federal Home
Loan  Mortgage  Corporation  ("FHLMC")  loans.  The Bank retains the  servicing  rights on the loans sold to FHLMC.
Excluding the sale

-13-

---

of assets,  non-interest income increased $117,000,  or 4% over 2000. The increase was driven by
a 16% increase in service  charges on deposits.  This  increase  was a result of continued  account  growth and fee
increases.  Non-interest  income,  excluding  the sale of assets,  increased  $553,000 or 22% for 2000 versus 1999.
The increase was due primarily to a 67% increase in service charges on deposits.

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

`Year ended December 31,
                                                            -----------------------------------------
                                                                2001         2000          1999
                                                                ----         ----          ----
Total Real estate mortgage loan originations                  $136,626     $45,098       $65,668

Real estate mortgage loan sales                                105,682      20,224        44,764

Real estate mortgage loans servicing rights sold                     -           -             -

Net gains on the sale of real estate mortgage loans              1,924         344           600

Net gains as a percent of real estate mortgage loan sales        1.82%       1.70%         1.34%`

Net gains on the sale of real estate  mortgage  loans totaled  $1,924,000,  $344,000 and $600,000 in 2001,
2000 and  1999,  respectively.  The  sharp  increase  in gains on sale of real  estate  loans are a result of lower
interest  rates and are not  expected  to  continue  indefinitely.  Net gains on the sale of loans are  generally a
function of the volume of loans sold.  The volume of loans sold is dependant  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.  The  servicing  portfolio  increased  $47,348,000  or 32% from 2000 to 2001 and
$4,457,000 or 3% from 1999 to 2000.

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

`Year ended December 31,
                                         ---------------------------------------------------------
                                           Proceeds        Gains          Losses          Net
                                           --------        -----          ------          ---
        2001.........................      $4,131           $301            $1           $300
        2000.........................         969            218             5            213
        1999.........................       3,313            533             -            533`

Non-interest Expense

Non-interest  expense  increased  $1,951,000  or 16.2% in 2001  compared  to 2000.  The  Company's  salary
expense  increased  14.5%, or $786,000 during 2001 compared to a year earlier.  The increase  includes the addition
of several key management  positions.  Employee  benefit's  increased  22.7%, or $280,000 during 2001 compared to a
year earlier.  The Company's  medical plan is  self-insured,  there were higher  medical  claims and more employees
enrolled in the plan. Other  non-interest  expenses  increased 34.4%, or $794,000 during 2001 compared to 2000. The
increase includes a write-down on ORE of $195,000, higher telephone, software, and lending costs due to growth.

              Non-interest  expense  increased  $1,454,000 or 13.7% in 2000 compared to 1999.  Employee  benefit expense
increased  $250,000 or 25.4% as a result of higher medical  claims.  Excluding the employee  benefit  expense,  the
increase in non-interest expense is a result of the overall expansion on the Company's business.

-14-

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`Non-interest Expense (in thousands)                            Year ended December 31,
                                               ---------------------------------------------------------
                                                     2001                2000               1999
                                                     ----                ----               ----
Salaries..................................          $6,202              $5,416             $4,949
Employee benefits.........................           1,514               1,234                984
Occupancy.................................           1,016                 918                881
Equipment.................................           1,064               1,145                847
Postage...................................             190                 170                152
Printing and supplies.....................             394                 321                286
Marketing.................................             350                 334                233
Michigan Single Business Tax..............             180                 215                192
Other.....................................           3,098               2,304              2,079
                                                   -------             -------            -------
  Total non-interest expense..............         $14,008             $12,057            $10,603
                                                   =======             =======            =======`

The increased  level of  non-interest  expense is both a result of, and necessary to achieve the Company's
aggressive  growth plan.  During the past three years the Company's  assets have  increased over 33%. The growth of
non-interest  expense includes four new banking  offices,  expansion of the corporate  offices,  and acquisition of
the Dornbush Insurance Agency.Provision for Income Taxes

              The provision for income taxes was  $1,644,000 in 2001 compared with  $1,132,000 in 2000,  and  $1,791,000
in  1999.  The  Company's  effective  tax  rate  approximated  22% in 2000 and 28% in  1999.  The  decrease  in the
effective  tax rate for the year 2000 was a result of a  valuation  allowance  that  started to reverse in 2000 and
will continue through year 2001.

              The  provision  for income  taxes was lowered by $439,000,  $260,000  and $20,000 in 2001,  2000 and 1999,
respectively,  as a result of the  Company's  utilization  of a valuation  allowance  from earlier  periods.  As of
December 31, 2001 the valuation  allowance is zero.  Excluding the valuation  allowance  credit,  the provision for
income taxes would have been  $2,083,000  and 27.2% in 2001,  $1,392,000 and 27.3% in 2000 and $1,811,000 and 28.7%
in 1999.

FINANCIAL CONDITION
Summary

              During 2001, total assets increased 10% to $500,782,000,  deposits  increased 6% to $358,954,000 and loans
increased 9% to  $379,345,000.  In recent years,  loan growth has exceeded  deposit growth.  As a result,  the Bank
has increased its usage of brokered CD's and other  borrowings to meet the Bank's  funding  needs.  A discussion of
changes in balance sheet amounts by major categories follows:
Securities

              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.

         All of the Company's  securities are classified as held-for-sale.  The Company's total holdings  increased
$4.6 million in 2001.

`Amortized                 Fair                 Amount
Securities available-for-sale                                Cost                  Value                 Pledged
     December 31, 2001                                      $77,692                 $79,080               $78,106
     December 31, 2000                                       73,713                  74,446                72,356`

-15-

---

Excluding holdings of U.S.  Government Agency  Securities,  there were no investments in securities of any
one issuer,  which  exceeded 10% of  stockholders'  equity.  The majority of the  securities  are pledged 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.
Schedule of Maturities
of Investment Securities and Weighted Average Yields

              The  following  is a  schedule  of  maturities  and  their  weighted  average  yield of each  category  of
investment  securities as of December 31, 2001. 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
                     -----------------------------------------------------------------------------------------------
                                                         (dollars in thousands)
                                                                                                  Investments With
                          Due Within            One to             Five to            After         No Contractual
                           One Year           Five Years          Ten Years         Ten Years          Maturity
                           --------           ----------          ---------         ---------          --------
                         Fair      Avg.      Fair     Avg.      Fair     Avg.      Fair     Avg.     Fair      Avg.
                        Value     Yield     Value     Yield    Value     Yield    Value    Yield    Value     Yield
                       -------   -------   -------   -------  -------   ------   -------  -------  -------   -------
Available for Sale:
Mortgage-backed
securities.........     $4,493     5.34%   $31,966    5.36%   $10,166    4.87%    $6,624   3.92%       $  -       -
States and
Political
Subdivisions.......      2,293     8.48%     8,092    7.47%    11,677    7.37%     2,795   7.71%          -       -
Other Securities...          -        -         -        -         -        -          -      -          974   7.74%
                        ------     -----   -------    -----   -------    -----    ------   -----        ----   -----
                        $6,786     5.34%   $40,058    5.78%   $21,843    6.35%    $9,419   5.04%        $974   7.74%
                        ======     =====   =======    =====   =======    =====    ======   =====        ====   =====`

The Loan
Portfolio

The Bank's  largest  concentration  of loans is to  businesses  in the form of  commercial  loans and real
estate  mortgages.  The Bank's consumer lending activity  includes direct consumer loans,  indirect consumer loans,
home equity  loans,  unsecured  lines of credit and  residential  real estate  loans.  In an effort to mitigate the
exposure to changes in interest  rates,  most of the  residential  real estate  loans are sold to the Federal  Home
Loan Mortgage  Corporation("FHLMC").  However,  the Bank retains  servicing rights on substantially  all such loans
sold.  At  December  31,  2001 and  2000,  the  Bank was  servicing  loans  for  FHLMC  totaling  $194,914,000  and
$147,566,000,  respectively.  The loan portfolio mix at December  31,2001  consists of 52% commercial  real estate,
13% residential real estate, 16% commercial and 19% consumer installment.

              All loans are  originated  centrally at the Bank's main office in Byron Center,  Michigan.  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
                                                       ------------------------------------------------
                                                                2001                    2000
                                                                ----                    ----
                                                          Amount         %        Amount         %
                                                          ------         -        ------         -

          Commercial Real Estate....................     $196,864       52       $165,978        48
          Residential Real Estate...................       49,961       13         53,644        15
          Commercial................................       60,667       16         64,511        19
          Consumer..................................       71,853       19         63,160        18
                                                         --------      ----      --------       ----
            Total loans............................      $379,345      100%      $347,293       100%
                                                         ========      ====      ========       ====`

The lending policy of the Bank was written to reduce credit risk,  enhance  earnings and guide the lending
officers in making credit decisions.

-16-

---

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.  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 low  interest  rate  environment  resulted  in a  significant  amount  of  re-financing  during  2001.
Consumers  refinanced  mortgage loans to lock in the lower interest rates.  This activity  increased gains on sales
of loans held for sale by over 450% from the  previous  year.  The  Company  does not expect this  abnormally  high
volume to  continue.  During the last half of 2001,  the Company  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.
Non-performing Assets

`Non-performing Assets (in thousands)                                                December 31,
                                                                  --------------------------------------------------
                                                                       2001             2000             1999
                                                                       ----             ----             ----
Non-accrual loans............................................          $2,285          $2,535           $2,471
90 days or more past due & still accruing....................           2,961             151            3,003
                                                                       ------          ------           ------
     Total non-performing loans..............................           5,246           2,686            5,474
     Other real estate.......................................             120               -                -
                                                                       ------          ------           ------
Total non-performing assets..................................          $5,366          $2,686           $5,474
                                                                       ======          ======           ======
As a percentage of portfolio loans
     Non-performing loans....................................           1.38%            .77%            1.90%
     Non-performing assets...................................           1.41%            .77%            1.90%
     Allowance for loan losses...............................           1.84%           1.40%            1.23%
Allowance for loan losses as a % of non-performing loans.....            133%            181%              65%`

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, 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.

              The Bank's ratio of  non-performing  loans to total loans at December 31, 2001 was 1.38%  compared to .77%
in 2000.  The increase is due to the increase in loans 90 days or more past due.

     Subsequent to year-end,  approximately $2.9 million in loans,  previously reported as 90 days or more past
due and still accruing, were classified as non-accrual.

              Total  non-performing  loans and assets remain  considerably  higher than last year.  Approximately 72% of
the  non-accrual  loans  are made to one group of  commercial  customers.  Total  non-performing  assets  decreased
$805,000 from the third quarter of 2001.  The allowance for loan losses is 133% of the total  non-performing  loans
as of December 31, 2001.  Management  believes  that the  allowance for loan losses is adequate for these loans and
the  remainder of the lending  portfolio.  As of December  31, 2001 there were no other  interest  bearing  assets,
which required classification.

              Management,  with the  assistance  of outside  consultants,  is  conducting a complete  and  comprehensive
review of the  lending  process.  The  expected  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.

