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, 2000

                                       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 2000 were $3.5 million. 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 $7.875  as of March  21,  2001,  was
$5,392,634  (common  stock,  no par  value).  As of March 21,  2001,  there were
outstanding 1,026,012 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 May 8, 2001 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. The Bank
offers a broad array of deposit  products  and may also provide  customers  with
trust services through third-party service providers.

     The Company  completed an 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 December  31, 2000,  the Company had total  assets of $60.2  million,
total  deposits of $51.4  million,  approximately  3,888  deposit  accounts  and
shareholders' equity of $8.3 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.  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-known
customers or new  customers  with an  established  profitable  history.  In many
cases, risk is further
<PAGE>
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.  From  time to time the  Bank  originates
residential mortgage loans which are generally short-term with maturates of five
years or less.  The  Bank's  general  policy,  which is  subject  to  review  by
management  as a result of  changing  market  and  economic  conditions.  On the
mortgage the Bank makes  directly,  the Bank  maintains  the  servicing  rights.
Requests  for  long-term  fixed rate  mortgages  are  generally  referred  to an
unrelated  mortgage company for processing and sale. The Bank also offers equity
loans.

     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 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 makes 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 follow those limits and in certain
cases are more restrictive than those required by the regulators.

     Deposit  Services.  The Bank  offers a broad  range  of  deposit  services,
including interest bearing and non-interest  bearing checking 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.

     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  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 electronic and at-home banking

                                       3
<PAGE>
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.  The Bank
started to offer telephone banking service in April 2000.

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, 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,  2000,  the Company  had 12  full-time  and 8 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

     Selected Statistical Data for Clarkston Financial  Corporation is presented
for 2000 and 1999 in Management's Discussion and Analysis of Financial Condition
and Results of Operations.  Clarkston State Bank commenced operations on January
4, 1999,  and  therefore  the Guide 3  Statistical  Disclosure  by Bank  Holding
companies would not be meaningful for 1998 and is not included.

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<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  Office of Financial and Insurance  Services,
Department  of Financial  Institutions  ("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.

Recent Legislation

     Recently enacted federal legislation (the  Gramm-Leach-Bliley  Act of 1999)
eliminates many Federal and state law barriers to  affiliations  among banks and
other financial services providers. The legislation, which took effect March 11,
2000,  establishes a statutory framework pursuant to which full affiliations can
occur  between  banks  and  securities  firms,  insurance  companies,  and other
financial  companies.  The  legislation  provides some degree of  flexibility in
structuring  these new  affiliations,  although  certain  activities may only be
conducted  through a holding company  structure.  The legislation  preserves the
role of the Board of  Governors  of the Federal  Reserve  System as the umbrella
supervisor  for  holding  companies,  but  incorporates  a system of  functional
regulation pursuant to which the various Federal and State financial supervisors
will   continue  to  regulate   the   activities   traditionally   within  their
jurisdictions.  The legislation  specifies that banks may not participate in the
new affiliations unless they are  well-capitalized,  well-managed and maintain a
rating under the Community  Reinvestment Act of 1977 of at least  "satisfactory"
among all affiliates.

     At this time, the Company is unable to predict the impact this  legislation
may have on the Company.

                                       5
<PAGE>
The Company

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

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

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

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

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

                                       6
<PAGE>
the  activities in which the company to be acquired is engaged,  the size of the
company  to be  acquired  and the  financial  and  managerial  condition  of the
acquiring bank company.

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

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

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

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

     Dividends.  The Company is a  corporation  separate and  distinct  from the
Bank.  Most of the  Company's  revenues  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

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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.

     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

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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 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.

                                       9
<PAGE>
     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.

     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

                                       10
<PAGE>
principal  in any  activity  that is not  permitted  for a national  bank or its
subsidiary,  respectively,  unless the bank meets,  and  continues to meet,  its
minimum  regulatory  capital  requirements  and the FDIC determines the activity
would not pose a  significant  risk to the deposit  insurance  fund of which the
bank is a member.  Impermissible  investments and activities must be divested or
discontinued  within  certain  time  frames set by the FDIC in  accordance  with
federal law. These  restrictions  are not currently  expected to have a material
impact on the operations of the Bank.

