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


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

                   For the fiscal year ended December 31, 1998

                                       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 333-63685

                         CLARKSTON FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

             MICHIGAN                                      38-3412321      
  (State of other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                       Identification No.)

                 15 South Main Street, Clarkston, Michigan 48346
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (248) 625-8585

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

   Securities registered pursuant to Section 12(g) of the Exchange Act: None.

                                   -----------

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

Check here if there is no disclosure  by  delinquent  filers in response to Item
405 of Regulation  S-B is not  contained in this form and no disclosure  will 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-KSB
or any amendments to this Form 10-KSB. |X|

The registrant's  revenues for 1998 were $35,000.  The aggregate market value of
the  voting  and  non-voting   common  equity  held  by  non-affiliates  of  the
Registrant,  based on a per  share  price of $8.25  as of March  10,  1999,  was
$6,891,225  (common  stock,  no par  value).  As of March 10,  1999,  there were
outstanding 951,000 shares of the Company's common stock (no par value).

Portions of the Company's Proxy Statement for the Annual Meeting of Shareholders
to be held April 20, 1999 are  incorporated  by reference  into Part II and Part
III of this Report.
<PAGE>
                                     PART I

ITEM 1:   Business


The Company

     Clarkston Financial Corporation (the "Company") was incorporated on May 18,
1998  under  Michigan  law  and  is a bank  holding  company  owning  all of the
outstanding  common  stock of  Clarkston  State Bank (the  "Bank").  The Bank is
organized as a Michigan  chartered bank with depository  accounts insured by the
Federal Deposit Insurance  Corporation (the "FDIC").  The Bank's initial primary
service area is Independence Township, which includes the City of Clarkston, and
the adjacent  township of Waterford,  both of which are located in North Oakland
County,  Michigan.  The Bank  provides a full range of  commercial  and consumer
banking services for small to medium size businesses as well as individuals. The
Bank's lending  strategy is to focus on commercial and consumer lending and to a
lesser extent  residential  mortgage  lending.  The Bank offers a broad array of
deposit  products  and may also  provide  customers  with  credit  cards,  trust
services, insurance products and investment products through third-party service
providers.

     Significant  events in 1998  included the  Company's  underwritten  initial
public  offering in November  1998.  The Company issued 950,000 shares of common
stock in the initial public  offering,  resulting in net proceeds to the Company
of $8.8 million. On December 18, 1998, the Company transferred $8,496,860 to the
Bank to capitalize the Bank.

     The Bank opened for  business on January 4, 1999.  As of February 28, 1999,
the Company had total assets of $12.3  million,  total deposits of $3.8 million,
approximately 1,048 deposit accounts and shareholders' equity of $8.5 million.

     The  Company's  and the  Bank's  main  office is  located  at 15 South Main
Street,  Clarkston,  Michigan 48346, and its telephone number is (248) 625-8585.
Unless the context clearly indicates otherwise,  financial information and other
references to the Company include the Bank.

Products and Services

     Commercial  Loans.  Commercial  loans  are  made  primarily  to  small  and
mid-sized businesses. These loans are and will be both secured and unsecured and
are made available for general operating  purposes,  acquisition of fixed assets
including  real  estate,  purchases  of equipment  and  machinery,  financing of
inventory  and accounts  receivable,  as well as any other  purposes  considered
appropriate. The Bank generally looks to a borrower's business operations as the
principal  source  of  repayment,  but  will  also  receive,  when  appropriate,
mortgages on real estate,  security interests in inventory,  accounts receivable
and other personal property and/or personal guarantees.

     Although the Bank takes a progressive and competitive  approach to lending,
it  stresses  high  quality in its loans.  Because of the Bank's  local  nature,
management  believes  that  quality  control  should be  achievable  while still
providing  prompt  and  personal  service.  On a  monthly  basis,  the  Board of
Directors  reviews  selected loans made in the preceding  month. In addition,  a
loan  committee of the Board of Directors of the Bank also reviews  larger loans
for prior approval when the loan request exceeds the established  limits for the
senior officers.

     Commercial real estate lending involves more risk than residential lending,
because loan balances are greater and repayment is dependent upon the borrower's
operation. The Bank attempts to minimize risk associated with these transactions
by generally limiting its exposure to owner operated properties of well-
<PAGE>
known customers or new customers with an established profitable history. In many
cases,  risk is further  reduced by (i) limiting the amount of credit to any one
borrower  to an amount  less  than the  Bank's  legal  lending  limit;  and (ii)
avoiding certain types of commercial real estate financings.

     Residential  Real Estate Loans.  The Bank originates  residential  mortgage
loans,  which are  generally  long-term  with either fixed or variable  interest
rates. The Bank's general policy,  which is subject to review by management as a
result of changing  market and  economic  conditions  and other  factors,  is to
retain all or a portion of variable  interest rate mortgage  loans in the Bank's
loan  portfolio  and to sell all fixed rate loans in the secondary  market.  The
Bank also offers home  equity  loans.  The Bank  retains  servicing  rights with
respect to residential mortgage loans that it originates.

     Personal  Loans and  Credit.  The Bank  makes  personal  loans and lines of
credit  available to  consumers  for various  purposes,  such as the purchase of
automobiles,  boats and  other  recreational  vehicles,  home  improvements  and
personal  investments.  The Bank  expects  to retain  substantially  all of such
loans.

     Consumer loans  generally have shorter terms and higher interest rates than
residential mortgage loans and, except for home equity lines of credit,  usually
involve more credit risk than  mortgage  loans because of the type and nature of
the collateral.  While the Bank does not use a formal credit scoring system, the
Bank  underwrites its loans  carefully,  with a strong emphasis on the amount of
the down payment, credit quality, employment stability and monthly income. These
loans are expected  generally to be repaid on a monthly repayment  schedule with
the source of repayment tied to the  borrower's  periodic  income.  In addition,
consumer  lending  collections  are  dependent  on  the  borrower's   continuing
financial  stability,  and are thus likely to be adversely affected by job loss,
illness and personal  bankruptcy.  In many cases,  repossessed  collateral for a
defaulted  consumer loan will not provide an adequate source of repayment of the
outstanding  loan balance because of depreciation of the underlying  collateral.
The Bank believes that the generally higher yields earned on consumer loans help
compensate  for the increased  credit risk  associated  with such loans and that
consumer  loans are  important  to its efforts to serve the credit  needs of the
communities and customers that it serves.

     Loan Policy. As a routine part of the Bank's business,  the Bank expects to
make loans to individuals and businesses  located within the Bank's market area.
The Bank has adopted a Loan Policy that contains general lending  guidelines and
is subject to review and revision by the Board of  Directors  from time to time.
The Company  seeks to make sound loans,  while  recognizing  that lending  money
involves a degree of business risk.

     Regulatory and supervisory  loan-to-value limits are established by Section
304 of  the  Federal  Deposit  Insurance  Corporation  Improvement  Act of  1991
("FDICIA").  The Bank's  internal  limitations  will follow  those limits and in
certain cases will be more restrictive than those required by the regulators.

     Deposit  Services.  The Bank  offers a broad  range  of  deposit  services,
including checking accounts, NOW accounts, savings accounts and time deposits of
various types.  Transaction  accounts and time  certificates are tailored to the
principal  market area at rates  competitive with those offered in the area. All
deposit  accounts are insured by the FDIC up to the maximum amount  permitted by
law.  The  Bank   solicits   these   accounts  from   individuals,   businesses,
associations,  financial institutions and government  authorities.  The Bank may
also use alternative funding sources as needed,  including advances from Federal
Home Loan Banks, conduit financing and the packaging of loans for securitization
and sale.

     Other Services.  The Bank may establish  relationships  with  correspondent
banks and other  independent  financial  institutions  to provide other services
requested by its customers, including loan

                                       -2-
<PAGE>
participations  where the requested loan amounts  exceed the Bank's  policies or
legal lending limits. The Bank may consider providing additional services in the
future,  such as personal  computer based at-home banking.  Management  believes
that the Bank's  personalized  service approach benefits from customer visits to
the Bank.  Management  will  continue to  evaluate  the  desirability  of adding
telephone,  electronic and at- home banking services.  Should the Bank choose to
do so, the Bank could  provide  one or more of these  services  at a future date
using a third-party service provider.

Competition

     There are many thrift  institution,  credit union and bank offices  located
within the Bank's primary  market area of North Oakland  County,  Michigan.  The
Bank faces competition from thrift institutions,  credit unions, and other banks
as  well  as  finance  companies,   insurance  companies,   mortgage  companies,
securities  brokerage firms, money market funds and other providers of financial
services.  Most of the  Bank's  competitors  have been in  business  a number of
years,  have  established  customer  bases,  are larger and have higher  lending
limits  than the Bank.  The Bank  competes  for loans  principally  through  its
ability to  communicate  effectively  with its customers and understand and meet
their needs.  Management  believes that its personal service philosophy enhances
its ability to compete favorably in attracting individuals and small businesses.
The Bank  actively  solicits  retail  customers and will compete for deposits by
offering  customers  personal  attention,  professional  service,  off-site  ATM
capability, and competitive interest rates.


Environmental Matters

     The Company does not believe that existing  environmental  regulations will
have  any  material  effect  upon  the  capital  expenditures,   earnings,   and
competitive position of the Company.

Employees

     As of December  31,  1998,  the  Company  had 8  full-time  and 2 part-time
employees.  The  Company  has  assembled  a  staff  of  experienced,   dedicated
professionals  whose  goal  is to  provide  outstanding  service.  None  of  the
Company's employees are represented by collective bargaining agents.

Selected Statistical Data

     The  information  required  by Guide  3-Statistical  Data for Bank  Holding
Companies  is not  applicable  to the  Company  because  the Bank did not  begin
operations until after December 31, 1998.


                                       -3-
<PAGE>
                           SUPERVISION AND REGULATION

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

General

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

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

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

The Company

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

     In accordance with Federal Reserve Board policy, the Company is expected to
act as a source of  financial  strength to the Bank and to commit  resources  to
support the Bank in circumstances  where the Company might not do so absent such
policy.  In  addition,  if the  Commissioner  deems  the  Bank's  capital  to be
impaired,  the  Commissioner  may  require  the Bank to restore its capital by a
special  assessment  upon the  Company as the Bank's  sole  shareholder.  If the
Company were to fail to pay any such assessment, the directors of the Bank would
be required, under Michigan law, to sell the shares of the Bank's stock owned by
the Company to the highest bidder at either a public or private  auction and use
the proceeds of the sale to restore the Bank's capital.