-17-

---

The table  below  presents  the  interest  income  that would  have been  earned on  non-performing  loans
outstanding  at December 31, 2001,  2000 and 1999 had those loans been  accruing  interest in  accordance  with the
original terms of the loan agreement (pro forma interest) and the amount of interest  income  actually  included in
net interest income for those years.
Foregone Interest on Non-Performing Loans

`For the Year Ended December 31
                                                                (in thousands)
                                         --------------------------------------------------------------
                                                      2001                           2000
                                                      ----                           ----
                                         Non-accrual     Restructured    Non-accrual    Restructured
          Pro forma interest               $ 232           $ 551           $ 284          $ 372
          Interest earned                     29             551             146            372
                                           -----           -----           -----          -----
          Foregone interest income         $ 203           $   -           $ 138          $   -
                                           =====           =====           =====          =====`

Loan Loss
Experience

              The  following  is a summary of loan  balances  (excluding  loans held for sale) at the end of each period
and their daily average  balances,  changes in the allowance for the loan losses arising from loans charged off and
recoveries on loans previously charged off, and additions to the allowance, which have been expensed.
Allowance for Loan Losses (dollars in thousands)

`Year Ended December 31,
                                                                    -------------------------------------------------
                                                                           2001            2000             1999
                                                                           ----            ----             ----
  Balance at beginning of year................................            $4,874          $3,551           $2,879

  Charge-offs:
     Commercial...............................................              (363)         (1,400)             (45)
     Real estate-mortgages....................................                 -              (1)               -
     Consumer.................................................              (816)           (642)            (625)
                                                                          ------          ------           ------
                                                                          (1,179)         (2,043)            (670)
                                                                          ------          ------           ------
  Recoveries:
     Commercial...............................................                36              90               24
     Real estate-mortgages....................................                 -               -                -
     Consumer.................................................               227             156               68
                                                                          ------          ------           ------
                                                                             263             246               92
                                                                          ------          ------           ------
  Net charge-offs.............................................              (916)         (1,797)            (578)

  Additions to allowance charged to operations................             3,025           3,120            1,250
                                                                          ------          ------           ------
  Balance at end of year......................................            $6,983          $4,874           $3,551
                                                                          ======          ======           ======
  Net charge-offs as a percent of average loans...............              .25%            .56%             .24%`

For the year ended  December  31, 2001 versus 2000,  net loans  charged off  decreased  from .56% of total
loans  outstanding to .25%.  During the year ended December 31, 2001,  management added $3,025,000 to the loan loss
provision and had net  charge-offs  of $916,000,  increasing the allowance for loan losses to 1.84% from 1.40% from
a year ago. The provision for loan losses charged against earnings  decreased  $95,000,  or approximately 3% from a
year ago. 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.  During the second  quarter of 2001,  the consumer loan

-18-

---

policy was changed from charging off the entire loan
balance of repossessed  assets and  subsequent  recovery upon sale, to charging off the net  uncollectable  balance
after  collateral  liquidation.  Consumer  loan  charge-offs  increased  $103,000  in 2001  compared  to 2000.  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.

`Year ended December 31,
                           -----------------------------------------------------------------------------------
                                      2001                         2000                       1999
                                      ----                         ----                       ----
                             Allowance     % of total     Allowance    % of total     Allowance    % of total
                               Amount       allowance       Amount      allowance       Amount      allowance
                               ------       ---------       ------      ---------       ------      ---------
Commercial.................    $4,908          70%         $3,849          79%          $2,723         77%
Real estate mortgages......       100           2             107           2              151          4
Consumer...................     1,273          18             863          18              637         18
Unallocated................       702          10              55           1               40          1
                               ------         ----         ------         ----          ------        ----
  Total....................    $6,983         100%         $4,874         100%          $3,551        100%
                               ======         ====         ======         ====          ======        ====`

In addition to specific  reserves  assigned to  individual  loans,  management  uses an eight point rating
system to assign risk ratings to all commercial  loans. A  pre-determined  loss  allocation is assigned to loans in
each  risk-rating  category.  Residential  real-estate  and  consumer  loans are  assigned a loss  allocation  on a
"pooled" basis, which represents historical losses and management judgment.

              The above  allocations  are not  intended  to imply  limitations  on usage of the  allowance.  The  entire
allowance is available  for any future loans  without  regard to loan type.  Management  has provided  additions to
the allowance for loan losses to support the 2001 loan growth,  to replenish the allowance for  charge-offs  during
the year and for the increase of non-performing loans.
Deposits

              Average  total  deposits  grew 20% from 2000 to 2001 and grew 20% from 1999 to 2000.  The increase in 2001
resulted  primarily  from gaining  market share in the Bank's  market areas and the use of brokered  time  deposits
outside the banks market area.

              Deposits are gathered  from the  communities  the Bank serves.  Increasing  core deposits is a key element
of the  Bank's  strategic  plan for  calendar  year  2002.  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.  Additionally,  a Company wide training  program,  to educate every
employee  on the new  products  has  been  implemented.  The  Bank  has also  introduced  online  banking  as a new
alternative for customer access.
Average Daily
Deposits (dollars in thousands)

`Average for the Year
                                       --------------------------------------------------------
                                                  2001                        2000
                                          Amount           %           Amount           %
                                          ------           -           ------           -
Non-interest bearing demand.......        $44,685          13%        $40,109          14%
NOW accounts......................         29,164           8          21,554           8
MMDA/Savings .....................         68,837          20          67,498          23
Time - negotiable brokered........         51,699          15          18,241           6
Time..............................        152,000          44         141,085          49
                                         --------         ----       --------         ----
   Total Deposits.................       $346,385         100%       $288,487         100%
                                         ========         ====       ========         ====`

-19-

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The recent surge in loan growth and lending  opportunities  has resulted in the Banks' need to rely on funding
sources  outside its local  market.  The use of such funding  sources is  monitored  very closely to provide the lowest
cost funding available to the Bank.
Average
Deposit Balances (dollars in thousands)

              The following table sets forth the average deposit balances and the weighted average rates paid thereon:

`Average for the Year
                                                --------------------------------------------------------
                                                           2001                         2000
                                                           ----                         ----
                                                    Average       Average        Average       Average
                                                    Balance         Rate         Balance         Rate
                                                    -------        ------        -------        ------
         Non-interest bearing demand........         $44,685                      $40,109
         NOW Accounts.......................          29,164       2.00%           21,554       2.41%
         MMDA/Savings.......................          68,837       2.13            67,498       2.96
         Time - negotiable brokered.........          51,699       5.91            18,241       6.91
         Time...............................         152,000       5.26           141,085       5.75
                                                    --------       -----         --------       -----
            Total Deposits..................        $346,385       3.78%         $288,487       4.12%
                                                    ========       =====         ========       =====`

At December 31,2001, the Bank had approximately $56,010,000 in brokered time deposits.
Maturity
Distribution of Time Deposits of $100,000 Or More

              The  following  table  summarizes  time  deposits in amounts of $100,000 or more by time  remaining  until
maturity as of December 31, 2001:

`Amount
                                                                              ------
                     Three months or less...........................          $22,835
                     Over 3 months through 12 months................           26,919
                     Over 1 year through 3 years...................            28,811
                     Over 3 years...................................           25,451
                                                                             --------
                                                                             $104,016
                                                                             ========`

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, 2001                           December 31, 2000
                               -----------------------------------------    ----------------------------------------
                                Average         Average        Average       Average       Average       Average
                                Balance         Maturity         Rate        Balance       Maturity        Rate
                               -----------     ----------    -----------   -----------   -----------    ----------
Repurchase agreements             $38,885          1 day        2.93%        $28,976         1 day        6.17%
FHLB Borrowings                    37,110      66 months        6.48          36,019     67 months        6.39
Federal funds purchased             2,543          1 day        4.17          12,899         1 day        4.98
Treasury tax & loan note            1,799          1 day        3.45           1,622         1 day        6.04
Other borrowings                      143      61 months        6.81             168     73 months        6.57
                               -----------                  -----------   -----------                   ---------
                                  $78,538                       4.63%        $77,894                      5.77%
                               ===========                  ===========   ===========                   =========`

-20-

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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 $49.3  million as of  December  31,  2001,  an  increase  of $4.7
million, or 10.5% from a year ago.  The increase is primarily from the retention of earnings.

              In 2001, the Company paid cash dividends  totaling  $1,899,554,  approximately 32% of earnings.  The lower
percentage  was the  result  of  higher  earnings  in 2001 and not a change  in the  dividend  policy.  In 2000 the
Company paid cash dividends  totaling  $1,768,647,  approximately  45% of earnings.  In 1999, the Company paid cash
dividends totaling $1,674,256, approximately 37% of earnings.

              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, 2001, as shown in the table below:
Capital
Resources (in thousands)

`Regulatory Requirements              December 31,
                                                                      -----------------------------
                                       Adequately         Well
                                      Capitalized      Capitalized        2001            2000
                                                                          ----            ----
Tier 1 capital..................                                         $47,761         $43,499
Tier 2 capital..................                                           5,099           4,765
                                                                         -------         -------
  Total qualifying capital......                                         $52,860         $48,264
                                                                         =======         =======
Tier 1 leverage ratio...........            4%              5%            10.01%          10.52%
Tier 1 risk-based capital.......            4%              6%            11.90%          11.41%
Total risk-based capital........            8%             10%            13.17%          12.67%`

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.

-21-

---

Maturities and Sensitivities of Loans to Changes in Interest Rates

              The following  table shows the amount of total loans  outstanding as of December 31, 2001,  which based on
scheduled maturity dates, are due in the periods indicated.