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

     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

                                       11
<PAGE>
U.S.  territories or  protectorates,  and (iii) the consolidation of one or more
Michigan-chartered  banks and FDIC-insured  banks,  savings banks or savings and
loan  associations  located in other  states,  with the  resulting  organization
chartered by one of such other states.

ITEM 2:  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  $5,250 per
month. In addition,  the Bank is required to make payments for taxes,  insurance
and other operating expenses.

     The Bank leases space for its branch office in Farmer Jack's  grocery store
at 6555 Sashabaw Road, Clarkston, Michigan, at a rental rate of $2,750 per month
under a lease which runs until July 2002.

     In March 2001 the Company completed the purchase of commercial office space
at 6600  Highland  Road  in the  Airport  Office  Center  on  M-59 in  Waterford
Township. A new Clarkston State Bank branch office will occupy this facility.

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

ITEM 3:  Legal Proceedings.

     As the date hereof, there were no pending legal proceedings.


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

     No matters were  submitted  during the fourth  quarter of 2000 to a vote of
the Registrant's stockholders.

                                       12
<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 are as follows for the
periods indicated:
<TABLE>
                                                       High             Low
                                                       ----             ---
         <S>                                           <C>              <C>
         2000
         ----
         First Quarter . . . . . . . . . . . . . . . . $5.00            $4.32
         Second Quarter. . . . . . . . . . . . . . . . $5.00            $4.20
         Third Quarter . . . . . . . . . . . . . . . . $5.91            $4.43
         Fourth Quarter. . . . . . . . . . . . . . . . $7.00            $5.45

         1999
         ----
         First Quarter . . . . . . . . . . . . . . . . $9.09            $6.36
         Second Quarter. . . . . . . . . . . . . . . . $8.64            $6.48
         Third Quarter . . . . . . . . . . . . . . . . $7.50            $5.40
         Fourth Quarter. . . . . . . . . . . . . . . . $6.36            $4.55
</TABLE>
     These  quotations  reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commission and may not represent actual transactions. Quotations do
not include intra-day highs and lows. The prices have been adjusted to reflect a
10% share  dividend  paid in November  2000.  On December 31,  2000,  there were
approximately  154 owners of record and  approximately  675 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  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Registrant's   definitive  Proxy  Statement  dated  April  2,  2001,  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
April 2, 2001, 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.

                                       13
<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 under the caption  "Information  About Directors"
of the  Registrant's  definitive  Proxy  Statement  dated April 2, 2001, and the
information within that section is hereby  incorporated by reference.  There are
no family  relationships  between or among the directors and executive officers.
There are no  arrangements  or  understandings  between  or among the  executive
officers pursuant to which any of them was named an officer.

     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  under the captions  "Compensation  of Directors" and
"Executive  Compensation," in the Registrant's  definitive Proxy Statement dated
April 2, 2001, and the information within those sections is incorporated  herein
by reference.


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

     Information relating to security ownership of certain beneficial owners and
management is contained under the captions  "Security  Ownership of Management,"
"Voting  Securities  and  Principal  Holders  Thereof"  and  "Information  About
Directors" in the  Registrant's  definitive Proxy Statement dated April 2, 2001,
and the information within those sections is incorporated herein by reference.


ITEM 12:  Certain Relationships and Related Transactions.

     Information  relating to certain  relationships and related transactions is
contained  under  the  caption   "Transactions   Involving  Management"  in  the
Registrant's definitive Proxy Statement dated April 2, 2001, and the information
within that section is incorporated herein by reference.

                                       14
<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 Sheets as of December 31, 2000 and 1999
          Consolidated Statements of Operations for the year ended
               December 31, 2000 and 1999
          Consolidated Statements of Changes in Stockholders'
               Equity for the year ended December 31, 2000 and 1999
          Consolidated Statement of Cash Flows for the year ended
               December 31, 2000 and 1999
          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.