     Investments and Activities.  In general, any direct or indirect acquisition
by the  Company  of any  voting  shares of any bank  which  would  result in the
Company's direct or indirect ownership or control of

                                       -4-
<PAGE>
more than 5% of any  class of voting  shares  of such  bank,  and any  merger or
consolidation  of the Company with another bank company,  will require the prior
written  approval of the Federal Reserve Board under the BHCA. In acting on such
applications, the Federal Reserve Board must consider various statutory factors,
including among others, the effect of the proposed transaction on competition in
relevant geographic and product markets,  and each party's financial  condition,
managerial resources, and record of performance under the Community Reinvestment
Act.  Effective  September  29, 1995,  bank holding  companies may acquire banks
located  in  any  state  in the  United  States  without  regard  to  geographic
restrictions  or reciprocity  requirements  imposed by state law, but subject to
certain  conditions,  including  limitations on the aggregate amount of deposits
that may be held by the  acquiring  company  and all of its  insured  depository
institution affiliates.

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

     With certain limited  exceptions,  the BHCA prohibits any bank company from
engaging,  either directly or indirectly  through a subsidiary,  in any activity
other  than  managing  or  controlling  banks  unless the  proposed  non-banking
activity is one that the Federal  Reserve Board has  determined to be so closely
related to banking or managing or controlling  banks as to be a proper  incident
thereto.  Under current  Federal  Reserve Board  regulations,  such  permissible
non-banking  activities  include  such  things as  mortgage  banking,  equipment
leasing,  securities  brokerage,  and consumer and  commercial  finance  company
operations.  As a result of recent amendments to the BHCA,  well-capitalized and
well-managed  bank  holding  companies  may engage de novo in  certain  types of
non-banking  activities  without  prior  notice to, or approval  of, the Federal
Reserve Board,  provided that written notice of the new activity is given to the
Federal  Reserve  Board within 10 business days after the activity is commenced.
If a bank  company  wishes to engage in a  non-banking  activity by  acquiring a
going concern,  prior notice and/or prior  approval will be required,  depending
upon the activities in which the company to be acquired is engaged,  the size of
the company to be acquired and the  financial  and  managerial  condition of the
acquiring bank company.

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

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

     The Federal  Reserve  Board's  capital  guidelines  establish the following
minimum  regulatory  capital  requirements  for bank  holding  companies:  (i) a
leverage capital requirement expressed as a percentage of total assets, and (ii)
a  risk-based  requirement  expressed  as a  percentage  of total  risk-weighted
assets. The leverage capital  requirement  consists of a minimum ratio of Tier 1
capital (which consists principally of

                                       -5-
<PAGE>
shareholders' equity) to total assets of 3% for the most highly rated companies,
with minimum requirements of 4% to 5% for all others. The risk-based requirement
consists of a minimum  ratio of total capital to total  risk-weighted  assets of
8%, of which at least one-half must be Tier 1 capital.

     The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum  requirements,  and higher  capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations.  For example,  Federal  Reserve  Board  regulations  provide that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk and the risks  posed by  concentrations  of credit,
nontraditional activities or securities trading activities. Further, any banking
organization  experiencing or anticipating  significant growth would be expected
to maintain capital ratios,  including  tangible capital positions (i.e., Tier 1
capital less all intangible assets),  well above the minimum levels. The Federal
Reserve Board has not advised the Company of any specific minimum Tier 1 Capital
leverage ratio applicable to it.

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank.  Most of the  Company's  revenues  will be  received  by it in the form of
dividends,  if  any,  paid by the  Bank.  Thus,  the  Company's  ability  to pay
dividends  to  its   shareholders   will  indirectly  be  limited  by  statutory
restrictions on its ability to pay dividends.  See "Supervision and Regulation -
the Bank - Dividends."  Further,  the Federal  Reserve Board has issued a policy
statement on the payment of cash  dividends by bank  holding  companies.  In the
policy  statement,  the Federal  Reserve  Board  expressed  its view that a bank
company experiencing earnings weaknesses should not pay cash dividends exceeding
its net  income  or which can only be  funded  in ways  that  weakened  the bank
company's  financial  health,  such as by borrowing.  Additionally,  the Federal
Reserve Board possesses enforcement powers over bank holding companies and their
non-bank  subsidiaries  to prevent or remedy  actions that  represent  unsafe or
unsound  practices or violations of applicable  statutes and regulations.  Among
these powers is the ability to  proscribe  the payment of dividends by banks and
bank holding companies.  Similar  enforcement powers over the Bank are possessed
by the FDIC.  The  "prompt  corrective  action"  provisions  of federal  law and
regulation  authorizes  the Federal  Reserve  Board to  restrict  the payment of
dividends  by the  Company  for an insured  bank which  fails to meet  specified
capital levels.

     In addition to the restrictions on dividends imposed by the Federal Reserve
Board,  the Michigan  Business  Corporation  Act provides that  dividends may be
legally declared or paid only if after the  distribution a corporation,  such as
the Company,  can pay its debts as they come due in the usual course of business
and its total assets equal or exceed the sum of its liabilities  plus the amount
that would be needed to satisfy the preferential  rights upon dissolution of any
holders of  preferred  stock  whose  preferential  rights are  superior to those
receiving the  distribution.  The Company is not  authorized to issue  preferred
stock and has no current plans to seek to authorize any preferred stock.

The Bank

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

                                       -6-
<PAGE>
     Deposit Insurance. As an FDIC-insured institution,  the Bank is required to
pay deposit  insurance  premium  assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine categories and assessed insurance  premiums,  based upon
their  respective  levels of  capital  and  results of  supervisory  evaluation.
Institutions  classified  as well-  capitalized  (as  defined  by the  FDIC) and
considered  healthy pay the lowest premium while institutions that are less than
adequately  capitalized  (as defined by the FDIC) and  considered of substantial
supervisory concern pay the highest premium.  Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period.

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

     The FDIC may  terminate  the deposit  insurance  of any insured  depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound  practices,  or have
violated any applicable  law,  regulation,  order,  or any condition  imposed in
writing by, or written  agreement with, the FDIC, or if the institution is in an
unsafe or unsound  condition to continue  operations.  The FDIC may also suspend
deposit  insurance  temporarily  during  the  hearing  process  for a  permanent
termination of insurance if the institution has no tangible capital.

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

     FICO  Assessments.  Pursuant to federal  legislation  enacted September 30,
1996,  the Bank, as a member of the BIF, is subject to  assessments to cover the
payments on outstanding  obligations of the Financing Corporation ("FICO"). FICO
was created in 1987 to finance the  recapitalization  of the Federal Savings and
Loan Insurance  Corporation,  the predecessor to the FDIC's Savings  Association
Insurance  Fund (the "SAIF") which insures the deposits of thrift  institutions.
Until  January 1, 2000,  the FICO  assessments  made against BIF members may not
exceed  20% of the  amount  of  FICO  assessments  made  against  SAIF  members.
Currently,  SAIF members pay FICO  assessments at a rate equal to  approximately
0.063% of deposits  while BIF members  pay FICO  assessments  at a rate equal to
approximately  0.013% of deposits.  Between  January 1, 2000 and the maturity of
the  outstanding  FICO  obligations  in 2019,  BIF members and SAIF members will
share the cost of the  interest  on the FICO  bonds on a pro rata  basis.  It is
estimated that FICO  assessments  during this period will be less than 0.025% of
deposits

     Capital  Requirements.  The  FDIC has  established  the  following  minimum
capital standards for  state-chartered,  FDIC-insured  non-member banks, such as
the Bank: a leverage requirement consisting of a minimum ratio of Tier 1 capital
to total assets of 3% for the most highly-rated banks with minimum  requirements
of 4% to 5% for all others, and a risk-based capital requirement consisting of a
minimum  ratio of total  capital to total  risk-weighted  assets of 8%, at least
one-half of which must be Tier 1 capital. Tier 1 capital consists principally of
shareholders'  equity.  These  capital  requirements  are minimum  requirements.
Higher   capital  levels  will  be  required  if  warranted  by  the  particular
circumstances  or risk profiles of individual  institutions.  For example,  FDIC
regulations provide that higher capital may be required to take adequate account
of, among other things, interest rate risk and the risks posed by concentrations
of credit,  nontraditional  activities or securities  trading  activities.  As a
condition to regulatory approval of the Bank's

                                       -7-
<PAGE>
formation, the Bank was required to have an initial capitalization sufficient to
provide a ratio of Tier 1 capital  to total  estimated  assets of at least 8% at
the end of the third year of operation.

     Federal law provides  the federal  banking  regulators  with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."  Federal  regulations  define  these  capital  categories  as
follows:
<TABLE>
                                           Total                  Tier 1
                                           Risk-Based             Risk-Based
                                           Capital Ratio          Capital Ratio           Leverage Ratio
                                           -------------          -------------           --------------
<S>                                        <C>                    <C>                     <C>
Well capitalized                           10% or above           6% or above             5% or above
Adequately capitalized                      8% or above           4% or above             4% or above
Undercapitalized                           Less than 8%           Less than 4%            Less than 4%
Significantly undercapitalized             Less than 6%           Less than 3%            Less than 3%
Critically undercapitalized                          --                     --            A ratio of tangible
                                                                                          equity to total assets
                                                                                          of 2% or less
</TABLE>
     Depending  upon the capital  category to which an  institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring  the  institution  to  issue   additional   capital  stock  (including
additional  voting  stock)  or to be  acquired;  restricting  transactions  with
affiliates;  restricting  the interest rate the institution may pay on deposits;
ordering a new election of directors of the  institution;  requiring that senior
executive  officers or directors be dismissed;  prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain  subsidiaries;  prohibiting  the  payment of  principal  or  interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

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

     Dividends.  Under  Michigan  law, the Bank is  restricted as to the maximum
amount  of  dividends  it may pay on its  common  stock.  The  Bank  may not pay
dividends  except out of net profits after deducting its losses and bad debts. A
Michigan state bank may not declare or pay a dividend  unless the bank will have
a surplus  amounting  to at least 20% of its  capital  after the  payment of the
dividend.  If the Bank has a surplus less than the amount of its capital, it may
not  declare or pay any  dividend  until an amount  equal to at least 10% of net
profits for the preceding one-half year (in the case of quarterly or semi-annual
dividends) or full-year (in the case of annual  dividends) has been  transferred
to surplus. A Michigan state bank may, with the approval of the Commissioner, by
vote of  shareholders  owning 2/3 of the stock  eligible  to vote  increase  its
capital  stock by a  declaration  of a stock  dividend,  provided that after the
increase  the  bank's  surplus  equals at least  20% of its  capital  stock,  as
increased.  The Bank may not declare or pay any  dividend  until the  cumulative
dividends on preferred  stock (should any such stock be issued and  outstanding)
have been paid in full. The Bank's  Articles of  Incorporation  do not authorize
the  issuance  of  preferred  stock and there are no current  plans to seek such
authorization.