`Maturing
                                                                      (in thousands)
                                       -----------------------------------------------------------------------------
                                                               After one but
                                         Within one Year     within five years    After five years       Total
Residential Real Estate...........            $15,589               25,613               8,759             49,961
Installment.......................              2,524               45,313              24,016             71,853
Commercial Real Estate............             47,101              140,688               9,075            196,864
Other Commercial..................             31,870               26,523               2,274             60,667
                                              -------             --------             -------           --------
       Totals.....................            $97,084             $238,137             $44,124           $379,345
                                              =======             ========             =======
Allowance for Loan Losses.........                                                                         (6,983)
                                                                                                         --------
Total Loans Receivable, Net.......                                                                       $372,362
                                                                                                         ========`

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)
                                                         -----------------------------------------------------------
                                                               Fixed Rate          Variable Rate         Total
                                                               ----------          -------------         -----
Due within 3 months.................................              $17,057            $103,124          $120,181
Due after 3 months within 1 year....................               17,691                   -            17,691
Due after one but within five years.................              199,314                   -           199,314
Due after five years................................               42,159                   -            42,159
                                                                 --------            --------          --------
Total...............................................             $276,221            $103,124          $379,345
                                                                 ========            ========
Allowance for loan losses...........................                                                     (6,983)
                                                                                                       --------
Total loans receivable, net.........................                                                   $372,362
                                                                                                       ========`

-22-

---

Asset/Liability
Gap Position (in thousands)

`December 31, 2001
                                            ---------------------------------------------------------------------
                                                0-3            4-12           1-5           5+
                                               Months         Months         Years         Years         Total
                                               ------         ------         -----         -----         -----
Interest earning assets:
  Fed Funds Sold.......................       $      0       $      0       $      0      $      0     $        0
  Loans................................        134,322         40,017        177,533        27,473        379,345
  Securities (including restricted
     investments)......................         42,459          3,659         13,853        22,009         81,980
  Loans held for sale..................         11,456              -              -             -         11,456
                                              --------       --------       --------       -------       --------
  Total interest earning assets........       $188,237        $43,676       $191,386       $49,482       $472,781
                                              ========       ========       ========       =======       ========
Interest bearing liabilities:
  Savings & NOW........................        $31,323       $  8,253        $44,017       $23,843        107,436
  Time.................................         43,106         76,723         75,165         8,201        203,195
                                              --------       --------       --------       -------       --------
  Total deposits.......................         74,429         84,976        119,182        32,044        310,631
  Other borrowings.....................         54,076          4,000         12,200        17,800         88,076
                                              --------       --------       --------       -------       --------
   Total interest bearing liabilities..       $128,505        $88,976       $131,382       $49,844       $398,707
                                              ========       ========       ========       =======       ========
Rate sensitivity gap and ratios:
  Gap for period.......................         59,732        (45,300)        60,004          (362)
  Cumulative gap.......................         59,732         14,432         74,436        74,074
  Period gap ratio.....................           1.46            .49           1.46           .99
  Cumulative gap ratio.................           1.46           1.07           1.21          1.19
Gap /Total Earning assets
  Period...............................          31.7%         (103.7)%        31.4%         (0.7)%
  Cumulative...........................          31.7%            6.2%         17.6%         15.7%`

The  asset/liability  gap  reflects  the  scheduled  repayment  and  maturities  of the  Banks'  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.

     As of December  31,2001 the cumulative one year gap position was asset  sensitive,  approximately  6.2% of
earning  assets.  The table above reflects that the Bank has an asset  repricing gap of $59,732,000 at 3 months and
an asset  repricing gap of $14,432,000 at one year. 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 jumbo  certificates  of deposit  from  outside  its market  area.
Management  evaluates the funding needs and makes a decision  based on current  interest rates and terms whether to
fund  internally or from  alternate  sources.  To date,  the Bank has not employed the use of derivative  financial
instruments in managing the risk of changes in interest rates.

-23-

---

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

`Market Value of
Change in Interest Rates          Portfolio           Percent           Net Interest          Percent
                                  Equity(1)           Change             Income(2)            Change
                              -------------------  ---------------    -----------------    --------------
     300 basis point rise          $32,250             (37.4)%             $23,630                6.4%
     200 basis point rise           38,331             (25.6)               23,122                4.1
     100 basis point rise           45,551             (11.6)               22,650                2.0
     Base rate                      51,509               -                  22,206                -
     100 basis point decline        55,062               6.9                21,247               (4.3)
     200 basis point decline        58,883              14.3                20,082               (9.6)
     300 basis point decline        62,925              22.2                18,440              (16.7)`

|(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.                                            

Simulations  models are useful tools, but require numerous  assumptions that have a significant  impact on
the measured  interest rate risk.  The use of a simulation  model is relatively  new at the Bank and changes in the
assumptions  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.

              The Bank does not  currently,  nor does it have plans to, use  derivatives  to assist in the management of
interest risk.
Liquidity

              Liquidity  management  is also a  significant  responsibility  of the ALCO.  The  objective  of  liquidity
management is to ensure the  availability  of funds to meet the demands of depositors  and  borrowers.  The primary
sources of  liquidity  include the  repayment of customer  loans,  maturity of and  repayment of Bank  investments,
deposits,  and borrowings.  The Bank also has at its disposal the ability to borrow funds from other banks,  borrow
funds from the Federal  Home Loan Bank,  and purchase  brokered  certificates  of deposits  from outside the Bank's
market  area.  Advances  from the  Federal  Home  Loan  Bank  increased  by $1.2  million  and the use of  brokered
certificates of deposit increased by $3.1 million in 2001 compared to 2000.

              Net cash flows from operating  activities  declined  significantly  in 2001 to $2.8 million cash used from
$8.3   million   provided  in  2000.   The  decline  was  almost   completely   attributable   to  an  increase  in
loans-held-for-sale  at December 31, 2001. This increase  reflects the significant  number of mortgage  closings in
the closing days of December, 2001.

              Cash  flows  from  financing  activities  reflect  an  increase  in both the  purchases  and  proceeds  of
available-for-sale  securities.  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 similar  securities.  Net
loan growth  declined  from $61 million in 2000 to $33 million in 2001.  This decline  reflects  the economic  slow
down and tightening of credit standards on consumer loans.

              The $38  million  decline  in cash  flows from  financing  activities  reflects  the lower  funding  needs
resulting  from the decline in net loan growth  explained  above.  During 2001,  brokered time  deposits  increased
$3.1 million compared to an increase of $52.9 million in 2000.

              Next years cash flow from  operations  and other  borrowings are expected to be adequate to meet the needs
of the Company.

-24-

---

Impact of Inflation

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

`Three Months Ended
------------------------------------------------------------------------------------------------------------
                                           March 31          June 30        September 31      December 31
------------------------------------------------------------------------------------------------------------
Year Ending December 31, 2001
------------------------------------------------------------------------------------------------------------
Total Assets                                $470,007          $475,573         $489,473          500,782
------------------------------------------------------------------------------------------------------------
Net Interest Income                            4,285             4,662            5,018            5,346
------------------------------------------------------------------------------------------------------------
Provision for Loan Losses                        525               610              565            1,325
------------------------------------------------------------------------------------------------------------
Net Income                                     1,244             1,455            1,848            1,469
------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------
Earnings per Share                                .61              .72               .90            .73
------------------------------------------------------------------------------------------------------------
Book Value per Share                            22.86            23.12             24.10          24.24
------------------------------------------------------------------------------------------------------------
Return on Average Assets                         1.09%            1.24%             1.51%          1.17%
------------------------------------------------------------------------------------------------------------
Return on Stockholders' Equity                  11.06%           12.41%            15.25%         11.71%
------------------------------------------------------------------------------------------------------------
Efficiency Ratio                                57.97%           56.15%            51.38%         57.41%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Year Ending December 31, 2000
------------------------------------------------------------------------------------------------------------
Total Assets                               $ 396,913         $ 416,548        $ 429,146        $ 457,004
------------------------------------------------------------------------------------------------------------
Net Interest Income                            4,030             4,148            4,260            4,243
------------------------------------------------------------------------------------------------------------
Provision for Loan Losses                        330               470              400            1,920
------------------------------------------------------------------------------------------------------------
Net Income                                       994             1,258            1,397              321
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Earnings per Share                                .49              .62               .68            .16
------------------------------------------------------------------------------------------------------------
Book Value per Share                            20.64            20.72             21.89          21.95
------------------------------------------------------------------------------------------------------------
Return on Average Assets                         1.04%            1.24%             1.31%           .26%
------------------------------------------------------------------------------------------------------------
Return on Stockholders' Equity                   9.61%           12.03%            12.83%          3.02%
------------------------------------------------------------------------------------------------------------
Efficiency Ratio                                63.97%           55.21%            56.38%         59.95%
------------------------------------------------------------------------------------------------------------`

-25-

---

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.

-26-

---

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

|O.A.K. FINANCIAL CORPORATION 
AND SUBSIDIARY               | TABLE OF CONTENTS
|---------------------------------------------------------- | -----------------
|                                                           |                  
|                                                           | PAGE             
|Independent Auditors' Reports                              | 28               
|Consolidated Financial Statements                          |                  
|Consolidated Balance Sheets                                | 30               
|Consolidated Statements of Income                          | 31               
|Consolidated Statements of Comprehensive Income            | 32               
|Consolidated Statements of Changes in Stockholders' Equity | 33               
|Consolidated Statements of Cash Flows                      | 34               
|Notes to Consolidated Financial Statements                 | 35-51            

-27-

---

Independent Auditor's Report

To the Board of Directors and Stockholders
O.A.K Financial Corporation and Subsidiaries
We have audited the
accompanying consolidated balance sheet of O.A.K Financial Corporation and
Subsidiaries as of December 31, 2001 and the related consolidated statements of
income, comprehensive income, changes in stockholders equity and cash
flows for the year 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
audit.

We conducted our audit 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 audit provide a reasonable
basis for our opinion.
In our opinion, the 2001
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of O.A.K Financial
Corporation and Subsidiaries as of December 31, 2001 and the consolidated
results of their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.



-28-

---

INDEPENDENT AUDITORS' REPORT

-29-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBDISIARY | CONSOLIDATED BALANCE SHEETS
|------------------------------------------- | ---------------------------

`December 31,
                                                                 -------------------------------------------
      ASSETS                                                             2001                   2000
                                                                 --------------------   --------------------
Cash and due from banks                                              $12,051,503            $10,759,837
Federal funds sold                                                             -              6,000,000
                                                                    ------------           ------------
Cash and cash equivalents                                             12,051,503             16,759,837
Available-for-sale securities                                         79,080,306             74,446,393
Total Loans                                                          379,345,186            347,293,451
Allowance for loan losses                                             (6,982,779)            (4,874,020)
                                                                    ------------           ------------
Net Loans                                                            372,362,407            342,419,431

Loans held for sale                                                   11,456,287                725,857
Accrued interest receivable                                            3,484,633              3,445,573
Premises and equipment, net                                           12,586,367             12,293,881
Restricted investments                                                 2,900,000              2,710,000
Other assets                                                           6,860,483              4,202,688
                                                                    ------------           ------------
Total assets                                                        $500,781,986           $457,003,660
                                                                    ============           ============

                   LIABILITIES AND STOCKHOLDERS' EQUITY


Deposits
     Interest bearing                                               $310,631,041           $293,593,320
     Non-interest bearing                                             48,322,935             44,559,923
                                                                    ------------           ------------
Total deposits                                                       358,953,976            338,153,243

Securities sold under agreements to repurchase and
federal funds purchased                                               51,162,712             32,233,984
Borrowed funds                                                        37,036,681             38,455,955
Other liabilities                                                      4,345,794              3,531,662
                                                                    ------------           ------------
Total liabilities                                                    451,499,163            412,374,844

Stockholders' equity
     Common stock, $1 par value; 4,000,000 shares authorized,
        shares issued and outstanding: 2,040,532 at December 31,
        2001 and 2,041,775 at December 31, 2000                        2,040,532              2,041,775
     Additional paid-in capital                                        6,302,538              6,265,446
     Retained earnings                                                40,396,147             36,280,076
     Accumulated other comprehensive income                              916,256                483,869
     Unallocated common stock held by ESOP                              (372,650)              (442,350)
                                                                    ------------           ------------
Total stockholders' equity                                            49,282,823             44,628,816
                                                                    ------------           ------------
Total liabilities and stockholders' equity                          $500,781,986          $ 457,003,660
                                                                    ============          =============