                                       15
<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 28, 2001.

                            CLARKSTON FINANCIAL CORPORATION



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



                            /s/ Terry R. Wolf
                            Terry R. Wolf
                            (Principal Accounting Officer)


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report has been signed  below on March 28,  2001,  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
Terry R. Wolf, 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 28, 2001
David T. Harrison, Principal Executive Officer and a Director


/s/ Edwin L. Adler                                                March 28, 2001
Edwin L. Adler, Chairman of the Board and a Director


____________________________________________                      March 28, 2001
Louis D. Beer, Director


/s/ Charles L. Fortinberry                                        March 28, 2001
Charles L. Fortinberry, Director




                                       16
<PAGE>


/s/ William J. Clark                                              March 28, 2001
William J. Clark, Director


___________________________________________                       March 28, 2001
Bruce H. McIntyre, Secretary and a Director


/s/ Robert A. Olsen                                               March 28, 2001
Robert A. Olsen, Director


____________________________________________                      March 28, 2001
John H. Welker, Director






                                       17
<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).

10.5      Lease  between  Clarkston  State  Bank and  Foodtown,  Inc.,
          incorporated  by  reference  to Exhibit 10 to the  Clarkston
          Financial  Corporation  Quarterly  Report on Form 10-QSB for
          the quarter ended June 30, 1999.


                                       18
<PAGE>
13        Appendix A of the Proxy Statement to shareholders  for the May 8, 2001
          shareholders  meeting.   This  exhibit,   except  for  those  portions
          expressly  incorporated by reference in this filing,  is furnished for
          the  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 16
          of the Annual Report on Form 10-KSB)






                                       19
<PAGE>
Exhibit 13

                                   APPENDIX A


Management's Discussion and Analysis of Financial Condition
 and Results of Operations...................................................A-2

Independent Auditors Report.................................................A-14

Consolidated Financial Statements

      Consolidated Balance Sheet............................................A-15

      Consolidated Statement of Operations..................................A-16

      Consolidated Statement of Changes in Shareholders' Equity.............A-17

      Consolidated Statement of Cash Flows..................................A-18

      Notes to Consolidated Financial Statements............................A-19




                                       A-1
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


     Management's  discussion and analysis of financial condition and results of
operations contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from those projected in such forward-looking statements.

     The  following  section  presents  additional  information  to  assess  the
financial  condition and results of operations of the  Corporation and the Bank.
This  section  should be read in  conjunction  with the  consolidated  financial
statements  and the  supplemental  financial  data  contained  elsewhere in this
Appendix.

Overview

     Clarkston Financial  Corporation (the "Company") is a Michigan  corporation
incorporated  on May 18,  1998.  The  Company is the bank  holding  company  for
Clarkston State Bank (the "Bank").  The Bank commenced  operations on January 4,
1999. The Bank is a Michigan chartered bank with depository  accounts insured by
the Federal  Deposit  Insurance  Corporation.  The Bank provides a full range of
commercial and consumer banking services,  primarily in Clarkston,  Michigan and
the surrounding market area primarily located in north Oakland County, Michigan.

     The Company's plan of operation has been to establish its  management  team
within  the  first  year of its  operations  and to grow  in a  prudent  manner,
primarily by providing prompt, quality service.  Management believes that it has
been  successful  in  establishing  a management  team that can  administer  the
Company's growth in such a manner.

     On April 6, 1999, the Bank entered into an agreement with The State Bank of
Fenton,   Michigan,  to  acquire  certain  assets  and  assume  certain  deposit
liabilities with respect to The State Bank's branch office located in the Farmer
Jack's  grocery  store  at  6555  Sashabaw  Road,  Clarkston,   Michigan.   This
transaction  was consummated on July 16, 1999 and added $1.8 million in deposits
to the  Bank's  totals.  A deposit  premium  of 9.24% of  deposits  (as  finally
adjusted) was paid to The State Bank for these deposits,  along with $17,000 for
various fixed assets and equipment. The Bank leases the branch space from Farmer
Jack's at a rental  rate of $2,750 per month under a lease which runs until July
2002.