                                       -8-
<PAGE>
     Federal law generally  prohibits a depository  institution  from making any
capital distribution  (including payment of a dividend) or paying any management
fee  to  its  company  if  the  depository   institution   would  thereafter  be
undercapitalized.  The FDIC may prevent an insured bank from paying dividends if
the  bank is in  default  of  payment  of any  assessment  due to the  FDIC.  In
addition,  the FDIC may prohibit  the payment of dividends by the Bank,  if such
payment is determined,  by reason of the financial  condition of the Bank, to be
an unsafe and unsound banking practice.

     Insider  Transactions.  The Bank is subject to certain restrictions imposed
by the  Federal  Reserve Act on any  extensions  of credit to the Company or its
subsidiaries,  on investments in the stock or other securities of the Company or
its  subsidiaries  and the  acceptance  of the stock or other  securities of the
Company or its  subsidiaries  as collateral for loans.  Certain  limitations and
reporting  requirements  are also placed on  extensions of credit by the Bank to
its  directors  and  officers,  to directors and officers of the Company and its
subsidiaries,  to  principal  shareholders  of  the  Company,  and  to  "related
interests" of such directors,  officers and principal shareholders. In addition,
federal law and  regulations may affect the terms upon which any person becoming
a director or officer of the Company or one of its  subsidiaries  or a principal
shareholder  of the  Company  may obtain  credit  from banks with which the Bank
maintains a correspondent relationship.

     Safety and Soundness  Standards.  The federal banking agencies have adopted
guidelines to promote the safety and soundness of federally  insured  depository
institutions.  These  guidelines  establish  standards  for  internal  controls,
information  systems,   internal  audit  systems,  loan  documentation,   credit
underwriting,  interest  rate  exposure,  asset growth,  compensation,  fees and
benefits,  asset quality and earnings.  In general, the guidelines prescribe the
goals to be achieved in each area, and each  institution will be responsible for
establishing its own procedures to achieve those goals. If an institution  fails
to  comply  with  any  of  the  standards  set  forth  in  the  guidelines,  the
institution's  primary federal regulator may require the institution to submit a
plan for achieving and  maintaining  compliance.  The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose  failure to meet one or more of the  standards is of such severity that it
could  threaten  the safe and sound  operation  of the  institution.  Failure to
submit an acceptable compliance plan , or failure to adhere to a compliance plan
that has been accepted by the appropriate  regulator,  would constitute  grounds
for further enforcement action.

     State Bank Activities. Under federal law and FDIC regulations, FDIC-insured
state  banks are  prohibited,  subject to  certain  exceptions,  from  making or
retaining  equity  investments  of a  type,  or  in  an  amount,  that  are  not
permissible   for  a  national  bank.   Federal  law,  as  implemented  by  FDIC
regulations,  also prohibits  FDIC-insured  state banks and their  subsidiaries,
subject to certain  exceptions,  from engaging as principal in any activity that
is not permitted for a national bank or its subsidiary, respectively, unless the
bank meets, and continues to meet, its minimum regulatory  capital  requirements
and the FDIC  determines the activity  would not pose a significant  risk to the
deposit insurance fund of which the bank is a member.  Impermissible investments
and activities must be divested or  discontinued  within certain time frames set
by the FDIC in accordance with federal law. These restrictions are not currently
expected to have a material impact on the operations of the Bank.

     Consumer  Protection Laws. The Bank's business includes making a variety of
types of loans to  individuals.  In making these  loans,  the Bank is subject to
State usury and regulatory  laws and to various  federal  statutes,  such as the
Equal  Credit  Opportunity  Act,  the Fair Credit  Reporting  Act,  the Truth in
Lending Act, the Real Estate  Settlement  Procedures  Act, and the Home Mortgage
Disclosure  Act, and the  regulations  promulgated  thereunder,  which  prohibit
discrimination, specify disclosures to be made to borrowers regarding credit and
settlement  costs,  and regulate the mortgage loan  servicing  activities of the
Bank,  including  the  maintenance  and  operation  of escrow  accounts  and the
transfer of mortgage loan

                                       -9-
<PAGE>
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 (including the approval
of the Commissioner and the FDIC).

     Effective  June 1, 1997 (or earlier if expressly  authorized  by applicable
state law), the Riegle-Neal  Interstate Banking and Branching  Efficiency Act of
1994 (the "IBBEA") allows banks to establish  interstate branch networks through
acquisitions of other banks,  subject to certain  conditions,  including certain
limitations  on the  aggregate  amount  of  deposits  that  may be  held  by the
surviving bank and all of its insured  depository  institution  affiliates.  The
establishment  of de novo  interstate  branches or the acquisition of individual
branches  of a  bank  in  another  state  (rather  than  the  acquisition  of an
out-of-state  bank in its  entirety)  is allowed  by IBBEA only if  specifically
authorized by state law. The legislation  allowed individual states to "opt-out"
of interstate branching authority by enacting  appropriate  legislation prior to
June 1, 1997.

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

                                      -10-
<PAGE>
ITEM 2:   Description of Property.

     The Bank is leasing a building  located at 15 South Main Street in downtown
Clarkston,  Michigan  for  use as the  Bank's  main  office  and  the  Company's
headquarters.  This building  consists of  approximately  3,890 square feet. The
building  was  formerly  a branch of a large  regional  bank and has been a bank
branch since 1911.  The building has a night deposit box, safe deposit boxes and
a complete security system, and has an ATM machine.  The Bank believes that this
space will be adequate  for its present  needs.  In order to conserve the Bank's
capital,  eight  directors  agreed to purchase the building in  September,  1998
specifically  for the purpose of leasing the property to the Bank.  The building
is leased on an arms-length basis from an entity owned by eight of the Company's
and the  Bank's  directors.  See  Item 12  "Certain  Relationships  and  Related
Transactions." The lease for the Bank's office has an initial term of five years
and the Bank has three  renewal  options of five years each.  The monthly  lease
payments are $5,000 per month for the first two years and thereafter  $5,165 per
month. In addition,  the Bank is required to make payments for taxes,  insurance
and other operating expenses.

     The Company believes its facilities are well-maintained, adequately insured
and primarily utilized.

ITEM 3:   Legal Proceedings.

     As the date hereof, there were no material pending legal proceedings, other
than routine  litigation  incidental  to the  business of banking,  to which the
Company or any of its  subsidiaries is a party of or which any of its properties
is the subject.


ITEM 4:   Submission of Matters to a Vote of Security Holders.

     No matters were  submitted  during the fourth  quarter of 1998 to a vote of
the Registrant's stockholders.

                                      -11-
<PAGE>
                                     PART II

ITEM 5:   Market for Common Equity and Related Stockholder Matters.

     The Company's common stock has traded in the over-the-counter  market since
the completion of the company's  initial public  offering in November 1998. High
and low bid  prices,  as  reported  on the OTC  Bulletin  Board,  for the fourth
quarter of 1998 are as follows:
<TABLE>
                                                      High              Low
                                                      ----              ---
         <S>                                         <C>               <C>
         Fourth Quarter of 1998                      $10.50            $8.75
</TABLE>
     These  quotations  reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commission and may not represent actual  transactions.  Fiscal 1998
quotations do not include  intra-day highs and lows. On December 31, 1998, there
were approximately 75 owners of record and approximately 1,100 beneficial owners
of the Company's common stock.

     No cash dividends have been declared to date on the Company's common stock.
The Company  expects that all earnings,  if any, will be retained to finance the
growth of the Company and the Bank and that no cash  dividends  will be paid for
the foreseeable future. If and when dividends are declared,  the Company will be
dependent  upon  dividends  paid to it by the bank for funds to pay dividends on
the common stock.


ITEM 6:  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

     The  information  set  forth in  Appendix  A,  under the  caption  "Plan of
Operation" of the  Registrant's  definitive Proxy Statement dated March 5, 1999,
is hereby  incorporated  by  reference  and is filed as  Exhibit 13 to this Form
10-KSB Annual Report.


ITEM 7:  Financial Statements.

     The  information  set forth in Appendix A, under the caption  "Consolidated
Financial  Statements,"  of the  Registrant's  definitive  Proxy Statement dated
March 5, 1999, is hereby incorporated by reference and is filed as Exhibit 13 to
this Form 10-KSB Annual Report.

ITEM 8:  Changes in and Disagreements With Accountants and Financial Disclosure.

     There have been no  disagreements  with the  Company's  independent  public
accountants.

                                      -12-
<PAGE>
                                    PART III

ITEM 9:   Directors, Executive Officers, Promotors and Control Persons; 
          Compliance with Section 16(a) of the Exchange Act.

     The information set forth on page 3, under the caption  "Information  About
Directors" of the  Registrant's  definitive Proxy Statement dated March 5, 1999,
is hereby  incorporated  by  reference  and is filed as  Exhibit 13 to this Form
10-KSB Annual Report.

     The Company's common stock is not registered under the Securities  Exchange
Act of 1934, and therefore the Company's officers and directors are not required
to and do not file beneficial ownership reports pursuant to Section 16(a) of the
Securities Exchange Act of 1934.


ITEM 10:  Executive Compensation.

     Information relating to compensation of the Registrant's executive officers
and  directors is contained on Exhibit 13, under the captions  "Compensation  of
Directors" and "Executive  Compensation,"  in the Registrant's  definitive Proxy
Statement  dated March 5, 1999, and is  incorporated  herein by reference and is
filed as Exhibit 13 to this Form 10-KSB Annual Report.


ITEM 11:  Security Ownership of Certain Beneficial Owners and Management.

     Information relating to security ownership of certain beneficial owners and
management  is  contained  on page 7, under the caption  "Security  Ownership of
Management" in the Registrant's  definitive Proxy Statement dated March 5, 1999,
and is incorporated  herein by reference and is filed as Exhibit 13 to this Form
10-KSB Annual Report.


ITEM 12:  Certain Relationships and Related Transactions.

     Information  relating to certain  relationships and related transactions is
contained on page 8, under the caption  "Transactions  Involving  Management" in
the  Registrant's  definitive  Proxy  Statement  dated  March  5,  1999,  and is
incorporated  herein by reference and is filed as Exhibit 13 to this Form 10-KSB
Annual Report.

                                      -13-
<PAGE>
ITEM 13:  Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.

(a)      Financial Statements.

         1. The following documents are filed as part of Item 7 of this report:

            Report of Independent Auditors
            Consolidated Balance Sheet as of December 31, 1998
            Consolidated Statement of Operations for the period from May 18,
            1998 (inception, to December 31, 1998 
            Consolidated Statement of Changes in Stockholders' Equity for the
            period from May 18, 1998 (inception) to December 31, 1998
            Consolidated  Statement of Cash Flows for the period from May 18,
            1998 (inception) to December 31, 1998  
            Notes to Consolidated Financial Statements

         2. Schedules to the consolidated financial statements required by
            Article 9 of Regulation S-X are not required under the related
            instructions or are inapplicable, and therefore have been omitted.