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

                                      -30-







  O.A.K. FINANCIAL CORPORATION                               CONSOLIDATED STATEMENTS OF INCOME
         AND SUBSIDIARY
-----------------------------------------------------------------------------------------------------------

                                                                       Year Ended December 31,
                                                         -------------------------------------------------
                                                               2001            2000              1999
                                                         ------------     --------------    --------------
Interest income
     Loans                                               $31,447,999        $28,942,504       $21,656,573
     Available-for-sale securities                         4,335,313          4,003,757         3,264,615
     Restricted investments                                  196,963            201,369           106,473
     Federal funds sold                                      139,476             24,589            52,644
                                                         -----------        -----------       -----------
Total interest income                                     36,119,751         33,172,219        25,080,305
                                                         -----------        -----------       -----------                                                         ===========        ===========       ===========
Interest expense
     Deposits                                             13,092,938         11,888,486         8,368,069
     Borrowed funds                                        2,583,850          3,159,406         1,327,843
     Securities sold under agreements to repurchase        1,132,235          1,442,904           832,353
                                                         -----------        -----------       -----------
Total interest expense                                    16,809,023         16,490,796        10,528,265
                                                         -----------        -----------       -----------
Net interest income                                       19,310,728         16,681,423        14,552,040

Provision for loan losses                                  3,025,000          3,120,000         1,250,000
                                                         -----------        -----------       -----------
Net interest income after provision for
     loan losses                                          16,285,728         13,561,423        13,302,040
                                                         -----------        -----------       -----------
Non-interest income
     Service charges                                       1,573,933          1,353,040           811,369
     Net gain on sales of loans held for sale              1,924,467            344,111           599,935
     Loan servicing fees                                      25,281            152,639           148,042
     Net gain on sales of available-for-sale securities      300,090            213,287           532,915
     Insurance premiums                                    1,007,243            960,907         1,042,618
     Brokerage fees                                          303,695            310,318           321,615
     Other                                                   247,185            263,701           164,311
                                                         -----------        -----------       -----------
Total non-interest income                                  5,381,894          3,598,003         3,620,805
                                                         -----------        -----------       -----------
Non-interest expenses
     Salaries                                              6,201,895          5,416,446         4,948,945
     Employee benefits                                     1,513,834          1,233,611           984,104
     Occupancy                                             1,015,564            918,782           880,846
     Furniture and fixtures                                1,063,756          1,144,496           846,828
     Other                                                 4,212,948          3,343,953         2,942,129
                                                         -----------        -----------       -----------
Total non-interest expenses                               14,007,997         12,057,288        10,602,852
                                                         -----------        -----------       -----------
Income before federal income taxes                         7,659,625          5,102,138         6,319,993

Federal income taxes                                       1,644,000          1,132,000         1,791,000
                                                         -----------        -----------       -----------
Net income                                                $6,015,625         $3,970,138        $4,528,993
                                                         ===========        ===========       ===========
Income per common share:
     Basic                                                     $2.96             $1.95             $2.23
                                                               =====             =====             =====
     Diluted                                                   $2.96             $1.95             $2.23
                                                               =====             =====             =====

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

                                      -31-









     O.A.K. FINANCIAL CORPORATION                                    CONSOLIDATED STATEMENTS OF
           AND SUBSIDIARY                                              COMPREHENSIVE INCOME
---------------------------------------------------------------------------------------------------------------

                                                                        Year Ended December 31
                                                       --------------------------------------------------------
                                                           2001                2000                  1999
                                                       --------------    ----------------     -----------------
Other comprehensive income (loss)

Unrealized gains (losses) on available-
     for-sale securities arising during the year           $955,477          $1,889,683          $(1,676,862)

Reclassification adjustment for realized
     gains included in net income                           300,090             213,287               532,915
                                                          ---------          ----------          ------------
Other comprehensive income (loss)
     before income taxes                                    655,387           1,676,396            (2,209,777)

Income taxes (benefit) related to
     other comprehensive income                             223,000             570,000              (751,000)
                                                          ---------          ----------          ------------

Other comprehensive income (loss)                           432,387           1,106,396            (1,458,777)

Net income                                                6,015,625           3,970,138             4,528,993
                                                          ---------          ----------          ------------
Comprehensive income                                     $6,448,012          $5,076,534            $3,070,216
                                                          ---------          ----------          ------------





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

                                      -32-










    O.A.K. FINANCIAL CORPORATION                                        CONSOLIDATED STATEMENTS OF
        AND SUBSIDIARY                                               CHANGES IN STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------------



                                                                         Year Ended December 31
                                                            ------------------------------------------------
                                                                2001              2000               1999
                                                           -------------     --------------    -------------

Shares of common stock issued and outstanding
     Balance, beginning of year                              2,041,775          2,041,775         2,000,000
     Common stock forfeitures                                   (2,000)                 -                 -
     Common stock issued                                           757                  -            13,000
     Issuance of common stock for business combination               -                  -            28,775
                                                            ----------         ----------        ----------
     Balance, end of year                                    2,040,532          2,041,775         2,041,775
                                                            ==========         ==========        ==========
Common stock
     Balance, beginning of year                             $2,041,775         $2,041,775        $2,000,000
     Common stock forfeitures                                   (2,000)                 -                 -
     Common stock issued                                           757                  -            13,000
     Issuance of common stock for business combination               -                  -            28,775
                                                            ----------         ----------        ----------
     Balance, end of year                                    2,040,532          2,041,775         2,041,775
                                                            ----------         ----------        ----------
Additional paid-in-capital
     Balance, beginning of year                              6,265,446          6,259,681         5,622,680
     Issuance of common stock                                   37,092                  -           637,001
     Allocation of ESOP shares                                       -              5,765                 -
                                                            ----------         ----------        ----------
     Balance, end of year                                    6,302,538          6,265,446         6,259,681
                                                            ----------         ----------        ----------
Retained earnings
     Balance, beginning of year                             36,280,076         34,078,585        31,494,055
     Accumulated deficit in business combination                     -                  -          (270,207)
     Net income                                              6,015,625          3,970,138         4,528,993
     Cash dividends                                         (1,899,554)        (1,768,647)       (1,674,256)
                                                            ----------         ----------        ----------
     Balance, end of year                                   40,396,147         36,280,076        34,078,585
                                                            ----------         ----------        ----------
Accumulated other comprehensive (loss) income
     Balance, beginning of year                                483,869           (622,527)          836,250
     Other comprehensive income (loss)                         432,387          1,106,396        (1,458,777)
                                                            ----------         ----------        ----------
     Balance, end of year                                      916,256            483,869          (622,527)
                                                            ----------         ----------        ----------
Unallocated common stock held by ESOP
     Balance, beginning of year                               (442,350)          (500,000)                -
     Unearned ESOP compensation                                      -                  -          (500,000)
     Allocation of ESOP shares                                  69,700             57,650                 -
                                                            ----------         ----------        ----------
     Balance, end of year                                     (372,650)          (442,350)         (500,000)
                                                            ----------         ----------        ----------
Total stockholders' equity                                 $49,282,823        $44,628,816       $41,257,514
                                                            ----------         ----------        ----------

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

                                      -33-





     O.A.K. FINANCIAL CORPORATION                                   CONSOLIDATED STATEMENTS OF
         AND SUBSIDIARY                                                  CASH FLOWS
--------------------------------------------------------------------------------------------------------------
                                                                            Year Ended December 31,
                                                               -----------------------------------------------
                                                                     2001           2000            1999
                                                               --------------  -------------    --------------
Cash flows from operating activities
  Net income                                                    $6,015,625       $3,970,138       $4,528,993
  Adjustments to reconcile net income to net
     cash provided by operating activities
        Depreciation and amortization                            1,048,634        1,108,809          916,515
        Provision for loan losses                                3,025,000        3,120,000        1,250,000
        Proceeds from sales of loans held for sale             107,606,050       20,568,196       45,364,562
        Originations of loans held for sale                   (116,412,013)     (20,317,904)     (40,716,703)
        Net gain on sales of available-for-sale securities        (300,090)        (213,287)        (532,915)
        Net gain on sales of loans held for sale                (1,924,467)        (344,111)        (599,935)
        Net amortization of investment premiums                    177,358          112,885          163,506
        (Gain) loss on sales of property and equipment               8,475          (65,500)           7,769
        Deferred income taxes (benefit)                           (905,000)        (743,000)         (85,000)
        Changes in operating assets and liabilities
             which (used) provided cash
        Accrued interest receivable                                (39,060)        (728,736)         (690,652)
        Other assets                                            (1,977,795)         179,631          (186,327)
        Other liabilities                                          883,832        1,688,352          (304,994)
                                                                ----------      -----------        ----------
Net cash (used in) provided by operating activities             (2,793,451)       8,335,473         9,114,819
                                                                ----------      -----------        ----------
Cash flows from investing activities
  Available-for-sale securities
     Proceeds from maturities                                   29,648,233        8,331,637        11,425,763
     Proceeds from sales                                         4,130,670          968,939         3,313,371
     Purchases                                                 (37,634,697)     (20,320,276)      (23,146,715)
  Purchases of restricted investments                             (190,000)        (710,000)         (736,100)
  Net increase in loans held for investment                    (32,967,976)     (61,260,242)      (66,275,365)
  Purchases of premises and equipment                           (2,090,988)      (2,874,735)       (4,361,920)
  Proceeds from the sale of premises and equipment                 741,393          156,115            11,858
                                                                ----------      -----------        ----------
Net cash used in investing activities                          (38,363,365)     (75,708,562)      (79,769,108)
                                                                ----------      -----------        ----------
Cash flows from financing activities
  Net increase in deposits                                      20,800,733       83,987,195        36,875,241
  Net (decrease) increase in TT&L note                          (2,576,782)        (509,820)        2,447,197
  Proceeds from FHLB borrowings                                 15,400,000       22,800,000        20,000,000
  Repayments of FHLB borrowings                                (14,200,000)     (16,000,000)       (4,000,000)
  Net other borrowed funds (repayments)                            (42,492)         (39,824)          (54,065)
  Net increase (decrease) in securities sold under
     agreements to repurchase and fed funds purchased           18,928,728      (14,390,367)       18,051,047
  Dividends paid                                                (1,899,554)      (1,768,647)       (1,674,256)
  Proceeds from issuance of common stock                                 -                -           150,001
  Proceeds from stock options exercised                             37,849                -                 -
                                                                ----------      -----------        ----------
Net cash provided by financing activities                       36,448,482       74,078,537        71,795,165
                                                                ----------      -----------        ----------
Net increase in cash and cash equivalents                       (4,708,334)       6,705,448         1,140,876

Cash and cash equivalents, beginning of year                    16,759,837       10,054,389         8,913,513
                                                                ----------      -----------        ----------
Cash and cash equivalents, end of year                         $12,051,503      $16,759,837       $10,054,389
                                                               ===========      ===========       ===========
Supplementary cash flows information
  Interest paid                                                $17,195,069      $15,762,060       $10,320,794
  Income taxes paid                                              2,740,000        1,869,167         1,948,430



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

                                      -34-`

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

1. BUSINESS
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         Business - O.A.K.  Financial  Corporation(the "Corporation")  through its wholly owned subsidiary,  Byron
Center State Bank (the "Bank")  provides a variety of  financial  services to  individuals  and  businesses  in the
western Michigan area through its eleven branches  located in Byron Center,  Jamestown,  Cutlerville,  Hudsonville,
Grandville,  Moline, Dorr, Hamilton,  Allendale,  Zeeland and Kentwood. Active competition,  principally from other
commercial  banks and  credit  unions,  exists in all of the  Bank's  principal  markets.  The  Bank's  results  of
operations  can be  significantly  affected  by  changes  in  interest  rates  or  changes  in the  local  economic
environment.