Financial Condition

     Summary.  Total assets of the  Corporation  increased  to $60.2  million at
December 31,  2000,  from $33.3  million at December  31, 1999.  The increase in
assets is primarily  attributable  to the Bank  continuing  to attract  customer
deposits The year 2000 was the Company's second full year of operations, and the
number of deposit accounts increased to approximately 3,888 accounts at December
31, 2000 from 2,695 at  December  31,  1999.  Management  attributes  the strong
growth in deposits to quality  customer  service and the desire of  customers to
deal with a local bank.  The  Company  anticipates  that the Bank's  assets will
continue to increase  during  2001,  which will be the Bank's third full year of
operations.  However, management does not believe that the rate of increase will
be as rapid as it has been during the first two years of operation.

                                      A-2
<PAGE>
     Cash and Cash Equivalents. Cash and cash equivalents, which include federal
funds sold and short-term  investments,  increased $0.9 million,  or 38% to $3.4
million at December  31,  2000,  from $2.5  million at December  31,  1999.  The
increase was the result of the increase in deposits that did not get transferred
to the investment and loan portfolios in the last two weeks of 2000.

     Securities.  The Bank classifies as Held to Maturity most securities with a
maturity  date of two years or more from date of  purchase.  Securities  held to
maturity  were $21.3  million at December 31, 2000,  compared to $9.6 million at
December 31, 1999.  All other  securities  are classified as Available for Sale.
Securities  available for sale were $9.0 million at December 31, 2000,  compared
to $9.3  million  at  December  31,  1999.  The  increase  is the  result of the
investment of customer deposits that have been obtained since December 31, 1999.
The  securities  may be sold to meet the Bank's  liquidity  needs.  The  primary
objective of the Company's investing  activities is to provide for the safety of
the principal invested. Secondary considerations include earnings, liquidity and
overall  exposure to changes in interest rates.  Excluding those holdings of the
investment  portfolio in U.S. Treasury and U.S.  Government  Agency  Securities,
there were no  investments in securities of any one issuer which exceeded 10% of
shareholders' equity.
<TABLE>
                                                          Maturing (Dollars in Thousands) For Year Ended December 31, 2000

                                                 Due Within        One to Five       Five to Ten        After Ten
                                                  One Year            Years             Years            Years            Totals
                                                -------------     --------------    --------------  ---------------   --------------

                                        Gross
                               Amor-    Unreal-   Est.              Est.             Est.             Est.             Est.
                               tized    ized     Market   Avg.     Market   Avg.    Market   Avg.    Market   Avg.    Market   Avg.
                               Cost     (Loss)   Value    Yield    Value    Yield   Value    Yield   Value    Yield   Value    Yield
<S>                            <C>      <C>      <C>      <C>      <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
Available for Sale
  U.S.  Government
    Agencies                   $836     ($ 1)                               6.97%                      $ 89   6.99%     $835   6.97%
  Obligations of state and
    Political subdivisions                                          $746
                                975        1     $ 976    6.34%                                                          976   6.34%
  Corporate securities
    Backed by letters of
    Credit                    6,530        0     6,530    6.88%                                                        6,530   6.88%
Corporate                       647        1       150    6.00%      498    7.50%                                        648   7.15%
                               ----      ---     -----    -----   ------    -----                      ----   -----   ------   -----
  Total Available for Sale   $8,988      $ 1    $7,656    6.81%   $1,244    7.18%                      $ 89   6.99%   $8,789   6.95%

Hold To maturity;
   U.S. Government
    Agencies                $21,244     ($24)    $ 406    7.33   $10,118    6.88%   $2,816   7.81%   $7,880   7.36%  $21,220   7.18%
  Corporate                      98       (2)                         96    7.05%                                         96   7.05%
                                         ---     -----    ----   -------    -----   ------   -----   ------   -----  -------   -----
   Total Hold to Maturity   $21,342      (26)    $ 406    7.33   $10,214    6.88%   $2,816   7.81%   $7,880   7.36%  $21,316   7.17%
</TABLE>
<TABLE>
         Securities Available for Sale Portfolio (in thousands)