         3. The following exhibits are filed as part of this report:
            Reference is made to the exhibit index which follows the signature
            page of this report.

            The Registrant  will furnish a copy of any exhibits  listed on
            the Exhibit Index to any shareholder of the Registrant without
            charge upon written request of David T.  Harrison, Clarkston
            Financial Corporation, 15 South Main Street, Clarkston, Michigan
            48346.

(b)      Reports on Form 8-K

         During  the last  quarter of the period  covered  by this  report,  the
         Registrant filed no Current Reports on Form 8-K.

                                      -14-
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, dated March 12, 1999.

                                    CLARKSTON FINANCIAL CORPORATION


                                    /s/ David T. Harrison   
                                    David T. Harrison
                                    Chief Executive Officer and President
                                    (Principal Executive Officer)


                                    /s/ James L. Richardson
                                    James L. Richardson
                                    Treasurer
                                    (Principal Financial and Accounting Officer)


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed  below on March 12,  1999,  by the  following  persons on
behalf of the Registrant and in the capacities  indicated.  Each director of the
Registrant, whose signature appears below, hereby appoints David T. Harrison and
James L. Richardson,  and each of them severally,  as his  attorney-in-fact,  to
sign in his name and on his behalf, as a director of the Registrant, and to file
with the Commission any and all Amendments to this Report on Form 10-KSB.


       Signature


/s/ David T. Harrison                                             March 12, 1999
David T. Harrison, Principal Executive Officer and a Director


/s/ James L. Richardson                                           March 12, 1999
James L. Richardson, Principal Financial and Accounting Officer



/s/ Edwin L. Adler                                                March 12, 1999
Edwin L. Adler, Chairman of the Board and a Director


/s/ Louis D. Beer                                                 March 12, 1999
Louis D. Beer, Director

                                      -15-
<PAGE>


/s/ Charles L. Fortinberry                                        March 12, 1999
Charles L. Fortinberry, Director


/s/ William J. Clark                                              March 12, 1999
William J. Clark, Director


/s/ Bruce H. McIntyre                                             March 12, 1999
Bruce H. McIntyre, Secretary and a Director


/s/ Robert A. Olsen                                               March 12, 1999
Robert A. Olsen, Director


/s/ John H. Welker                                                March 12, 1999
John H. Welker, Director



                                      -16-
<PAGE>
                                  EXHIBIT INDEX


                                                                    Sequentially
                                                                      Numbered
                    Exhibit Number and Description                      Page
                    ------------------------------                  ------------

3.1    Articles of Incorporation of Clarkston Financial Corporation,
       incorporated by reference to Exhibit 3.1 to the Clarkston
       Financial Corporation Registration Statement on Form SB-2
       (Registration No. 333-63685).

3.2    Bylaws of Clarkston Financial Corporation, incorporated by
       reference to Exhibit 3.2 to the Clarkston Financial Corporation
       Registration Statement on Form SB-2 (Registration No. 333-63685).


4      Specimen stock certificate of Clarkston Financial Corporation,
       incorporated by reference to Exhibit 4 to the Clarkston Financial
       Corporation Registration Statement on Form SB-2 (Registration No.
       333-63685).


10.1   Clarkston Financial Corporation Stock Compensation Plan,
       incorporated by reference to Exhibit 10.1 to the Clarkston
       Financial Corporation Registration Statement on Form SB-2
       (Registration No. 333-63685).


10.2   Clarkston Financial Corporation 1998 Founding Directors Stock
       Option Plan, incorporated by reference to Exhibit 10.2 to the
       Clarkston Financial Corporation Registration Statement on Form
       SB-2 (Registration No. 333-63685).


10.3   Lease Agreement dated September 10, 1998, for the facility
       located at 15 South Main Street, Clarkston, Michigan, 48346,
       incorporated by reference to Exhibit 10.3 to the Clarkston
       Financial Corporation Registration Statement on Form SB-2
       (Registration No. 333-63685).

10.4   Data Processing Agreement between Jack Henry and Associates, Inc.
       And Clarkston State Bank dated October, 1998, incorporated by
       reference to Exhibit 10.4 to the Clarkston Financial Corporation
       Registration Statement on form SB-2 (Registration No. 333-63685).

13     Proxy Statement to shareholders. This exhibit, except for those
       portions expressly incorporated by reference in this filing, is
       furnished for the

                                      -17-
<PAGE>
       information of the Securities and Exchange Commission and is not
       deemed "filed" as part of this filing.

21     Subsidiaries of the Registrant

23     Consent of Plante & Moran, LLP, independent public accountants

24     Power of Attorney (included on the signature page on page 15 of
       the Annual Report on Form 10-KSB)

27     Financial Data Schedule




                                      -18-
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION

                              15 South Main Street
                            Clarkston, Michigan 48346



                                  March 5, 1999



Dear Shareholder:

     We invite  you to attend the 1999  Annual  Meeting  of  Shareholders.  This
year's  meeting will be held on Tuesday,  April 20, 1999, at 10:00 a.m., at Deer
Lake Racquet Club, 6167 White Lake Road, Clarkston, Michigan 48346.

     Our audited financial  statements are included in an appendix to this Proxy
Statement.

     It is important  that your shares are  represented  at the Annual  Meeting.
Please carefully read the Notice of Annual Meeting and Proxy Statement.  Whether
or not you expect to attend the Annual Meeting, please sign, date and return the
enclosed Proxy in the envelope provided at your earliest convenience.

                                            Sincerely,


                                            /s/ David T. Harrison
                                            David T. Harrison
                                            Chief Executive Officer
                                            and President
<PAGE>
                         CLARKSTON FINANCIAL CORPORATION

                              15 South Main Street
                            Clarkston, Michigan 48346




                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                            TO BE HELD APRIL 20, 1999


To Our Shareholders:

     The Annual Meeting of Shareholders of Clarkston Financial  Corporation will
be held at Deer Lake Racquet  Club,  6167 White Lake Road,  Clarkston,  Michigan
48346, on Tuesday,  April 20, 1999 at 10:00 A.M.,  local time, for the following
purposes:

          1. To elect two directors, each to hold office for a three year term.

          2. To transact  such other  business as may  properly  come before the
             meeting or at any adjournment thereof.

     Shareholders  of record at the close of  business  March 1,  1999,  will be
entitled to vote at the meeting or any adjournment  thereof.  Whether or not you
expect  to be  present  in  person  at this  meeting,  you are urged to sign the
enclosed Proxy and return it promptly in the enclosed envelope. If you do attend
the  meeting  and wish to vote in  person,  you may do so even  though  you have
submitted a Proxy.

                                              By order of the Board of Directors
Dated: March 5, 1999
Clarkston, Michigan

                                              /s/ Bruce H. McIntyre
                                              Bruce H. McIntyre
                                              Secretary
<PAGE>
                                                            Dated: March 5, 1999

                         CLARKSTON FINANCIAL CORPORATION

                              15 South Main Street
                            Clarkston, Michigan 48346

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

                                 PROXY STATEMENT

                     For the Annual Meeting of Shareholders
                            to be held April 20, 1999
                               ------------------

                   SOLICITATION OF PROXIES FOR ANNUAL MEETING

     This  Proxy  Statement  is  furnished  to  the  Shareholders  of  Clarkston
Financial Corporation (the "Corporation") in connection with the solicitation by
the  Board  of  Directors  of  proxies  to be  used  at the  Annual  Meeting  of
Shareholders which will be held at Deer Lake Racquet Club, 6167 White Lake Road,
Clarkston, Michigan 48346, April 20, 1999, at 10:00 A.M., local time.

     The Annual Meeting is being held for the following purposes:

          1. To elect two directors, each to hold office for a three year term.

          2. To transact  such other  business as may  properly  come before the
             meeting or at any adjournment thereof.

     If a proxy in the form distributed by the Corporation's  Board of Directors
is properly executed and returned to the Corporation,  the shares represented by
the  proxy  will be voted  at the  Annual  Meeting  of  Shareholders  and at any
adjournment of that meeting. Where shareholders specify a choice, the proxy will
be voted as specified. If no choice is specified,  the shares represented by the
proxy  will be voted FOR the  nominees  named by the Board of  Directors  in the
proxy. Shares not voted at the meeting, whether by abstention,  broker non-vote,
or  otherwise,  will not be treated as votes cast at the meeting.  Votes cast at
the  meeting  and  submitted  by proxy will be  tabulated  by the  Corporation's
transfer agent.

     A proxy may be revoked prior to its exercise by delivering a written notice
of revocation to the secretary of the  Corporation,  executing and  delivering a
proxy of a later date or attending the meeting and voting in person.  Attendance
at the meeting does not automatically act to revoke a proxy.
<PAGE>
                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

     On  March 1,  1999,  the  record  date for  determination  of  shareholders
entitled to vote at the Annual Meeting, there were outstanding 951,000 shares of
common stock of the  Corporation.  Shares cannot be voted unless the shareholder
is present at the meeting or is represented by proxy.

     As of March 1, 1999, no person was known to management to be the beneficial
owner of more than 5% of the Corporation's common stock.


                              ELECTION OF DIRECTORS

     The Corporation's Articles of Incorporation provide for the division of the
Board of  Directors  into  three  classes of nearly  equal  size with  staggered
three-year  terms of office.  The number of directors  constituting the Board of
Directors is determined  from time to time by the Board of Directors.  The Board
is currently  composed of eight  members.  Two persons have been  nominated  for
election  to the Board,  each to serve a  three-year  term  expiring at the 2002
Annual  Meeting  of  Shareholders.  The  Board has  nominated  Louis D. Beer and
William J. Clark, each of whom is an incumbent director.

     Holders of common stock  should  complete the  accompanying  proxy.  Unless
otherwise directed by a shareholder's  proxy, it is intended that the votes cast
upon  exercise of proxies in the form  accompanying  this  statement  will be in
favor of electing the nominees as directors for the terms indicated above.  Each
of the nominees is presently serving as a director.  The following pages of this
Proxy Statement  contain more information about the nominees and other directors
of the Corporation.

     Except for those  persons  nominated  by the Board of  Directors,  no other
persons  may  be  nominated  for  election  at  the  1999  Annual  Meeting.  The
Corporation's  Articles of Incorporation  require at least 60 days prior written
notice of any other proposed shareholder  nomination and no such notice has been
received.

     A  plurality  of the votes cast at the Annual  Meeting is required to elect
the nominees as directors of the  Corporation.  As such, the two individuals who
receive  this  number of votes cast by the holders of the  Corporation's  common
stock will be elected as directors.  Shares not voted at the meeting, whether by
abstention,  broker non-vote, or otherwise, will not be treated as votes cast at
the meeting.  Votes cast at the meeting and submitted by proxy will be tabulated
by the Corporation.