              The Bank's primary  deposit  products are interest and  noninterest  bearing  checking  accounts,  savings
accounts and time deposits and its primary  lending  products are  commercial  loans,  real estate  mortgages,  and
consumer loans.  Note 3 further  describes the types of lending the Bank engages in and Note 6 provides  additional
information on deposits.  Note 2 discusses the types of securities the Corporation invests in.

              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 (see Note 12).

         Use  of  Estimates  - In  preparing  consolidated  financial  statements  in  conformity  with  accounting
principles  generally accepted in the United States,  management is required to make estimates and assumptions that
affect the  reported  amounts of assets  and  liabilities  at the date of the  consolidated  balance  sheet and the
reported  amounts of revenues and expenses  during the  reporting  period.  Actual  results could differ from those
estimates.  Material  estimates  particularly  susceptible  to  significant  change in the near term  relate to the
determination of the allowance for loan losses and deferred tax assets.

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

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

              Cash and cash  equivalents  include  cash on hand,  amounts  due from banks and federal  funds  sold.  The
Corporation  maintains  deposit  accounts in various  financial  institutions,  which generally exceed FDIC insured
limits or are not insured.  Management  believes the  Corporation is not exposed to any  significant  interest rate
or other financial risk as a result of these deposits.
Available-For-Sale Securities

              Available-for-sale  securities  are recorded at their  estimated fair value.  Net unrealized  appreciation
and depreciation,  net of the effect of deferred income taxes is reported in other comprehensive  income.  Premiums
and discounts are  recognized in interest  income using the interest  method over the period to maturity.  Declines
in the fair value of  securities  below  cost that are  determined  to be other than  temporary  are  reflected  in
earnings as realized  losses.  Gains or losses on the sale of  available-for-sale  securities are determined  using
the specific identification method.

-35-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

Loans Held for Investment and Related Income

              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.
Mortgage Banking Activities

             Mortgage loans  originated and intended for sale in the secondary  market are carried at the lower of cost
or estimated  market value in the aggregate.  Gains and losses on sales of such loans are recognized at the time of
sale and are determined by the difference  between the net sales proceeds and the unpaid  principal  balance of the
loans sold,  adjusted for any yield  differential,  servicing fees and servicing costs  applicable to future years.
Net unrealized losses are recognized in a valuation allowance by charges to income.

              The Bank  currently  retains  servicing  on all  loans  originated  and sold  into the  secondary  market.
Originated  mortgage  servicing  rights ("OMSR")  retained are recognized for loans sold by allocating  total costs
incurred  between the loan and the servicing  rights based on their  relative fair values.  The mortgage  servicing
rights are  amortized  in  proportion  to, and over the period of,  estimated  net future  servicing  revenue.  The
expected  period of the estimated net servicing  income is based,  in part, on the expected  prepayment rate of the
underlying  mortgage.  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  for  similar  assets  with  similar
characteristics,  when available,  or based upon discounted cash flows using market-based  assumptions.  Impairment
is recognized through a decrease in carrying value.

              Loan  administration  fees earned for  servicing  loans for others are generally  calculated  based on the
outstanding principal balances for the loans serviced and are recorded as revenue when received.
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.

              A loan is considered  impaired  when,  based on current  information  and events,  it is probable that the
Bank will be unable to  collect  the  scheduled  payments  of  principal  or  interest  when due  according  to the
contractual  terms of the loan  agreement.  Factors  considered  by management in  determining  impairment  include
payment status,  collateral  value,  and the probability of collecting  scheduled  principal and interest  payments
when due. Loans that experience  insignificant  payment delays and payment shortfalls  generally are not classified
as impaired.  Management  determines the  significance  of payment delays and payment  shortfalls on a case-by-case
basis,  taking into  consideration  all of the circumstances  surrounding the loan and the borrower,  including the
length of the delay,  the  reasons  for the delay,  the  borrower's  prior  payment  record,  and the amount of the
shortfall  in relation to the  principal  and  interest  owed.  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.

-36-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

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.
Foreclosed Real Estate

              Real estate properties  acquired through,  or in lieu of, loan foreclosure are held for sale and initially
recorded at fair value at the date of  foreclosure  less estimated  cost to sell,  thereby  establishing a new cost
basis.  Subsequent to  foreclosure,  valuations  are  periodically  performed by management  and the real estate is
recorded at the lower of carrying  amount or fair value less costs to sell.  Revenue and expenses  from  operations
and changes in the valuation allowance are included in net expenses from foreclosed assets.
Credit Related Financial 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.
Premises and Equipment

              Premises and equipment are stated at cost less  accumulated  depreciation.  Depreciation is computed using
both the  straight-line  and  accelerated  methods based upon the useful lives of related  assets,  which generally
range  from 5 to  approximately  40 years.  Maintenance,  repairs  and minor  alterations  are  charged  to current
operations as expenditures occur and major improvements are capitalized.  Management  annually reviews these assets
to determine whether carrying values have been impaired.
Net Income Per Share

              Net income per share of common stock is calculated on the basis of the weighted  average  number of common
shares  outstanding  including shares  allocated under the employee stock ownership plan,  which was  approximately
2,035,000  in 2001,  2,034,000  in 2000 and  2,031,000 in 1999 and the assumed  exercise of the  outstanding  stock
options  were  not  considered  in the  calculation  of  diluted  earnings  per  share  because  their  effect  was
anti-dilutive.
Federal Income Taxes

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

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

-37-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

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:

`Gross             Gross
                                         Amortized          Unrealized         Unrealized            Fair
2001                                        Cost               Gains             Losses              Value
                                     -----------------  ----------------   ---------------    ---------------
Mortgage-backed securities                $52,577,876           $731,739           $60,197       $53,249,418
States and political subdivisions          24,234,969            660,464            38,647        24,856,786
Other                                         879,198            106,640            11,736           974,102
                                     -----------------  ----------------   ---------------    ---------------
Total                                     $77,692,043         $1,498,843          $110,580       $79,080,306
                                     =================  ================   ===============    ===============

2000

U.S. government and
     federal agency                       $10,430,632           $  1,295          $ 77,550       $10,354,377
Mortgage-backed securities                 37,305,026            286,161           161,428        37,429,759
States and political subdivisions          25,188,019            486,964            60,352        25,614,631
Other                                         789,068            265,675             7,117         1,047,626
                                     -----------------  ----------------   ---------------   ----------------
Total                                     $73,712,745         $1,040,095         $ 306,447       $74,446,393
                                     =================  ================   ===============   ================`

The amortized cost and fair value of  available-for-sale  securities by  contractual  maturity at December
31, 2001 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                                          $2,268,217         $2,293,352
     Due after one year through five years                             7,820,079          8,091,473
     Due after five years through ten years                           12,307,319         12,650,963
     Due after ten years                                               2,718,551          2,795,099
                                                                ----------------    ----------------

     Subtotal                                                         25,114,166         25,830,887
     Mortgage-backed securities                                       52,577,877         53,249,419
                                                                ----------------    ----------------

     Total                                                           $77,692,043        $79,080,306
                                                                ================    ================`

-38-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

Investment income from
taxable and nontaxable securities for the years ended December 31, is as
follows:

`2001               2000               1999
                             ----------------    --------------    ---------------
     Taxable                       $3,095,141       $2,815,554        $2,173,429
     Nontaxable                     1,240,172        1,188,203         1,091,186
                             ----------------    --------------    ---------------

     Total                         $4,335,313       $4,003,757        $3,264,615
                             ================    ==============    ===============

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

                                                  2001              2000             1999
                                             -------------     -------------    -------------
     Gross realized gains                         $301,458         $217,785          $532,915
     Gross realized losses                          (1,368)          (4,498)                -
                                             -------------     -------------    -------------
           Net realized gain on sales of
          available-for-sale securities           $300,090         $213,287          $532,915
                                             =============     =============    =============`

The tax provision,  applicable to these net realized gains,  amounted to approximately  $102,000,  $73,000
and $181,000 during 2001, 2000 and 1999, respectively.

              Investment  securities with carrying values of  approximately  $78,106,000 and $72,356,000 at December 31,
2001 and 2000,  respectively,  were  pledged to secure  borrowing  arrangements  disclosed  in notes 7 and 8 or for
other purposes as required or permitted by law.
3. LOANS

Major loan classifications at December 31 are as follows:

`2001                 2000
                                                               -----------------    -----------------

     Commercial real estate                                         $196,863,957         $165,977,721
     Residential real estate                                          49,960,794           53,644,229
     Commercial                                                       60,667,282           64,511,214
     Consumer                                                         71,853,153           63,160,287
                                                               -----------------    -----------------

     Total loans receivable                                          379,345,186          347,293,451

     Less allowance for loan losses                                    6,982,779            4,874,020
                                                               -----------------    -----------------

     Loans receivable, net                                          $372,362,407         $342,419,431
                                                               =================    =================

At December 31, 2001, scheduled maturities of loans with fixed rates of interest are as follows:

     One year or less                                                      $34,747,893
     One to five years                                                     199,314,510
     Over five years                                                        42,158,653
                                                                     ------------------
     Total                                                                $276,221,056
                                                                     ==================`

The  Bank  services  loans  for  others,   which  generally  consists  of  collecting  mortgage  payments,
maintaining  escrow  accounts,   disbursing   payments  to  investors  and  taxing   authorities,   and  processing
foreclosures.  Loans being serviced for others as of  December 31,  2001 and 2000,  approximated  $199,000,000  and
$152,000,000, respectively; such loans are not included in the accompanying consolidated balance sheets.