                                                                           Year Ended December 31
                                                                         2000                    1999
                                                                         ----                    ----
<S>                                                                   <C>                      <C>
U. S. Treasury and U.S. Government Agencies..................         $   836                   $1,313
Michigan municipal bonds.....................................             975                    1,198
Corporate....................................................           7,177                    6,805
                                                                      -------                  -------
                                                                       $8,988                  $ 9,316
                                                                      =======                  =======
</TABLE>
                                      A-3
<PAGE>
     The Loan  Portfolio.  The majority of loans are made to  businesses  in the
form of  commercial  loans and real estate  mortgages.  As of December  31, 2000
commercial  loans  account  for  approximately  63% of  the  Bank's  total  loan
portfolio, residential mortgages accounts for 15% of the portfolio, and consumer
loans account for 22% of the portfolio.
<TABLE>
         Loan Portfolio Composition (in thousands)
                                                                    Year Ended December 31
                                                                    ----------------------
                                                             2000                            1999
                                                             ----                            ----
                                                     Amount            %             Amount            %
<S>                                                  <C>             <C>            <C>              <C>
Commercial.............................              $16,100          63%           $   5,936         53%
Residential Real Estate................                3,955          15                2,529         22
Consumer...............................                5,707          22                2,798         25
                                                     -------        ----               ------       ----
     Total Loans.......................               25,762         100%              11,263        100%
                                                     -------        =====              ------       =====
Less:
   Allowance for Loan Losses...........                 (379)                            (140)
                                                     -------                          -------
Total Loans Receivable, Net............              $25,383                          $11,123
                                                     =======                          =======
</TABLE>

     Maturities  and  Sensitivities  of Loans to Changes in  Interest  Rates (in
     thousands of dollars)

     The  following  table  shows the amount of total  loans  outstanding  as of
December 31, 2000 which, based on remaining  scheduled  repayments of principal,
are due in the periods indicated.
<TABLE>
                                                                             Maturing
                                           ---------------------------------------------------------------------
                                                                 After one but
                                           Within one Year     Within five years    After five years       Total
                                           ---------------     -----------------    ----------------       -----
<S>                                        <C>                      <C>                 <C>              <C>
Commercial........................             $7,697               $  7,572            $   831          $16,100
Residential Real Estate...........                328                  2,810                817            3,955
Consumer .........................              1,184                  4,251                272            5,707
                                                -----                -------           --------          -------
      Totals......................             $9,209                 14,633             $1,920           25,762
                                               ------                -------           --------          -------
Allowance for Loan Losses.........                379                                                       (379)
                                                                                                         -------
Total Loans Receivable, Net.......             $8,830                $14,633             $1,920          $25,383
                                               =======               =======             ======          =======
</TABLE>
                                      A-4
<PAGE>
     Below is a schedule of the loan  amounts  maturing or  repricing  which are
classified according to their sensitivity to changes in interest rates.
<TABLE>
                                                                            Interest Sensitivity
                                                             -----------------------------------------------
                                                                         (in thousands of dollars)
                                                              Fixed Rate        Variable Rate         Total
                                                              ----------        -------------         -----
<S>                                                           <C>                  <C>               <C>
Due within 3 months.................................           $    30             $2,201            $2,231
Due after 3 months within 1 year....................               976              6,002             6,978
Due after one but within five years.................            11,068              3,565            14,633
Due after five years................................             1,920                  0             1,920
                                                               -------            -------           -------
Total...............................................           $13,994            $11,768           $25,762
Allowance for Loan Losses...........................                                                    379
                                                                                                    -------
Total Loans Receivable, Net.........................                                                $25,383
                                                                                                    =======
</TABLE>
     Nonperforming  Assets.  There are no nonperforming loans as of December 31,
2000. Management believes that the allowance for loan losses is adequate for the
lending  portfolio.  Loan  performance  is reviewed  regularly by external  loan
review specialists,  loan officers, and senior management. When reasonable doubt
exists  concerning  collectibility  of interest or  principal,  the loan will be
placed in nonaccrual status.  Any interest  previously accrued but not collected
at that time will be  reversed  and  charged  against  current  earnings.  As of
December 31, 2000 there were no other  material  interest  bearing  assets which
required  classification.  Management  is not  aware of any  recommendations  by
regulatory agencies, which, if implemented,  would have a material impact on the
Corporation's liquidity, capital or operations.