     If any nominee becomes  unavailable for election due to  circumstances  not
now known, the accompanying  proxy will be voted for such other person to become
a director as the Board of Directors selects.

     The Board of  Directors  recommends  a vote FOR the election of each of the
persons nominated by the Board.

                                        2
<PAGE>
                           INFORMATION ABOUT DIRECTORS

     The content of the following table is based upon information as of February
1, 1999, furnished to the Corporation by the directors.  As of February 1, 1999,
there  were  951,000  issued  and  outstanding  shares  of  common  stock of the
Corporation.
<TABLE>
                                                                                      Amount and Nature of        Percent of
                                                                   Year First              Beneficial               Common
                                                                    Became a              Ownership(1)              Stock
                      Name                            Age           Director
---------------------------------------------        -----        ------------           --------------            --------
<S>                                                   <C>             <C>                      <C>                   <C>
Nominees for Election as Directors for Terms
Expiring in 2002

Louis D. Beer                                         53              1998                     10,000                1.1%

William J. Clark                                      48              1998                      3,200                 *


Directors Whose Terms Expire in 2000

Charles L. Fortinberry                                42              1998                      7,000                 *

Bruce H. McIntyre (a)(b)                              68              1998                     10,000                1.1%

Robert A. Olsen (b)(c)                                53              1998                     12,500                1.3%


Directors Whose Terms Expire in 2001

Edwin L. Adler (a)(b)                                 60              1998                     30,000                3.2%

David T. Harrison (b)(c)                              56              1998                     14,000                1.5%

John H. Welker (c)                                    58              1998                     29,000                2.6%

*Denotes ownership of less than one percent.
</TABLE>
(a)      Member Audit Committee
(b)      Member Executive Committee
(c)      Member Personnel Committee

(1)      Each  director  owns  the  shares  directly  and has  sole  voting  and
         investment  power or shares voting and investment power with his or her
         spouse under joint ownership.  Includes shares of common stock that are
         issuable  under options  exercisable  within sixty days, of which there
         were none as of February 1, 1999.

                                        3
<PAGE>
     David T. Harrison is the Chief Executive Officer,  President and a director
of the  Corporation and the Bank. Mr. Harrison has 30 years of experience in the
banking  industry.  Mr. Harrison was employed by First of America Bank from 1963
to 1991, and most recently served from 1989 to 1991 as Chief  Executive  Officer
and President of First of America Bank-Southeast, in Detroit, a Michigan banking
corporation  that had over $4 billion in assets in 1991. Mr. Harrison has served
as  Chief  Executive  Officer  and  President  of  Pinnacle  Appraisal  Group of
Clarkston,  Michigan,  from 1991 to the present. Mr. Harrison has also served as
Chief Executive Officer and President of Trophy Homes, a residential builder, of
Clarkston,  Michigan,  from 1995 to the  present.  Mr.  Harrison has served as a
director of Credit Acceptance Corporation from 1991 to the present.

     Edwin L. Adler is the  Chairman and a director of the  Corporation  and the
Bank. Mr. Adler is president of Food Town  Supermarkets,  a chain of five stores
in the Clarkston, Michigan area, where he has been employed since 1963.

     Louis D. Beer is a director of the  Corporation  and the Bank. Mr. Beer has
served since 1993 as the chairman of First  Public  Corporation,  a real estate,
financial and business consulting firm located in Saginaw, Michigan.

     William J. Clark is a director of the  Corporation  and the Bank. Mr. Clark
has  served  since  October  1996 as the  general  manager  of  Coldwell  Banker
Professionals,  a real estate brokerage firm in Clarkston,  Michigan.  Mr. Clark
was employed by Clarkston  Real Estate  Services Inc. from 1989 through  October
1996.

     Charles L.  Fortinberry is a director of the  Corporation and the Bank. Mr.
Fortinberry  is an automobile  dealer and is the president of Clarkston  Motors,
Inc., where he has been employed since 1985.

     Bruce H. McIntyre is the Secretary  and a director of the  Corporation  and
the Bank. Mr. McIntyre has served as president of McIntyre  Media,  LLC, a media
consulting  firm,  since October 1996.  From 1971 through  September  1996,  Mr.
McIntyre  was  employed  by Capital  Cities/ABC,  Inc.,  most  recently  as vice
president of the  publishing  division.  Mr.  McIntyre was the  publisher of the
Oakland Press from 1977 through February 1995.

     Robert A. Olsen is a director of the Corporation and the Bank. Mr. Olsen is
the president of Planned  Financial  Services,  Inc., where he has been employed
since 1974.

     John H. Welker is a director of the Corporation and the Bank. Mr. Welker is
president of Numatics,  Inc.,  where he has been employed since 1965.  Numatics,
Inc.  is a  global  developer  and  manufacturer  of  pneumatic  components  for
automated machinery used in various industries.

     The Board of  Directors  had 13 meetings in 1998.  The  Corporation  has no
nominating  committee.  All  directors  attended at least  three-fourths  of the
aggregate  number of meetings of the Board and Board  committees which they were
eligible to attend.

                            COMPENSATION OF DIRECTORS

     Directors of the Corporation are not paid any cash  compensation  for Board
meetings or Committee meetings attended. In 1998 the Corporation granted to each
of the directors  options to purchase shares of Common Stock. Such directors are
reimbursed for their expenses for each meeting attended.

     A total of 75,000  shares of Common  Stock have been  reserved for issuance
under the  Corporation's  1998 Founding  Directors'  Stock Option Plan,  and the
Corporation  has granted to its directors and organizers  options to purchase an
aggregate of 58,318 shares.

                                        4
<PAGE>
     Effective  November 13, 1998,  the  Corporation  awarded  stock  options to
purchase an aggregate of 29,160 shares to the directors of the  Corporation  and
the Bank in the following amounts: Mr. Harrison (3,645 shares); Mr. Adler (3,645
shares);  Mr. Beer (3,645  shares);  Mr. Clark (3,645 shares);  Mr.  Fortinberry
(3,645 shares);  Mr. McIntyre (3,645 shares);  Mr. Olsen (3,645 shares); and Mr.
Welker (3,645 shares). These options are subject to vesting requirements and 20%
of the shares subject to each option vest in each year in which the  Corporation
achieves a performance  goal  determined in advance by the Board of Directors of
the  Corporation.  Pursuant to their terms,  these  options  must be  completely
vested nine and one half years after their date of grant,  regardless of whether
the Corporation achieves the performance goals. These stock options were granted
pursuant  to the 1998  Founding  Directors'  Stock  Option Plan have an exercise
price of $10.00 per share, and expire on November 13, 2008.

     Effective  November 13, 1998,  the  Corporation  awarded  stock  options to
purchase an aggregate of 29,158 shares to the directors of the  Corporation  and
the Bank in the following amounts: Mr. Harrison (3,270 shares); Mr. Adler (8,176
shares); Mr. Beer (2,725 shares); Mr. Clark (817 shares); Mr. Fortinberry (1,907
shares);  Mr. McIntyre (2,725 shares);  Mr. Olsen (2,725 shares); and Mr. Welker
(6,813 shares).  These stock options were granted  pursuant to the 1998 Founding
Directors'  Stock Option Plan.  These stock  options vest 20% each year for five
years,  have an exercise price of $10.00 per share,  are  exercisable  beginning
December 31, 2000, and expire on November 13, 2008.


                             EXECUTIVE COMPENSATION

     The following table sets forth the compensation  paid by the Corporation to
its Chief Executive Officer (the "Named Executive") for services rendered to the
Corporation   from  May  18,  1998   (inception)   to  December  31,  1998,  the
Corporation's  first  full year of  operations.  No  executive  officers  of the
Corporation  or the Bank  received  annual  compensation  in excess of  $100,000
during 1998.
<TABLE>
                           Summary Compensation Table

                                                                                          Long Term
                                                    Annual Compensation                 Compensation
                                          --------------------------------------        ------------
                                                                        Other
                                                                        Annual           Securities          All Other
                                                                       Compen-           Underlying           Compen-
Name and Principal Position                Year       Salary(1)       sation ($)         Options(#)           sation
---------------------------                ----       ---------       ----------         ----------           ------
<S>                                        <C>        <C>                <C>              <C>                  <C> 
David T. Harrison.......................   1998       $16,666             0                 6,915              $0
     President and                                                                   
     Chief Executive Officer
</TABLE>
(1)  Mr. Harrison received total salary compensation of $16,666 during 1998. Mr.
     Harrison's annual salary at the present time is $100,000 per year.

                                        5
<PAGE>
     Option  Grants  in 1998.  Shown  below is  information  on  grants of stock
options to the Named Executive  during the period from May 18, 1998  (inception)
through December 31, 1998, pursuant to the Corporation's Stock Compensation Plan
and the Corporation's 1998 Founding Directors Stock Option Plan.
<TABLE>
                                                    Individual Grants
                              ----------------------------------------------------------------------
                                                                                                            Potential
                                                                                                           Realizable
                                                                                                            Value at
                                                                                                             Assumed
                                                                                                          Annual Rates
                                Number of          Percent of                                            of Stock Price
                               Securities         Total Options       Exercise or                         Appreciation
                               Underlying          Granted to         Base Price                           for Option
                                Options           Employees in           (per          Expiration           Term (4)
                                                                                                    ---------------------
           Name                Granted(1)            1998(2)           share)(3)          Date         5%          10%
-------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                   <C>                <C>           <C>            <C>        <C>
David T. Harrison                6,915               100.00%            $10.00        11/13/08       $43,488    $110,207
 President and
 Chief Executive
 Officer
</TABLE>
(1)      Indicates  number of shares which may be purchased  pursuant to options
         granted under the Corporation's Stock Compensation Plan on December 31,
         1998.  Options  may not be  exercised  in full or in part  prior to the
         expiration of one year from the date of grant.
(2)      Mr.  Harrison is the only  employee  who was granted  stock  options in
         1998.  Options to purchase a total of 58,318 shares were granted to the
         Corporation's founding directors in 1998, of which Mr. Harrison's stock
         options represented 11.9%.
(3)      The exercise  price equals the price at which the  Corporation  offered
         its stock to the public in its initial  public  offering.  The exercise
         price may be paid in cash, by the delivery of previously  owned shares,
         through the withholding of shares otherwise issuable upon exercise or a
         combination thereof.
(4)      These amounts are based on assumed rates of appreciation  only.  Actual
         gains,  if any, on stock option  exercises will be dependent on overall
         market  conditions and on the future  performance of the  Corporation's
         Common Stock.  There can be no assurance that the amounts  reflected in
         this table will be realized.