-39-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

The following table summarizes  mortgage  servicing rights capitalized and amortized and the fair value of
mortgage servicing rights included in other assets in the accompanying  consolidated  balance sheets as of December
31:

`2001                2000                1999
                                                  -----------------    ----------------    ----------------
    Balance, beginning of year                          $1,223,808        $1,215,373         $  918,093
      Mortgage servicing rights capitalized              1,162,497           223,465            491,995
      Amortization                                        (444,780)         (215,030)          (194,715)
                                                   ----------------    ----------------    ----------------
    Balance, end of year                                $1,941,525        $1,223,808         $1,215,373
                                                   ================    ================    ================

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

                                                                      2001                 2000
                                                               -----------------    ----------------
    Impaired loans without a valuation allowance                        $324,952         $         -
    Impaired loans with a valuation allowance                          8,484,210           2,685,702
                                                               -----------------    ----------------
    Total impaired loans                                              $8,809,162          $2,685,702
                                                               =================    ================
    Valuation allowance related to impaired loans                     $1,622,659            $699,334
                                                               =================    ================


                                                              2001             2000              1999
                                                         -------------    -------------     --------------
    Average investment in impaired loans                  $8,731,084       $2,618,756         $1,607,204

    Interest income recognized on impaired loans
    (no interest income was recognized on the cash
    basis)                                                  $580,298        $172,775            $151,414`

All payments applied to impaired loans are recorded as a reduction in principal balance, when the
impaired loan is in non-accrual status.4. ALLOWANCE
FOR LOAN LOSSES

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

`2001                  2000                1999
                                               -----------------    -----------------    ----------------
     Balance, beginning of year                       $4,874,020           $3,550,553          $2,879,376

     Provision for loan losses                         3,025,000            3,120,000           1,250,000
     Recoveries                                          262,859              245,826              91,451
     Loans charged off                                (1,179,100)          (2,042,359)           (670,274)
                                               ------------------    -----------------    ----------------
                Balance, end of year                   6,982,779           $4,874,020          $3,550,553
                                               ==================    =================    ================`

-40-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

5. PREMISES
AND EQUIPMENT

A summary of premises and equipment at December 31 follows:

`2001                 2000
                                                                -----------------    ----------------
     Land                                                             $2,555,231          $2,130,069
     Buildings and improvements                                       10,599,636          10,118,577
     Furniture and equipment                                           5,955,322           5,769,263
                                                                -----------------    ----------------

     Total premises and equipment                                     19,110,189          18,017,909

            Less accumulated depreciation                              6,523,822           5,724,028
                                                                -----------------    ----------------

     Premises and equipment, net                                     $12,586,367         $12,293,881
                                                                =================    ================


6. DEPOSITS

The following is a summary of the distribution of time deposits at December 31:

                                                                       2001                 2000
                                                                -----------------    -----------------
       Time, $100,000 and over                                       $48,005,633          $46,362,916
       Other time                                                     99,179,615          101,128,485
       Brokered time deposits, $100,000 and over                      56,010,000           52,915,000
                                                                -----------------    -----------------
     Total interest bearing                                         $203,195,248         $200,406,401
                                                                =================    =================

At December 31, 2001, scheduled maturities of time deposits are as follows:

     2002                                                                         $119,837,204
     2003                                                                           29,089,076
     2004                                                                           22,328,082
     2005                                                                           16,173,614
     2006                                                                            7,574,272
     2007                                                                            4,097,000
     2008                                                                            1,000,000
     2009                                                                            2,096,000
     2010                                                                            1,000,000
                                                                              -----------------

     Total time deposits                                                          $203,195,248
                                                                              =================`

Interest  expense  on time  deposits  issued  in  denominations  of  $100,000  or more  was  approximately
$5,566,310 in 2001, $3,874,000 in 2000 and $1,365,000 in 1999.

-41-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

7. BORROWED FUNDS

Borrowed funds at December 31, consist of the following obligations:

`2001                 2000
                                                                -----------------    -----------------

     Federal Home Loan Bank advances                                 $36,000,000          $34,800,000
     Treasury tax and loan note                                          913,398            3,490,180
     Other borrowings                                                    123,283              165,775
                                                                -----------------    -----------------

     Total borrowed funds                                            $37,036,681          $38,455,955
                                                                =================    =================`

The Federal  Home Loan Bank  borrowings  are  collateralized  by a blanket  lien on all  qualified  1-to-4
family whole mortgage loans and U.S.  government  agency securities with a combined carrying value of approximately
$47,071,000 and $40,869,000 at December 31, 2001 and 2000,  respectively;  the maximum outstanding at any month end
was  $40,000,000  and  $39,800,000,  respectively;  the average  daily  balance was  $37,110,000  and  $36,019,000,
respectively; the average interest rate was 6.48% and 6.17% respectively.

              The Treasury Tax and Loan Note is  collateralized  by U.S.  government  agency  securities with a carrying
value of  approximately  $5,353,000  and $6,314,000 at December 31, 2001 and 2000,  respectively.  The Treasury Tax
and Loan Note is a daily  borrowing  with the Federal  Reserve  Bank,  due on demand at 25 basis  points  below the
national  federal fund interest  rate (1.75% at December 31,  2001).  The Treasury Tax and Loan Note had a carrying
value and fair value as of  December  31,  2001 and 2000 of  $913,398  and  $3,490,180,  respectively;  the maximum
outstanding  at any  month  end was  $4,022,000  and  $4,541,000,  respectively;  the  average  daily  balance  was
$1,799,000 and $1,622,000, respectively; the average interest rate was 3.45% and 3.80% respectively.

The Federal Home Loan Bank
advances at December 31, 2001 and their contractual maturities are as follows:

`2001
                                                                         ---------------
               Fixed rate advances:
               Due in 2002                                                    6,000,000
               Due in 2003                                                    1,000,000
               Due in 2004                                                    8,200,000
               Due in 2005                                                    1,000,000
               Due in 2006                                                    2,000,000
               Due in 2007                                                    1,000,000
               Due in 2010                                                   16,800,000
                                                                         ---------------

               Total long-term debt                                         $36,000,000
                                                                         ===============`

8.       SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND FEDERAL FUNDS PURCHASED

              Securities sold under agreements to repurchase  at December 31, 2001 and 2000 mature  within one day  from
the  transaction  date and  have an average  interest rate of 2.94% and  5.03%, respectively. The  U.S.  government
agency  securities  underlying the agreements  have a carrying value and a fair value of approximately  $51,484,000
and  $43,847,000  at December  31, 2001 and 2000,  respectively.  Such  securities  remain under the control of the
Bank.  The  maximum  amount  outstanding  at any month end during the years  ended  December 31, 2001  and 2000 was
$44,580,000  and   $36,045,000,   respectively;   the  daily  average  balance  was  $38,574,000  and  $28,976,000,
respectively.

              Federal  Funds  Purchased  had a  carrying  value  and fair  value  as of  December  31,  2001 and 2000 of
$10,150,000  and $0,  respectively;  the maximum  outstanding  at any month end was  $12,200,000  and  $24,000,000,
respectively;  the average daily balance was $2,543,000 and  $12,899,000,  respectively;  the average interest rate
was 4.17% and 6.39% respectively.

-42-

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|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

9. FEDERAL
INCOME TAXES

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

`2001                  2000               1999
                                         ------------------    -----------------   ----------------
Current                                         $2,549,000            $1,875,000        $1,876,000
Deferred (benefit)                                (905,000)             (743,000)          (85,000)
                                          ------------------    -----------------   ----------------

Federal income tax expense                      $1,644,000            $1,132,000        $1,791,000
                                          ==================    =================   ================`

`2001                 2000                1999
                                                ------------------    ----------------    ----------------
Statutory rate applied to income
  before income taxes                                $2,604,000          $1,734,727          $2,148,798
Effect of tax-exempt interest
  income                                               (407,000)           (354,990)           (341,898)
Change in valuation allowance
                                                       (439,000)           (260,000)            (20,000)
Other - net                                            (114,000)             12,263               4,100
                                                 ------------------    ----------------    ----------------

Federal income tax expense                           $1,644,000          $1,132,000          $1,791,000
                                                 ==================    ================    ================`

The net  deferred  income tax asset as of December  31, is  comprised  of the tax effect of the  following
temporary differences:

`2001                2000
                                                                    ---------------     ---------------
Deferred tax assets
  Allowance for loan losses                                           $2,106,000          $1,555,000
  Deferred compensation plan                                             465,000             301,000
  Deferred loan fees                                                     108,000               1,000
                                                                    ---------------     ---------------
Total deferred tax assets                                              2,679,000           1,857,000
Valuation allowance                                                            -            (439,000)
                                                                    ---------------     ---------------

          Net deferred tax assets                                      2,679,000           1,418,000
                                                                    ---------------     ---------------
Deferred tax liabilities
  Depreciation                                                          (165,000)            (73,000)
  Discount accretion                                                     (20,000)            (31,000)
  Other                                                                  (31,000)                  -
  Loan servicing rights                                                 (660,000)           (416,000)
                                                                    ---------------     ---------------

Total deferred tax liabilities                                          (876,000)           (520,000)
                                                                    ---------------     ---------------
Net deferred tax assets entering into the determination
  of the provision for federal income taxes                            1,803,000             898,000

Additional deferred tax (liability) asset related to
  other comprehensive income                                            (472,000)           (249,000)
                                                                    ---------------     ---------------
           Net deferred tax asset included in other assets
  on the accompanying consolidated balance sheets                     $1,331,000           $ 649,000
                                                                    ===============     ===============`

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---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

10. RELATED
PARTY TRANSACTIONS
Loans

              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  $8,122,000  and  $4,577,000 at December 31, 2001 and 2000,  respectively;  new loans and  repayments
during 2001 were approximately $5,202,000 and $1,657,000, respectively.
11.
OFF-BALANCE SHEET ACTIVITIES

              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.

            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, 2001 and 2000,  the  following  financial  instruments  were  outstanding  whose  contract
amounts represent credit risk:

`Contract Amount
                                                       -------------------------------------
                                                            2001                2000
                                                       ----------------    ----------------
Commitments to grant loans                                 $33,871,000         $29,949,000
Unfunded commitments under lines of credit                  87,712,000          82,352,000
Commercial and standby letters of credit                     4,471,000           3,406,000`

Commitments  to extend  credit are  agreements  to lend to a customer as long as there is no  violation of
any condition  established in the 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.

-44-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

12. REGULATORY
MATTERS

              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, 2001,  that the  Corporation  and the Bank meet all capital  adequacy  requirements  to which they are
subject.  As of  December  31,  2000  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, 2001 and 2000 are also presented in the table.