Loan Loss Experience (in thousands)

     The  following  is a summary of loan  balances at the end of the period and
their daily average balances,  changes in the allowance for possible loan losses
arising from loans charged off and recoveries on loans  previously  charged off,
and additions to the allowance which have been expensed.
<TABLE>
                                                                                December 31         December 31
                                                                                   2000                1999
                                                                                   ----                ----
<S>                                                                             <C>                 <C>
Loans:
   Average daily balance of loans for the year.......................           $ 18,040            $   4,707
   Amount of loans outstanding at end of period......................             25,762               11,263

Allowance for loan losses:
   Balance at beginning of year......................................                140                    0
   Additions to allowances charged to operations.....................                243                  142
   Net charge offs...................................................                  4                    2
                                                                                --------            ---------
        Balance at end of year.......................................           $    379            $     140
                                                                                ========            =========
Ratios:
   Net charge offs to loans outstanding at year-end..................               .02%                 .02%
   Allowance for loan losses to loans outstanding at year end........              1.47%                1.24%
</TABLE>

                                      A-5
<PAGE>
Allocation of the Allowance for Loan Losses

     The  allowance  for loan  losses as of  December  31,  2000,  was  $379,000
representing  approximately 1.47% of gross loans outstanding and at December 31,
1999, was $140,000 representing  approximately 1.24% of gross loans outstanding.
The Bank has not  experienced  any  material  credit  losses in the two years of
operations  ended December 31, 2000. The allowance for loan losses is maintained
at a level  management  feels is adequate to absorb losses  inherent in the loan
portfolio.  Management  prepares an evaluation  which is based upon a continuous
review of the Bank's loan portfolio,  the Bank's and industry's  historical loan
loss  experience,  known and  inherent  risks  included  in the loan  portfolio,
composition of loans,  growth of the portfolio and current economic  conditions.
The allowance for loan losses is analyzed quarterly by management.  In so doing,
management  assigns a portion of the  allowance to the entire  portfolio by loan
type and to specific  credits  that have been  identified  as problem  loans and
reviews past loss  experience.  The local economy and particular  concentrations
are considered, as well as a number of other factors.
<TABLE>
                                                                   Year Ended December 31
                                                                   ----------------------
                                                            2000                            1999
                                                 ---------------------------       -------------------------
                                                                  % of each                        % of each
                                                                   Category                        category
                                                 Allowance          to total       Allowance       to total
                                                  Amount            loans           Amount          loans
                                                 ---------        ----------       ---------      ---------
<S>                                              <C>              <C>              <C>             <C>
Commercial...................................      $237              .92%            $74              .66%
Real estate mortgages........................        58              .22              32              .28
Consumer.....................................        84              .33              34              .30
Unallocated..................................         0                0               0                0
                                                    ---             ----            ----            -----
     Total...................................       379             1.47%           $140             1.24%
                                                   ====             =====           ====            ======
</TABLE>
     The above allocations are not intended to imply limitations on usage of the
allowance. The entire allowance is available for any future loans without regard
to loan type.

     Deposits.  Deposits  are  gathered  from the  communities  the Bank serves.
Deposits  increased  $26.1  million  or 103% to $51.4  million at  December  31,
2000,compared  to $25.3  million at December 31, 1999.  This was  primarily as a
result of deposits being obtained from new customers of the Bank.