                                        6
<PAGE>
     Year-End  Options  Values.  Shown  below is  information  with  respect  to
unexercised options to purchase shares of the Corporation's Common Stock granted
under the  Option  Plans to the  Named  Executive  and the value of  unexercised
options at December 31,  1998.  The Named  Executive  did not exercise any stock
options during 1998.
<TABLE>
                                                 Number of Shares Subject to               Value of Unexercised
                                                  Unexercised Options Held                In-the-Money Options at
                                                    at December 31, 1998                   December 31, 1998(1)
                                                   ----------------------                 ---------------------
                   Name                       Exercisable        Unexercisable       Exercisable        Unexercisable
---------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>                 <C>                   <C>
David T. Harrison.........................         0                6,915                $0                    0
Chief Executive Officer
and President
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      The value of  unexercised  options  reflects  the  market  value of the
         Corporation's  Common Stock from the date of grant through December 31,
         1998,  (when the closing  price of the  Corporation's  Common Stock was
         $9.75 per share).  Mr.  Harrison's stock options have an exercise price
         of $10.00 per share and were not  in-the-money  at December  31,  1998.
         Value  actually  realized  upon  exercise by the Named  Executive  will
         depend on the value of the  Corporation's  Common  Stock at the time of
         exercise.

     Benefits. The Corporation provides group health and life insurance benefits
and  supplemental  unemployment  benefits  to its regular  employees,  including
executive officers.

     Security Ownership of Management. The following table shows, as of February
1,  1999,  the  number  of  shares  beneficially  owned by the  Named  Executive
identified in the executive  compensation  tables of this proxy statement and by
all  Directors  and  Executive  Officers as a group.  Except as described in the
notes  following  the  table,  the  following   persons  have  sole  voting  and
dispositive power as to all of their respective shares.
<TABLE>
                                                                       Amount and Nature of           Percent of
Name                                                                   Beneficial Ownership          Common Stock
<S>                                                                           <C>                        <C>
-------------------------------------------------------------------------------------------------------------------
David T. Harrison.................................................            14,000                      1.5%
  Chief Executive Officer
  and President
All Executive Officers and Directors as a Group
  (eight persons).................................................           115,700                     12.1%
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                        7
<PAGE>
                        TRANSACTIONS INVOLVING MANAGEMENT

     The Bank is leasing a building in downtown  Clarkston,  Michigan for use as
the Bank's main office and the Corporation's  headquarters.  The Bank leases the
building  from a limited  liability  company  wholly owned by Messrs.  Harrison,
Adler, Beer, Clark,  Fortinberry,  McIntyre, Olsen and Welker, each of whom is a
director of the Corporation and the Bank. Management of the Corporation believes
that the terms of the lease are no less favorable to the Corporation  than could
be obtained from non-affiliated parties.

     During  1998,   organizers   of  the   Corporation   and  the  Bank  loaned
approximately   $415,000  in  aggregate  amount  to  the  Corporation  to  cover
organizational expenses of the Bank and the Corporation. Interest was payable on
the loans at the rate of 5.0% per  annum.  These  loans  were  repaid in full in
December 1998.

     Except as described in the preceding paragraph, no directors or officers of
the Corporation or their associates were customers of, or had transactions with,
subsidiaries  of the  Corporation  other than in the ordinary course of business
during 1998.  Clarkston State Bank did not commence  operations until January 4,
1999,  and has made loans and loan  commitments  to certain of its directors and
officers.  All loans and  commitments to officers and directors were made in the
ordinary course of business on substantially the same terms,  including interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions  with  other  persons  and  do  not  involve  an  unusual  risk  of
collectibility or present other unfavorable features.


                RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

     The consolidated financial statements of the Corporation have been examined
by  Plante  &  Moran,  LLP,   independent   certified  public   accountants.   A
representative  of Plante & Moran,  LLP is  expected to be present at the annual
meeting  with the  opportunity  to make a  statement,  if  desired,  and will be
available  to respond  to  appropriate  questions.  It is  anticipated  that the
Corporation's Audit Committee will select the Corporation's  auditors before the
end of this calendar year.


                   SHAREHOLDER PROPOSALS--2000 ANNUAL MEETING

     Any proposal of a  shareholder  intended to be presented  for action at the
2000 annual meeting of the Corporation must be received by the Corporation at 15
South Main Street, Clarkston, Michigan 48346, not later than January 1, 2000, if
the shareholder  wishes the proposal to be included in the  Corporation's  proxy
materials for that meeting.

                                        8
<PAGE>
                      AVAILABILITY OF 10-KSB ANNUAL REPORT

     An annual report on Form 10-KSB to the Securities  and Exchange  Commission
for the year ended December 31, 1998, will be provided free to shareholders upon
written request. Write to Clarkston Financial Corporation,  Attention:  David T.
Harrison, 15 South Main Street,  Clarkston,  Michigan 48346. The Form 10-KSB and
certain  other  periodic  filings  are filed with the  Securities  and  Exchange
Commission  (the  "Commission").  The Commission  maintains an Internet web site
that contains reports and other information  regarding companies,  including the
Corporation,  that file  electronically.  The  Commission's  web site address is
http:\\www.sec.gov.


                                  MISCELLANEOUS

     The  management is not aware of any other matter to be presented for action
at the  meeting.  However,  if any such other matter is properly  presented  for
action,  it is the  intention of the persons named in the  accompanying  form of
proxy to vote thereon in accordance with their best judgment.

     The cost of soliciting  proxies in the  accompanying  form will be borne by
the Corporation.  In addition to solicitation by mail,  proxies may be solicited
in  person,  or  by  telephone  or  telegraph,   by  regular  employees  of  the
Corporation.

                                           By order of the Board of Directors



                                           /s/ Bruce H. McIntyre
March 5, 1999.                             Bruce H. McIntyre
                                           Secretary



                                        9
<PAGE>
                                    APPENDIX


Plan of Operation............................................................A-2

Independent Auditors Report..................................................A-4

Consolidated Financial Statements

         Consolidated Balance Sheet..........................................A-5

         Consolidated Statement of Operations................................A-6

         Consolidated Statement of Changes in Shareholders' Equity...........A-7

         Consolidated Statement of Cash Flows................................A-8

         Notes to Consolidated Financial Statements..........................A-9




                                       A-1
<PAGE>
                                PLAN OF OPERATION

Plan of Operation.

     Clarkston Financial Corporation was incorporated on May 18, 1998, as a bank
holding company.  The Company owns all of the outstanding shares of common stock
of Clarkston State Bank, a Michigan banking  corporation (the "Bank").  The Bank
received all necessary  regulatory  approvals and began operations on January 4,
1998. Based on the preopening growth  projections and the growth levels achieved
during the first few weeks of operations,  management  believes that the Bank is
likely to have  adequate  funds to meet its  capital  requirements  for the next
several years.

     During the next 12 months of  operation  the  Company  does not  anticipate
requiring   substantial   additional  equipment  or  building   facilities.   No
significant change in the number of employees is anticipated in the next year of
operations.

     Total assets of the Company at December 31, 1998, were $8.7 million, and at
February 28, 1999, total assets were  $12,304,066.  As of February 28, 1999, the
Bank had total loans of $354,593  and total  deposits  of  $3,778,474.  The Bank
experienced  significant  growth during the initial  period of  operations  from
January 4, 1999 to February 28, 1999.  This growth is expected to continue  into
1999.

     As of  December  31,  1998,  the  Company  had an  accumulated  deficit  of
$149,000.  This accumulated  deficit was primarily the result of preopening fees
and expenses.  During 1999,  the Bank expects to establish an allowance for loan
losses  at a level of 1.5% of total  loans,  resulting  in  additional  expected
losses for 1999.  Management  believes that the Company will generate a net loss
for 1999 as a result of the  expenditures  made to build its loan loss  reserve,
build its management team and open its office.  Significant ongoing additions to
loan loss  reserves  will also  contribute  to this deficit due to the projected
rapid  increase in the loan  portfolio.  Management  further  believes  that the
expenditures  made in 1998 and 1999 will create the  infrastructure  and lay the
foundation for growth in subsequent years.


Year 2000 Compliance.

     Because many computerized systems use only two digits to record the year in
date fields (for example, the year 1998 is recorded as 98), such systems may not
be able to  accurately  process  dates  ending in the year 2000 and  after.  The
effects of the issue will vary from  system to system and may  adversely  affect
the ability of a financial  institution's  operations  as well as its ability to
prepare  financial  statements.  The Company and the Bank were organized in 1998
and the Company  acquired its computer  equipment  within the past twelve months
and has contracted with a leading supplier of information  processing  services.
This equipment and these  services were  purchased with  assurances of Year 2000
compliance.

     Company management has developed a comprehensive Year 2000 Compliance Plan.
The  Company  has  procedures  in place to assess  Year 2000  compliance  by the
Company and its vendors. In addition,  the Bank asks commercial  borrowers about
Year 2000 compliance as part of the loan application and review process.

     To date,  the Company has spent less than $20,000 on Year 2000  compliance.
Management  believes that the  additional  costs to complete the Company's  Year
2000 compliance will be minimal.

     The  Company  presently  anticipates  that it will  complete  its Year 2000
assessment and any necessary  remediation by December 31, 1999.  However,  there
can be no assurance that the Company will be successful in implementing its Year
2000 remediation plan according to the anticipated  schedule.  In addition,  the
Company may be  adversely  affected by the  inability of other  companies  whose
systems interact with the Company to become Year 2000 compliant.

                                       A-2
<PAGE>
     The Bank's  core  processing  applications  are  provided  by a third party
vendor, Jack Henry and Associates,  Inc. The Company has received correspondence
from Jack Henry and  Associates,  Inc. which  documents the status of their Year
2000  compliance.  The  Company  has  been  advised  that  the  Jack  Henry  and
Associates, Inc. software has been successfully tested for Year 2000 compliance.

     Although the Company expects its internal systems to be Year 2000 compliant
as described  above,  the Company is in the process of  preparing a  contingency
plan that will  specify  what it plans to do if  important  internal or external
systems are not Year 2000 compliant in a timely manner.

     Management  does  not  anticipate  that the  Company  will  incur  material
operating  expenses  or  be  required  to  invest  heavily  in  computer  system
improvements  to be Year 2000  compliant.  Nevertheless,  the  inability  of the
Company to successfully  address Year 2000 issues could result in  interruptions
in the Company's  business and have a material  adverse  effect on the Company's
results of operations.

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  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.