`Minimum To Be Well
                                                                                       Capitalized Under
                                                           Minimum Capital             Prompt Corrective
                                       Actual                Requirement               Action Provisions
                                 ------------------     ---------------------        ---------------------
                                  Amount     Ratio         Amount      Ratio            Amount     Ratio
                              --------   -------       --------    -------          --------   --------
                                                        (Dollars in thousands)
As of December 31, 2001
Total capital to risk
  weighted assets
   Consolidated                  $52,860    13.17%        $32,120       8.0%        $     N/A        N/A%
   Bank                           52,173    13.01          32,082       8.0            40,102        10.0
Tier 1 capital to risk
  weighted assets
   Consolidated                   47,761    11.90%         16,060       4.0               N/A         N/A
   Bank                           47,137    11.76          16,041       4.0            24,061         6.0
Tier 1 capital to
  average assets
   Consolidated                   47,761    10.01%         19,130       4.0               N/A         N/A
   Bank                           47,137     9.87          19,103       4.0            23,877         5.0`

-45-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

`Minimum To Be Well
                                                                                        Capitalized Under
                                                            Minimum Capital            Prompt Corrective
                                       Actual                 Requirement              Action Provisions
                                ------------------       -------------------          ------------------
                                 Amount     Ratio         Amount      Ratio            Amount     Ratio
                                --------   -------       --------    -------          --------   -------
                                                        (Dollars in thousands)
As of December 31, 2000
Total capital to risk
  weighted assets
   Consolidated                  $48,264    12.67%        $30,494       8.0%         $    N/A        N/A%
   Bank                           47,963    12.60          30,453       8.0            38,066        10.0
Tier 1 capital to risk
  weighted assets
   Consolidated                   43,499    11.41          15,247       4.0               N/A         N/A
   Bank                           43,205    11.35          15,227       4.0            22,840         6.0
Tier 1 capital to
  average assets
   Consolidated                   43,499    10.52          16,542       4.0               N/A         N/A
   Bank                           43,205    10.48          16,489       4.0            20,611         5.0`

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,  2001 and 2000,  those
required reserve balances were $4,851,000 and $3,215,000, respectively.

              The Bank is also subject to limitations  under the Federal  Reserve Act on the amount of loans or advances
that can be extended to the  Corporation  and dividends  that can be paid to the  Corporation.  The total amount of
dividends  which may be paid at any date is generally  limited to the retained  earnings of the Bank,  and loans or
advances are limited to 10 percent of the Bank's capital stock and surplus on a secured  basis.  Approval is needed
if total  dividends  declared in any  calendar  year exceed the  retained  "net  profit" (as defined in the Federal
Reserve  Act) of that year plus the  retained  "net  profit" of the  preceding  two years.  The amount that was not
subject to this restriction is approximately  $10,776,000 at  January 1, 2002.  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.
13. EMPLOYEE
BENEFIT PLANS

              The  Corporation  maintains  a 401(k)  covering  substantially  all  employees.  The  Corporation  matches
employee contributions to the 401(k) up to a maximum of 2% 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  Corporation  maintains  an  internally  leveraged  Employee  Stock  Ownership  Plan  (ESOP)  covering
substantially  all  employees.  The  Corporation  makes  annual  contributions  equal to at least the  ESOP's  debt
service  less  dividends  received by the ESOP.  The  original  loan will be repaid over a period of 10 years.  The
dividends on the allocated shares are distributed to participants  and the dividends on the unallocated  shares are
used to pay debt  service.  The ESOP shares  initially  were  pledged as  collateral  for its debt.  As the debt is
repaid,  shares  are  released  from  collateral  and  allocated  to active  participants.  The  shares  pledged as
collateral  are reported as  unallocated  common stock held by the ESOP in the equity section of the balance sheet.
As shares are released they become outstanding for earnings per share computations.

-46-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

`2001                 2000                 1999
                                               ----------------    -----------------    -----------------
       Allocated shares                               2,547                1,153                    -
       Shares released for allocation                   928                1,394                1,153
       Unreleased shares                              6,525                7,453                8,847
                                               ----------------    -----------------    -----------------
       Total ESOP shares                             10,000               10,000               10,000
                                               ================    =================    =================`

The total  Corporation  contributions  to the 401(k) match,  profit  sharing plan and ESOP were  $345,062,
$319,367 and $274,035 for 2001, 2000 and 1999, respectively.

         Stock  Compensation  and  Stock  Option  Plans  -  The  Corporation   maintains  stock  option  plans  for
non-employee  directors (the Director's  Plan) and employees and officers of the Corporation and its'  subsidiaries
(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.

              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.  During  2001,  13,400
options were  awarded with an exercise  price of $50.00 per share.  During 2000,  12,127  options were awarded with
an exercise price of $55.00 per share.

The following tables summarize information about stock option transactions:

`2001                       2000                     1999
                                  ----------------------    ------------------------   ----------------------
                                                Average                     Average                   Average
                                                Option                       Option                   Option
                                   Shares        Price        Shares         Price      Shares        Price
                                 ----------    ---------    ----------     ---------   ---------    ---------
Outstanding, beginning of year     22,484       $52.53         11,750        $50.00           -           $ -

Granted                            13,400        50.00         12,127         55.00      11,750         50.00

Exercised                            (757)       50.00              -             -           -             -

Forfeited/expired                    (732)       50.00         (1,393)       (52.72)          -             -
                                 ----------    ----------    ----------     ---------   --------    ---------
Outstanding, end of year           34,395        51.65         22,484         52.53      11,750         50.00
                                 ==========    ==========    ==========     =========   ========    =========
Exercisable, end of year           21,727       $52.62         11,114        $50.00           -     $       -
                                 ==========    ==========    ==========     =========   ========    =========


                                                         Options Outstanding
                                              --------------------------------------           Number of
                                                    Number              Wgt. Avg.               Options
      Exercise                                   Outstanding            Remaining             Exercisable
        Price                                   Dec. 31, 2001      Contractual Life           Dec. 31, 2001
  ------------------                          -----------------    -------------------    ------------------
          $50                                       23,025             8.2 years                 10,357
          $55                                       11,370             8.0 years                 11,370
                                              ------------         -------------------    ------------------
         Total                                      34,395             8.1 years                 21,727
                                              ============         ===================    ==================`

-47-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

All options expire 10 years after the date of the grant;  137,848 shares are reserved for future  issuance
under the Stock  Compensation  Plan and 27,000 shares are reserved for future  issuance under the Stock Option Plan
for non-employee directors.

              Statement of Financial  Accounting  Standards  (SFAS) No. 123,  Accounting for  Stock-Based  Compensation,
encourages  all entities to adopt a fair value based method of accounting for employee  stock  compensation  plans,
whereby  compensation  cost is  measured at the grant date based on the value of the award and is  recognized  over
the service period, which is usually the vesting period.

              Had  compensation  costs for the  Corporation's  stock option plan been determined  based on fair value at
  the grant dates for awards under the plan  consistent with the method  prescribed by FASB 123, the  Corporation's
  net income and earnings per share would have been adjusted to the pro forma amounts indicated below:

`2001               2000             1999
                                                                 -------------    -------------     ------------
Net Income                                  As Reported              6,015            3,970            4,529
                                            Pro Forma                5,939            3,858            4,421

Earnings Per Share                          As Reported               2.96             1.95             2.23
                                            Pro Forma                 2.92             1.89             2.18

Earnings Per Share - assuming dilution      As Reported               2.96             1.95             2.23
                                            Pro Forma                 2.92             1.89             2.18`

`2001                   2000                  1999
                                                -------------------    -------------------    ------------------
Dividend yield                                         1.97%                  1.66%                 1.45%
Expected life                                        9 years                9 years               9 years
Expected volatility                                    4.80%                  3.49%                 3.49%
Risk-free interest rate                                5.07%                  5.12%                 6.45%
Weighted-average fair value per share of options
    granted during the year                          $16.77                 $13.44                 $9.63`

Deferred  Compensation  - The Bank  sponsors a deferred  compensation  plan for all  directors who wish to
participate.  The cost of the plan was $197,000,  $179,000 and $204,000 in 2001, 2000 and 1999,  respectively.  The
accrued  benefit  obligation  for  this  plan  was  $1,368,208  and  $820,952  as of  December 31, 2001  and  2000,
respectively,  and  is  included  in  other  liabilities.  The  Bank  has  purchased  life  insurance  policies  on
participating directors.
14.
CONTINGENCIES

              The Bank is party to litigation  arising in the normal course of business.  In the opinion of  management,
based on  consultation  with legal counsel,  liabilities  from such  litigation,  if any, would not have a material
effect  on the  Corporation's  consolidated  financial  statements.  As a result  of  acquiring  real  estate  from
foreclosure  proceedings,  the Bank is subject  to  potential  claims  and  possible  legal  proceedings  involving
environmental matters.  No such claims have been asserted at December 31, 2001.
15. FAIR
VALUES OF FINANCIAL INSTRUMENTS

              The fair value of a financial  instrument is the current  amount that would be exchanged  between  willing
parties,  other than in a forced  liquidation.  Fair value is best  determined  based upon  quoted  market  prices.
However,  in  many  instances,  there  are  no  quoted  market  prices  for  the  Corporation's  various  financial
instruments.  In cases where quoted  market  prices are not  available,  fair values are based on  estimates  using
present value or other valuation techniques.  Those techniques are significantly  affected by the assumptions used,
including the discount rate and estimates of future cash flows.  Accordingly,  the fair value  estimates may not be
realized in an immediate  settlement of the instrument.  The fair values of certain  financial  instruments and all
nonfinancial  instruments  are excluded  from  disclosure.  These  include,  among other  elements,  the  estimated
earning power of core deposit accounts,  the trained work force, customer goodwill and similar items.  Accordingly,
the aggregate fair values are not necessarily indicative of the underlying value of the Corporation.

-48-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

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

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

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

     Restricted Investments - The carrying value of Federal Home Loan Bank stock and Federal Reserve Bank
stock  approximates  fair value based on the  redemption  provisions  of the Federal Home Loan Bank and the Federal
Reserve Bank.

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

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

     Accrued Interest Receivable - The carrying amounts reported in the consolidated balance sheets for
accrued interest receivable approximate those assets' fair values.

     Deposit Liabilities - The fair values, for demand deposits (e.g., interest and noninterest checking,
passbook savings, and money market accounts), which have no stated maturity are, by definition, equal to the
amount  payable  on  demand.  Approximately  43% and 41% of the  Bank's  deposits  at  December 31, 2001  and 2000,
respectively  have fair values equal to carrying  values.  The carrying  amounts for variable rate  certificates of
deposit and other  variable rate time deposits  approximate  their fair values at the reporting  date.  Fair values
for fixed rate time deposits and other time deposits with stated  maturities are estimated  using a discounted cash
flow calculation that applies interest rates currently being offered for deposits of similar  remaining  maturities
to a schedule of aggregated expected monthly maturities.

     Securities Sold Under Agreements to RepurchaseFair value approximates the carrying value since the
majority of these instruments were entered into at our near December 31, 2001 and 2000.

     Borrowed Funds - The carrying amounts of federal funds purchased, treasury tax and loan note options,
and  variable  rate  advances  approximate  their  fair  values.  The fair  values of the  Corporation's  long-term
borrowings  are estimated  using  discounted  cash flow analyses  based on the  Corporation's  current  incremental
borrowing rates for similar types of borrowing arrangements.

     Other Liabilities - The carrying amounts reported in the consolidated balance sheets for other
liabilities approximate those liabilities' fair values.

