<PAGE>
                                                                 EXHIBIT 10.5


                      SHORELINE FINANCIAL CORPORATION
                    ANNUAL INCENTIVE COMPENSATION PLAN
                                   1998













































<PAGE>
              STATEMENT OF EXECUTIVE COMPENSATION OBJECTIVES

BUSINESS GOALS AND OBJECTIVES

            Shoreline is a "super community bank" operating in Southwestern
Michigan.  The Company has enjoyed good growth and has produced above
average results as measured by various indices of financial performance.

            The Company identifies superior financial performance as one of
its primary business objectives.  Relative total return to stockholders
(i.e. dividends plus market appreciation) is Shoreline's most important
long-term financial objective.  In this context "relative" is indicative of
measurement against similar super community banking organizations.

OBLIGATION TO SHAREHOLDERS

            Shoreline's primary obligation to its shareholders is to provide
a competitive "total return."  However, due to factors beyond the influence
of management (e.g. overall movement of the stock market, public "favor" or
"disfavor" of industries within the market), relative total return to
stockholders is difficult to control.

            On the other hand, return on equity, which has a high degree of
correlation with stock price, especially for banks, is a factor that can be
controlled by management.  Based on the relationship of ROE to stock price,
Shoreline focus on improving its ROE as a means by which to ensure the
highest possible relative total return to shareholders.

            To attract and retain quality management talent, the Company
should provide base salaries that are at the 50th percentile.  Any
additional compensation above and beyond the 50th percentile will be
provided through the Company's annual (and long-term) incentive programs.
However, above average incentives will be paid only if the Company's
performance is above average.

            Finally, a corporate performance threshold should be established,
below which no incentive awards would be paid.  This will help contain
compensation costs and prevent negative shareholder reactions to paying a
bonus in a year of poor performance.












<PAGE>
               SPECIFICATIONS FOR THE ANNUAL INCENTIVE PLAN
                                   1998

CONCEPT:       An annual incentive plan for key officers of the Company.
               Performance objectives and award opportunities will be
               specified and communicated prior to the beginning of each
               plan year (the calendar year).

PURPOSE:       The primary purpose of the Plan is to reward the outstanding
               performance of key officers.  Specific objectives include:

               -    reward executives for achieving specific predetermined goals

               -    motivate participants to work more effectively

               -    focus the attention of officers and key managers on
                    items of major importance to their lines of business

               PLAN GOVERNANCE: The Organization, Compensation, Stock Option
               Committee (OCS) will be responsible for the governance of the
               Plan.  The OCS will be responsible for final determination of
               eligibility, participation, award opportunity and earned
               awards under the Plan.  The determination of the OCS shall
               be conclusive and binding on all participants.

ELIGIBILITY:   The OCS has determined the following individuals to be
               eligible for participation in the Plan in 1998:

<TABLE>
<CAPTION>
<S>           <C>                        <C>
               Dan L. Smith               Chairman, CEO & President
               Richard D. Bailey          Executive Vice President
               Robert K. Burch            Executive Vice President
               Wayne R. Koebel            Executive Vice President, CFO
               James R. Milroy            Executive Vice President, Cashier
               Hilda Banyon               First Vice President, Human Resources
               Joseph Calvaruso           Senior Vice President, Loan Administration
               Michael Doherty            First Vice President, Commercial Loans
               Gary Dolezan               Senior Vice President, Mortgage Loans
               Ken Johnson                Vice President, Regional Manager
               Al Newcomb                 Vice President, Operations
               Ron Sonneman               Senior Vice President, Trust
               Gary Teske                 Vice President, Consumer Loans
               Eileen Toney               Vice President, Regional Manager
</TABLE>
PARTICIPATION: Each individual's participation in the Plan will be
               subject to annual approval by the OCS.