                                       A-3
<PAGE>
PLANTE & MORAN, LLP                        Suite 2000
                                           505 N. Woodward Ave.
                                           Bloomfield Hills, Michigan 48304-2966

                                           Certified Public Accountant
                                           Management Consultants
                                           248-644-0300
                                           FAX 248-644-0373


                          Independent Auditor's Report



To the Board of Directors and Stockholders
Clarkston Financial Corporation and Subsidiary


We have  audited  the  accompanying  consolidated  balance  sheet  of  Clarkston
Financial  Corporation  and  subsidiary  as of December 31, 1998 and the related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the period from May 18, 1998  (inception)  through  December 31, 1998.
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 generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Clarkston Financial  Corporation and subsidiary as of December 31, 1998, and the
consolidated  results  of their  operations  and their cash flows for the period
from May 18, 1998  (inception)  through  December 31, 1998, in  conformity  with
generally accepted accounting principles.


                                                  /s/ Plante & Moran, LLP

January 29, 1999

A member of
Moores
Rowland
INTERNATIONAL
A worldwide association of independent accounting firms                     A-4
<PAGE>
Clarkston Financial Corporation and Subsidiary
-------------------------------------------------------------------------------
                                                      Consolidated Balance Sheet
                                                               December 31, 1998
                                           (000s omitted, except per share data)
<TABLE>
                                     Assets
<S>                                                              <C>
Cash and cash equivalents                                        
     Cash and due from banks                                     $    92
     Federal funds sold                                            8,350
                                                                 -------

               Total cash and cash equivalents                     8,442

Premises and equipment                                               291
                                                                 -------

               Total assets                                      $ 8,733
                                                                 =======


                      Liabilities and Stockholders' Equity

Liabilities - Accounts payable                                   $   126

Stockholders' Equity (Note 7)
     Common Stock - No par value:
          Authorized - 10,000,000 shares                           4,378
          Issued and outstanding - 951,000 shares                  
     Capital surplus                                               4,378
     Accumulated deficit                                            (149) 
                                                                 --------
               
               Total stockholders' equity                          8,607
                                                                 --------
               Total liabilities and stockholders' equity         $8,733
                                                                 ========
</TABLE>

See Notes to Consolidated Financial Statements.                              A-5
<PAGE>
Clarkston Financial Corporation and Subsidiary
-------------------------------------------------------------------------------
                                            Consolidated Statement of Operations
                                            Period from May 18, 1998 (inception)
                                                       through December 31, 1998
                                           (000s omitted, except per share data)
<TABLE>
<S>                                                              <C>
Interest Income - Federal funds sold                             $   35

Interest Expense - Related party notes payable (Note 2)               4
                                                                 ------
Net Interest Income                                                  31

Other Operating Expenses
     Advertising                                                      8
     Compensation (Note 5)                                           68
     Insurance                                                        9
     Occupancy (Note 3)                                              32
     Organizational Costs                                            56
     Other                                                            7
                                                                 ------
               Total other operating expenses                       180
                                                                 ------
Loss - Before income taxes                                         (149)

Provision for Income Taxes (Note 4)                                   -
                                                                 ------
Net Loss                                                         $ (149)
                                                                 ======
Net Loss per Common Share (Note 9)                               $(0.96)
                                                                 ======
</TABLE>

See Notes to Consolidated Financial Statements.                              A-6
<PAGE>
Clarkston Financial Corporation and Subsidiary
-------------------------------------------------------------------------------
                       Consolidated Statement of Changes in Stockholders' Equity
                                            Period from May 18, 1998 (inception)
                                                       through December 31, 1998
                                           (000s omitted, except per share data)
<TABLE>
                                                                                        Total
                                        Common         Capital        Accumulated    Stockholders'
                                        Stock          Surplus        Deficit           Equity
<S>                                     <C>            <C>            <C>            <C>
Balance - May 18, 1998                  $    -         $    -         $    -         $    -

Public stock offering                    4,750          4,750              -          9,500

Cost of stock offering                    (372)          (372)             -           (744)

Comprehensive income - Net loss              -              -            (149)         (149)
                                        ------         ------         -------        ------
Balance - December 31, 1998             $4,378         $4,378         $  (149)       $8,607
                                        ======         ======         =======        ======

</TABLE>
See Notes to Consolidated Financial Statements.                              A-7
<PAGE>
Clarkston Financial Corporation and Subsidiary
-------------------------------------------------------------------------------
                                            Consolidated Statement of Cash Flows
                                            Period from May 18, 1998 (inception)
                                                       through December 31, 1998
                                           (000s omitted, except per share data)
<TABLE>
<S>                                                                             <C>
Cash Flows from Operating Activities
     Net loss                                                                   $   (149)
     Adjustments to reconcile net loss to net cash from operating activities-
          Increase in accounts payable                                               126
                                                                                --------
                    Net cash used in operating activities                            (23)

Cash Flows from Investing Activities - Additions to premises and equipment
     in process of installation                                                     (291)

Cash Flows from Financing Activities
     Proceeds from related party notes payable                                       415
     Repayment of related party notes payable                                       (415)
     Net proceeds from public stock offering                                       8,756
                                                                                --------
                    Net cash provided by financing activities                      8,756
                                                                                --------
Net Increase in Cash and Cash Equivalents                                          8,442

Cash and Cash Equivalents - May 18, 1998                                               -
                                                                                --------
Cash and Cash Equivalents - December 31, 1998                                   $  8,442
                                                                                ========
Supplemental Disclosure of Cash Flow Infomation - Cash paid during the
     year for
          Interest                                                              $      4
          Taxes                                                                        -
</TABLE>

See Notes to Consolidated Financial Statements.                              A-8
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998

Note 1 - Summary of Significant Accounting Policies

     The accounting and reporting  policies of Clarkston  Financial  Corporation
     and  subsidiary  conform  to  generally  accepted  accounting   principles.
     Management is required to make  estimates and  assumptions  that affect the
     amounts reported in the consolidated  financial statements and accompanying
     notes. Actual results could differ from those estimates and assumptions.

     Principles of Consolidation - The consolidated financial statements include
     the accounts of Clarkston Financial Corporation (the "Corporation") and its
     wholly owned subsidiary, Clarkston State Bank (the "Bank"). All significant
     intercompany transactions are eliminated in consolidation.

     Nature of Operations - Clarkston State Bank was formed during December 1998
     for the purpose of conducting  full-service commercial and consumer banking
     and other  financial  products and services,  initially  through one branch
     office,  to Michigan  communities  in Oakland  County.  Banking  operations
     commenced subsequent to December 31, 1998.

     Premises and  Equipment - Premises and equipment are stated at cost to date
     through  December 31, 1998.  Once placed in service,  depreciation  will be
     computed on the  straight-line  method and charged to  operations  over the
     estimated useful lives of the properties.

     Organization  and  Preopening  Costs - Organization  and  preopening  costs
     represent  incorporation  costs,  legal and accounting costs,  salaries and
     other costs relating to the  organization.  The organization and preopening
     costs totaled  approximately  $180,000 through December 31, 1998, which has
     been charged to expense as incurred.

     Offering  Costs - Costs  related to the  offering of common stock have been
     charged  against the offering  proceeds from the sale of the  Corporation's
     stock.

     Earnings  per Share - Basic  earnings  per  share is based on the  weighted
     average  number of shares  outstanding  during the  period.  Fully  diluted
     earnings per share are based on the weighted  average  shares  outstanding,
     assuming the exercise of the dilutive stock options.

     Stock  Options - The  Corporation  has two stock option plans (see Note 5).
     Options  granted to directors and key employees are accounted for using the
     intrinsic value method, under which compensation expense is recorded at the
     amount by which the  market  price of the  underlying  stock at grant  date
     exceeds the exercise price of an option. Under the Corporation's plans, the
     exercise  price on all options  granted equals or exceeds the fair value of
     the stock at the grant date. Accordingly,  no compensation cost is recorded
     as a result of stock option awards under the plan.

                                                                             A-9
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998


Note 2 - Notes Payable - Related Parties

     Notes  payable  totaling  $415,000  were  advanced  from and  repaid to the
     Corporation's  organizers  during the period ended  December 31, 1998.  The
     notes paid  interest  at 5 percent  per annum and were due on  demand.  The
     Corporation  repaid  the  notes  from  the  proceeds  of the  common  stock
     offering.

Note 3 - Operating Lease - Related Parties

     The Bank  entered  into a lease  for its main  operating  facility  under a
     five-year noncancelable lease expiring on October 1, 2003. The facility was
     leased from an entity owned by the members of the Board of Directors of the
     Corporation. Lease payment obligation is $5,000 per month through September
     1, 2000 and $5,165 per month  thereafter.  The Bank is responsible  for all
     taxes, utilities and maintenance costs for the facility.

     The annual future minimum lease payments  required under the  noncancelable
     operating lease as of December 31, 1998 are as follows:
<TABLE>
                                   <S>                <C>
                                   1999               $ 60,000
                                   2000                 60,495
                                   2001                 61,980
                                   2002                 61,980
                                   2003                 46,485
</TABLE>
Note 4 - Income Taxes

     Clarkston  Financial  Corporation  and its  subsidiary  file a consolidated
     income tax return.  The Corporation has incurred  certain  organization and
     start-up  costs  charged  to  expense  in  the  financial  statements,  not
     deductible for tax purposes totaling  approximately $170,000 as of December
     31, 1998. The tax benefit of the future deduction of these expenditures has
     been offset in its entirety by a valuation allowance.

                                                                            A-10
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998


Note 5 - Stock-based Compensation

     The  Corporation  has  two  stock-based   compensation   plans.  Under  the
     employees' Stock  Compensation Plan ("Employee  Plan"), the Corporation may
     grant  options to key  employees  for up to 25,000  shares of common stock.
     Under the 1998 Founding  Directors Stock Option Plan ("Director Plan"), the
     Corporation  may grant  options  for up to 75,000  shares of common  stock.
     Under both plans, there is a minimum vesting period of between one to three
     years before the options may be exercised,  and all options expire 10 years
     after the date of their grant.  Certain options under both plans vest based
     on the achievement of various future  financial and operational  goals. All
     such  options  vest  9.5  years  after  the  date of  grant  regardless  of
     achievement of future goals.  Under both plans,  the exercise price of each
     option  equals the market  price of the  Corporation's  common stock on the
     date of grant.