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

-49-

---

|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

`Carrying              Fair
     2001                                                          Amount               Value
                                                              ----------------    ----------------
     Financial assets
         Cash and cash equivalents                               $12,051,503         $12,051,503
         Available-for-sale securities                            79,080,306          79,080,306
         Loans receivable, net                                   372,362,407         382,060,017
         Loans held for sale                                      11,456,287          11,456,287
         Accrued interest receivable                               3,484,633           3,484,633
         Restricted investments                                    2,900,000           2,900,000

     Financial liabilities
         Deposits                                                358,953,976        361,121,027
         Borrowed funds                                           37,036,681         38,963,337
         Securities sold under agreements
           to repurchase and federal funds purchased              51,162,712         51,162,712
         Other liabilities                                         4,345,794          4,345,794

     2000

     Financial assets
         Cash and cash equivalents                               $16,759,837         $16,759,837
         Available-for-sale securities                            74,446,393          74,446,393
         Loans receivable, net                                   342,419,431         340,881,056
         Loans held for sale                                         725,857             725,857
         Accrued interest receivable                               3,445,573           3,445,573
          Restricted investments                                   2,710,000           2,710,000

     Financial liabilities
         Deposits                                                338,153,243        338,538,491
         Borrowed funds                                           38,455,955         39,314,326
         Securities sold under agreements
           to repurchase                                          32,233,984         32,233,984
         Other liabilities                                         3,531,662          3,531,662`

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

              The following  summarizes  parent company only  condensed  balance sheets as of December 31, 2001 and 2000
and the  related  condensed  statements  of income and cash flows for each of the three  years in the period  ended
December 31, 2001, 2000 and 1999:

`Condensed Balance Sheets

                                                                     2001                 2000
                                                               -----------------    ----------------
     Assets
         Cash                                                           $146,458             $38,517
         Investment in subsidiary                                     48,658,458          44,164,309
         Available-for-sale securities                                   914,399           1,008,952
                                                               -----------------    ----------------
     Total assets                                                    $49,719,315         $45,211,778
                                                               =================    ================
     Other borrowed funds                                               $372,650            $467,031

     Other liabilities                                                    63,842             115,931

     Stockholders' equity                                             49,282,823          44,628,816
                                                               -----------------    ----------------
     Total liabilities and stockholders' equity                      $49,719,315         $45,211,778
                                                               =================    ================`

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|O.A.K. FINANCIAL CORPORATION
AND SUBSIDIARY | NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|------------------------------------------- | ------------------------------------------

---

`Condensed Statements of Income

                                                               2001                  2000                1999
                                                         ------------------    -----------------    ----------------
     Income
         Dividends from subsidiary                              $1,972,000             $325,000            $816,710
         Interest from available-for-sale securities                20,669               24,076              36,045
         Net realized gain on sale of
           available-for-sale securities                           204,485              215,785             507,134
                                                         ------------------    -----------------    ----------------

     Total income                                                2,197,154              564,861           1,359,889

     Other expenses                                                137,927              167,599             202,937
                                                         ------------------    -----------------    ----------------
     Income before equity in undistributed net
         income of subsidiary                                    2,059,227              397,262           1,156,952
     Equity in undistributed net income of
         subsidiary                                              3,956,398            3,572,876           3,372,041
                                                         ------------------    -----------------    ----------------

     Net income                                                 $6,015,625           $3,970,138          $4,528,993
                                                         ==================    =================    ================

                                           Condensed Statements of Cash Flows

                                                         2001             2000             1999
                                                    --------------    -------------    --------------
  Cash flows from operating activities
      Net income                                      $6,015,625      $3,970,138        $4,528,993
      Adjustments to reconcile net income
        to net cash provided by operating
        activities
           Net gain on available-for-sale securities    (204,485)       (215,785)         (507,134)
           Undistributed earnings of subsidiary       (3,956,398)     (3,572,876)       (3,372,041)
           Changes in other liabilities                   12,922         (47,305)           15,685
                                                    -------------    ---------------   --------------

  Net cash provided by operating
      activities                                       1,867,664         134,172           665,503
                                                    -------------    ---------------   --------------

  Cash flows from investing activities
       Available-for-sale securities
        Proceeds from sales                              709,018         594,959         1,287,854
        Purchases                                       (572,705)       (298,474)                -
                                                    -------------    ---------------   --------------
  Net cash provided by investing
      activities                                         136,313         296,485         1,287,854
                                                    -------------    ---------------   --------------

  Cash flows from financing activities
      Repayment of long-term debt                        (94,381)        (32,969)                -
      Proceeds from allocation of ESOP                    60,050          63,415                 -
      Proceeds from common stock issued                        -               -           650,001
      Proceeds from stock options exercised               37,849               -                 -
      Dividends paid                                  (1,899,554)     (1,768,647)       (1,674,256)
                                                    -------------    ---------------   --------------

  Net cash used in financing activities              (1,896,036)     (1,738,201)       (1,024,255)
                                                    -------------    ---------------   --------------

  Net (decrease) increase in cash and cash
      equivalents                                        107,941       1,307,544           929,102
  Cash and cash equivalents, beginning
      of year                                             38,517       1,346,061           416,959
                                                    -------------    ---------------   --------------

  Cash and cash equivalents, end of year                $146,458         $38,517        $1,346,061
                                                    =============    ===============   ==============`

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

         Change in Registrant's Certifying Accountant.

              On December  30, 2000,  the  Registrant  dismissed  Rehmann  Robson,  P.C. as the  Registrant's  principal
accountants,  effective upon completion of their report with respect to the Registrant's  financial  statements for
the year ended December 31, 2000. The former  accountants'  reports on the  Registrant's  financial  statements for
the past two years  ended  December  31,  1999 and  December  31,  2000 did not  contain  any  adverse  opinion  or
disclaimer  of  opinion  nor were  they  qualified  or  modified  as to  uncertainty,  audit  scope  or  accounting
principles.  The  decision  to change  accountants  was  recommended  and  approved by the Audit  Committee  of the
Registrant  and by its Board of Directors.  During the  Registrant's  two most recent  fiscal years and  subsequent
interim periods,  preceding the dismissal,  there were no disagreements  with the former  accountants on any matter
of  accounting  principles or practices,  financial  statement  disclosure,  or auditing  scope or procedure  which
disagreements,  if not  resolved  to the  satisfaction  of the former  accountants,  would have caused them to make
reference to the subject matter of the  disagreement  in connection  with their report.  No "reportable  events" as
defined in Item  304(a)(1)(v)  occurred  within the  Registrant's  two most recent fiscal years and any  subsequent
interim periods preceding the former accountants dismissal.

              On January 8, 2001,  the Registrant  engaged Plante & Moran LLP as its principal  accountants to audit the
Registrant's  financial  statements for the year ending December 31, 2001.  During the Registrant's two most recent
fiscal years and any  subsequent  interim  period prior to engaging the new  accountants,  the  Registrant  did not
consult with the newly engaged accountants regarding any of the matters described in Item 304(a)(2)(i) or (ii).

              The  letter  of the  former  accountants  required  by Items  304(a)(3)  was  filed as  Exhibit  16 to the
Registrant's  Report on Form 8-K reporting the change in certifying  accountant and that letter is  incorporated by
reference in this Report on Form 10-K.

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 3 through 4 of the Company's  definitive proxy  statement,  as
filed  with the  Commission  and  dated  March  25,  2002,  relating  to the  April  18,  2002  Annual  Meeting  of
Shareholders, is incorporated herein by reference.
Executive Officers

              The information called for by this item is contained in Part I of this Form 10-K Report.
Item 11.  Executive Compensation.

              The information set forth under the caption  "Executive  Compensation  Summary" on pages 6, 7 and 8 of the
Company's  definitive  proxy  statement,  as filed with the  Commission  and dated March 25, 2002,  relating to the
April 18,  2002  Annual  Meeting of  Shareholders,  is  incorporated  herein by  reference.  Information  under the
caption  "Committee  Report on Executive  Compensation"  on pages 5 and 6 of the definitive  proxy statement is not
incorporated by reference herein and is not deemed to be filed with the Securities and Exchange Commission.
Item 12.  Security Ownership of Certain Beneficial Owners and Management.

              The  information set forth under the caption  "Voting  Securities and Beneficial  Ownership of Management"
on pages 2 and 3 of the Company's  definitive  proxy  statement,  as filed with the  Commission and dated March 25,
2002, relating to the April 18, 2002 Annual Meeting of Shareholders, is incorporated herein by reference.

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---

Item 13.
Certain Relationships and Related Transactions.

              The information set forth under the caption "Certain  Transactions" on page 6 of the Company's  definitive
proxy  statement,  as filed with the  Commission  and dated March 25,  2002,  relating to the April 18, 2002 Annual
Meeting of Shareholders, is incorporated herein by reference.
Item 14.  Exhibits, Financial Statement Schedules and Report on Form 8-K.

-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 8, 2002.

| | O.A.K. FINANCIAL CORPORATION/s/      John A. Van Singel
John A. Van Singel
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 John A. Van Singel 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 Deppe 
Robert Deppe            | March 8, 2002
|                                          |              
|/s/ Norm Fifelski
Norman Fifelski         | March 8, 2002
|                                          |              
|/s/ Dellvan Hoezee
Dellvan Hoezee         | March 8, 2002
|                                          |              
|/s/ John Peterson
John Peterson           | March 8, 2002
|                                          |              
|/s/ Lois Smalligan
Lois Smalligan         | March 8, 2002
|                                          |              
|/s/ John A. Van Singel
John A. Van Singel | March 8, 2002
|                                          |              
|/s/ David Van Solkema
David Van Solkema   | March 8, 2002
|                                          |              
|Gerald Williams                           | March 8, 2002

-54-

---

EXHIBIT INDEX

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

|ExhibitNumber |                                                                  
|------------- | -----------------------------------------------------------------
|              |                                                                  
|10            | Income Protection Agreement between the Registrant and James Luyk
|              |                                                                  
|21            | Subsidiaries of Registrant                                       

|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.                                                                                                                          
|              |                                                                                                                                                                                                                                                                                 
|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.                                                                                                              
|              |                                                                                                                                                                                                                                                                                 
|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.                                                                                                                    
|              |                                                                                                                                                                                                                                                                                 
|16            | Letter of former accountants required by Item 304(a)(3) of Regulation S-K is
incorporated by reference to Exhibit 16 of the Registrant's Report on Form 8-K
dated December 30, 2000.                                                                                            

-55-

---

EXHIBIT 10 -
FORM OF INCOME PROTECTION AGREEMENT PLAN

INCOME
PROTECTION AGREEMENT

This Agreement is made on the dates shown below by O.A.K. Financial Corporation, and James Luyk
("Employee").

Statement of Facts

Employee is employed by O.A.K.  Financial  Corporation / Byron Center State Bank, and is presently engaged
in  employment  as its Chief  Financial  Officer.  O.A.K.  Financial  Corporation  desires to retain Mr.  Luyk as a
productive  employee,  and  therefore  desires to  provide  him with  certain  assurances  that his income  will be
protected in the event of a change in the corporate control of O.A.K. Financial Corporation

Agreement

In consideration  of the facts stated above and the mutual promises of the parties,  it is agreed
as follows:

-56-

---

|O.A.K. Financial Corporation
By: /s/ John A. Van Singel
Title: President

Date: October 19, 2000 | /s/ James Luyk
James Luyk
Date: October 19, 2000
|------------------------------------------------------------------------------------------------ | ------------------------------------------------

-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-