                                        -2-

<PAGE>
PERFORMANCE
ASSESSMENT:    Performance will be assessed at three levels:

               -   corporate
               -   business unit (or position function)
               -   individual

               The weighting of each level of assessment for each
               participant will be approved annually by the OCS.  For 1998,
               levels of assessment for eligible participants are as
               follows:

<TABLE>
<CAPTION>
PARTICIPANT                CORPORATE      BUSINESS UNIT     INDIVIDUAL
-----------                ---------      -------------     ----------
<S>                          <C>              <C>              <C>
Smith                         100%             ---              ---
Bailey                         60%             30%              10%
Burch                          60%             30%              10%
Koebel                         60%             30%              10%
Milroy                         60%             30%              10%
Banyon                         60%             30%              10%
Calvaruso                      60%             30%              10%
Doherty                        50%             40%              10%
Dolezan                        50%             40%              10%
Johnson                        50%             40%              10%
Newcomb                        60%             30%              10%
Sonneman                       50%             40%              10%
Teske                          50%             40%              10%
Toney                          50%             40%              10%
</TABLE>

AWARD
DETERMINATION: At the beginning of each plan year, a target award
               will be established for each participant.  Target
               awards are expressed as a percent of annual base
               pay.

               Target awards for participants in the 1998 Plan are:









                                        -3-

<PAGE>
<TABLE>
<CAPTION>
<S>           <C>            <C>            <C>            <C>
               Smith          50%            Newcomb        27%
               Bailey         40%            Sonneman       27%
               Burch          40%            Banyon         10%
               Koebel         40%            Doherty        10%
               Milroy         40%            Johnson        10%
               Calvaruso      27%            Teske          10%
               Dolezan        27%            Toney          10%
</TABLE>

               Performance factors (goals) will be established at the
               beginning of each plan year.  The corporate performance factor
               will be established by the Chief Executive Officer and approved
               by the OCS.

               Business unit (or position function) and individual performance
               factors will be established and discussed and agreed to by each
               participant at the beginning of each plan year.

               These corporate, business unit (or position function), and
               individual performance factors (goals) will be used by the
               Chief Executive Officer and the OCS for assessing corporate,
               business unit (or position function) and individual results
               under the Plan.

               During the plan year, at least one mid-year review will be
               conducted with participants to assess progress toward
               corporate, business unit (or position function) and individual
               objectives.

               At the end of each plan, the Chief Executive Officer and the
               OCS assess corporate, business unit (or position function) and
               individual results using the performance factors set at the
               beginning of the year.

               The award payable to each participant will be the total of the
               three performance assessments.  An illustration follows:










                                        -4-

<PAGE>
               ILLUSTRATION:
<TABLE>
<CAPTION>
               COMPONENT        WEIGHTING         ASSESSMENT       FACTOR
               ---------        ---------         ----------       ------
<S>           <C>              <C>                  <C>            <C>
               Corporate            50%              100%           50%
               Business Unit        40%               90%           36%
               Individual           10%              110%           11%
                                                                    ---
                       Total                                        97%
                                                                    ===
               Base Pay         $70,000
               Target               25%
</TABLE>
               Award Earned:
               $70,000 x 25% (Target) x 97% (Weighted Score) = $16,975

MINIMUM LEVEL
OF CORPORATE
PERFORMANCE:   The OCS will specify a minimum level of corporate performance
               below which no award will be paid for the applicable plan year.

MAXIMUM AWARD: A cap will be placed on individual awards payable to
               participants.  Even when performance exceeds predetermined
               levels, no individual's total award will exceed 150% of target.

               NOTE: As 1998 is the first year of the plan, an initial cap
               of 125% will be used.

VESTING OF
AWARDS:        Awards under the Plan will vest as of the last day of each
               plan year.  Participants who leave the employ of the Company
               during a plan year forfeit any rights to an award for that
               year.  The OCS may, in its sole discretion, make a partial
               award to a participant who leaves the employ of the Company
               during a plan year due to death, total and permanent
               disability, or retirement.

PAYMENT OF
AWARDS:        The payment of awards will be made as soon as practicable
               after the Chief Executive Officer and the OCS complete their
               assessment of performance and approve individual awards.

TERMS OF
EMPLOYMENT:    Nothing in the Plan shall interfere with or limit in any way
               the right of the Company to terminate any participant's
               employment at any time, nor confer on any participant any
               right to continue in the employ of the Company.
                                        -5-