     The following table summarizes stock option transactions for both plans and
     the  related  average  exercise  prices  for the period  from May 18,  1998
     (inception) through December 31, 1998:
<TABLE>
                                                                   Weighted
                                                                   Average
                                                  Number of       Excercise
                                                    Shares         Price     
<S>                                               <C>            <C>
Options outstanding - May 18, 1998                     -         $    -

Options granted                                   58,318           10.00
Options excercised                                     -              -
Options expired                                        -              -
                                                  ------         ------
Options outstanding - December 31, 1998           58,318         $ 10.00
                                                  ======         =======
</TABLE>
     The  following  table shows summary  information  about fixed stock options
     outstanding at December 31, 1998:
<TABLE>
                 Stock Options Outstanding                                 Stock Options Exercisable
-----------------------------------------------------------------------    ------------------------------
                                   Weighted
Range of                           Average             Weighted            Number of      Weighted
Exercise            Number of      Remaining           Average             Shares         Average
Prices              Shares         Contractual Life    Exercise Price      Exerciseable   Exercise Price
-----------------   ------------   -----------------   ----------------    -------------  --------------
<S>                 <C>            <C>                 <C>                 <C>            <C>
$  10.00            29,160         9.9 years           $  10.00                 -         $    -
   10.00            29,158         9.9 years              10.00                 -              -
</TABLE>

                                                                            A-11
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998

Note 5 - Stock-based Compensation (Continued)

     The Corporation has adopted the disclosure-only  provisions of Statement of
     Financial  Accounting  Standards  (SFAS) 123,  Accounting  for  Stock-Based
     Compensation,  but applies the  intrinsic  value  method to account for its
     plan. The  Corporation has estimated fair value of the options at $3.81 and
     $2.74 per share for contingent  and  non-contingent  shares,  respectively,
     using a "minimum  value"  concept.  The  values  were  calculated  using an
     assumed  interest rate of 6.5 percent and estimated  lives of 7.5 years and
     5.0 years for contingent and  noncontingent  shares,  respectively.  If the
     Corporation had elected to recognize compensation costs for the plans based
     on the fair value of awards at the grant date,  net loss per share on a pro
     forma  basis  would have been as  follows  (000s  omitted  except per share
     data):
<TABLE>
                                                     As           Pro
                                                  Reported       Forma
     <S>                                          <C>            <C>
     Net loss                                     $  (149)       $   (153)
     Net loss per common share                      (0.96)          (0.99)
</TABLE>

Note 6 - Financial Instruments

     Fair Values of Financial  Instruments - The carrying  amounts and estimated
     fair values of the Corporation's  financial instruments consist exclusively
     of vault  cash,  due from banks and federal  funds sold as of December  31,
     1998. Due to the  short-term  nature of these assets,  the carrying  amount
     approximates its fair value.  Certain assets,  the most  significant  being
     premises  and  equipment,  do  not  meet  the  definition  of  a  financial
     instrument and are excluded from this  disclosure.  Accordingly,  this fair
     value  information  is not intended to, and does not,  represent  Clarkston
     Financial Corporation and subsidiary's underlying value.

                                                                            A-12
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998


Note 7 - Regulatory Matters

     The  Corporation  and the Bank are  subject to various  regulatory  capital
     requirements administered by federal and state banking agencies. Failure to
     meet minimum  capital  requirements  can  initiate  certain  mandatory  and
     discretionary  actions by  regulators  that  could  have a direct  material
     effect  on  the  Corporation's  consolidated  financial  statements.  Under
     capital adequacy guidelines and the regulatory  framework,  the Corporation
     and  the  Bank  must  meet  specific   capital   guidelines   that  involve
     quantitative measures of the Corporation and the Bank's assets, liabilities
     and  certain   off-balance-sheet   items  as  calculated  under  regulatory
     accounting practices.

     Quantitative  measures established by regulation to ensure capital adequacy
     require  the  Corporation  and the Bank to  maintain  minimum  amounts  and
     ratios, which are shown in the table below.

     As of December 31, 1998, the Bank's primary regulator  categorized the Bank
     as well-capitalized  under the regulatory  framework.  To be categorized as
     well-capitalized,  minimum capital amounts and ratios must be maintained as
     shown in the following table.  There are no conditions or events since that
     notification  that  management  believes  have  changed the Bank's  capital
     category.
<TABLE>
                                                                                  For Capital
                                                                                    Adequacy                  To be Well-
                                                          Actual                    Purposes                  capitalized
                                                  Amount         Ratio          Amount    Ratio          Amount         Ratio
<S>                                               <C>            <C>            <C>       <C>            <C>            <C>
As of December 31, 1998:
     Total capital (to risk-weighted assets)      $8,607         438.98%        $157      8.00%          $ 196          10.00%
     Tier 1 capital (to risk-weighted assets)     $8,607         438.98%        $ 78      4.00%          $ 118           6.00%
     Tier 1 capital (to average assets)           $8,607         319.13%        $108      4.00%          $ 135           5.00%
</TABLE>


Note 8 - Parent-only Condensed Financial Information

     The condensed  financial  information  that follows  presents the financial
     condition of Clarkston Financial Corporation (the "Parent Company"),  along
     with the results of its operations  and its cash flows.  The parent company
     has recorded its  investments  in  subsidiary at cost plus its share of the
     undistributed  earnings  of the  subsidiary  since  inception.  The  Parent
     Company   recognizes   dividends   from  the   subsidiary  as  revenue  and
     undistributed  earnings of the  subsidiaries  as other  income.  The Parent
     Company  financial  information  should  be read in  conjunction  with  the
     Corporation's consolidated financial statements.

                                                                            A-13
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998


Note 8 - Parent-only Condensed Financial Information (Continued)

     The condensed  balance sheet at December 31, 1998 (with 000s omitted) is as
     follows:
<TABLE>
     <S>                                                              <C>
     Assets
          Cash on deposit with correspondent bank                     $    31
          Receivable from subsidiary bank                                 229
          Investment in subsidiary bank                                 8,387
                                                                      -------
               Total assets                                           $ 8,647
                                                                      =======
     Liabilities - Accounts payable                                   $    40

     Stockholders' Equity
          Common Stock                                                  4,378
          Captial Surplus                                               4,378
          Retained Earnings                                              (149)
                                                                      -------
               Total stockholders' equity                               8,607
                                                                      -------
               Total liablities and stockholders' equity              $ 8,647
                                                                      =======
</TABLE>

     The  condensed  statement  of  operations  for the period from May 18, 1998
     (inception) through December 31, 1998 (000s omitted) is as follows:
<TABLE>
<S>                                                                   <C>
Opertaing Income - Interest income - Federal funds sold               $   21
               
Operating Expenses                                                        60
                                                                      ------
Loss - Before income taxes and equity in undistributed
     loss of subsidiary                                                  (39)

Provision for Income Taxes                                                 -
                                                                      ------
Loss Before income taxes and equity in undistributed
     loss of subsidiary                                                  (39)

Equity in Undisturbed Loss of Subsidiary                                (110)
                                                                      ------
Net Loss                                                              $ (149)
                                                                      ======
</TABLE>

                                                                            A-14
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                               December 31, 1998


Note 8 - Parent-only Condensed Financial Information (Continued)

     The  condensed  statement  of cash flows for the period  from May 18,  1998
     (inception) through December 31, 1998 (000s omitted) is as follows:
<TABLE>
     <S>                                                                        <C>
     Cash Flows from Operating Activities
          Net Loss                                                              $  (149)
          Adjustments to reconcile net loss to net cash from
               operating activities:
                    Equity in undistributed income of subsidiary                    110
                    Increase in receivable from subsidiary bank                    (229)
                    Increase in accounts payable                                     40
                                                                                -------
                         Net cash used in operating activities                     (228)

     Cash Flows from Investing Activities - Investment in common stock
           of bank subsidiary                                                    (8,497)

     Cash Flows from Financing Activities
          Proceeds from related party notes payable                                 415
          Repayment of related party notes payable                                 (415)
          Net Proceeds from public stock offering                                 8,756
                                                                                -------
               Net cash provided by financing activities                          8,756
                                                                                -------
     Net Increase in Cash and Cash Equivalents                                       31

     Cash and Cash Equivalents - May 18, 1998                                         -
                                                                                -------
     Cash and Cash Equivalents - December 31, 1998                              $    31
                                                                                =======
</TABLE>
Note 9 - Earnings per Share

     Earnings  (loss) per share data is the  amount of  earnings  (loss) for the
     period  available  to each  share of common  stock  outstanding  during the
     reporting period. All potential dilutive securities have been excluded from
     the computation because their effect would be antidilutive. The calculation
     of earnings  (loss) per share for the period from May 18, 1998  (inception)
     through December 31, 1998 is as follows:
<TABLE>
     <S>                                                                        <C>
     Net loss                                                                   $  (149)

     Weighted average number of shares outstanding for period                       155

     Net loss per common share                                                    (0.96)
</TABLE>

                                                                            A-15
<PAGE>
                             SHAREHOLDER INFORMATION


Notice of Annual Meeting

     The Company's Annual Meeting of Shareholders  will be held at 10:00 a.m. on
April 20, 1999,  at Deer Lake  Racquet  Club,  6167 White Lake Road,  Clarkston,
Michigan 48346.


Transfer Agent and Registrar

     Continental  Stock  Transfer & Trust Company  serves as transfer  agent and
registrar of the  Company's  Common  Stock.  Their  address is 2 Broadway,  19th
Floor, New York, New York 10004 (telephone 212-509- 4000).


Market Makers

     The  Company had two market  makers at December  31,  1998:  Roney  Capital
Markets and Hilliard Lyons.


                        EXECUTIVE OFFICERS AND DIRECTORS

Executive Officers:

         David T. Harrison, President and Chief Executive Officer of the Company
          and the Bank
         Bruce H. McIntyre, Secretary of the Company and the Bank
         James L. Richardson, Treasurer of the Company and Vice President and
          Controller of the Bank

Directors:

         Edwin L. Adler, Director of the Company and the Bank
         Louis D. Beer, Director of the Company and the Bank
         William J. Clark, Director of the Company and the Bank
         Charles L. Fortinberry, Director of the Company and the Bank
         David T. Harrison, Director of the Company and the Bank
         Bruce H. McIntyre, Director of the Company and the Bank
         Robert A. Olsen, Director of the Company and the Bank
         Ted J. Simon, Director of the Bank
         John H. Welker, Director of the Company and the Bank


::ODMA\PCDOCS\GRR\243572\1
<PAGE>
Exhibit 21
SUBSIDIARIES OF REGISTRANT

         Clarkston State Bank - 100% owned
         Incorporated as a Michigan Banking Corporation
         15 South Main Street
         Clarkston, Michigan 48346
<PAGE>
Exhibit 23
                          INDEPENDENT AUDITORS' CONSENT

Board of Directors
Clarkston Financial Corporation

We consent to the  incorporation by reference in the registration  statements on
Form S-8 (File No. 333-70297 and File No. 333-70299) of our report dated January
29, 1999, on our audit of the consolidated  financial  statements for the period
from May 18,  1998  (inception)  through  December  31,  1998,  which  report is
included in this Annual report on From 10-KSB.


March 25, 1999                                          /s/ PLANTE & MORAN, LLP
Troy, Michigan



::ODMA\PCDOCS\GRR\248685\1