Average Daily Deposits (in thousands)

     The  following  table  sets  forth the  average  deposit  balances  and the
weighted average rates paid thereon.
<TABLE>
                                              Average for the Year            Average for the Year
                                              --------------------            --------------------
                                                    2000                            1999
                                                    ----                            ----
                                             Amount     Average Rate         Amount     Average Rate
                                             ------     ------------         ------     ------------
<S>                                        <C>             <C>              <C>           <C>
Noninterest bearing demand...........      $   5,150          0%            $  1,320         0%
MMDA/Savings.........................         10,371       4.04%               5,940      3.16%
Time.................................         19,910       6.24%               4,513      5.43%
                                           ---------       -----            --------      -----
   Total Deposits....................        $35,431       4.69%             $11,773      3.67%
</TABLE>

                                      A-6
<PAGE>
Maturity Distribution of Time Deposits of $100,000 Or More

     The following table summarizes time deposits in amounts of $100,000 or more
by time remaining until maturity as of December 31, 2000 and December 31, 1999:
<TABLE>

                                                               Year Ended               Year Ended
                                                           December 31, 2000        December 31, 1999
                                                                 Amount                   Amount
                                                                 ------                   ------
       <S>                                                      <C>                   <C>
       Three months or less........................             $  8,617                  $1,153
       Over 3 months through 1 year................               19,633                   2,484
       Over 1 year.................................                5,631                     202
                                                                --------                  ------
                                                                 $33,881                  $3,839
                                                                ========                  ======
</TABLE>
     The Bank operates in a very competitive  environment.  Management  monitors
rates at other  financial  institutions  in the area to ascertain that its rates
are  competitive  with the  market.  Management  also  attempts  to offer a wide
variety  of  products  to meets  the  needs of its  customers.  The Bank  offers
business  and  consumer  checking  accounts,  regular and money  market  savings
accounts, and certificates having many options in their terms.

     Premises and  Equipment.  Bank  premises  and  equipment  were  $437,000 at
December 31, 2000 and $337,000 at December 31, 1999.

     Accumulated   Deficit.  As  of  December  31,  2000,  the  Company  had  an
accumulated deficit of $335,000. The accumulated deficit is primarily the result
of  losses  incurred  in  starting  the  bank  and in the  first  two  years  of
operations.  The  Company  had net income of  $418,000  in 2000 and  accumulated
deficit of $753,000 as of December 31, 1999 of operations,  including the impact
of  provisions  for loan losses which  totaled  $243,000 in 2000 and $142,000 in
1999.


                                      A-7
<PAGE>
                              Results of Operations

     Summary of Results.  The  Company  earned a net profit of $418,000 in 2000,
which was the Company's  second full year of operations.  The Company incurred a
net loss of $604,000 in 1999, the Company's  first full year of operations.  The
retained  deficit  and 1999 net  losses  are  primarily  the  result of costs of
opening  the Bank's  office,  wages  paid to  employees,  and fees and  expenses
incurred  in  forming  the  Company  and  applying  for  regulatory   approvals.
Significant  ongoing  additions to loan loss  reserves also  contributed  to net
losses in 1999 as the Bank  increased its loan  portfolio.  Management  believes
that the expenditures made in 1998 and 1999 have created the  infrastructure and
laid the foundation for future growth and profitability in subsequent years.

Performance Ratios (in thousands, except per share data).
<TABLE>
                                                                              Year Ended December 31
                                                                              ----------------------
                                                                           2000                    1999
                                                                           ----                    ----
<S>                                                                       <C>                     <C>
Net Profit (loss)                                                           $418                  $(604)
  Weighted average number of shares outstanding                              943                     941
  Basic Profit (loss) per share                                            $ .44                  $(.64)

Earnings (Loss) ratios:
  Return on average assets.........................                        1.01%                  (3.03%)
  Return on average equity.........................                        5.36%                  (7.60%)
  Average equity to average assets.................                       18.10%                  39.90%
  Dividend payout ratio............................                            0                      0
</TABLE>




                                      A-8
<PAGE>
     Net Interest  Income.  The  following  schedule  presents the average daily
balances, interest income and interest expense and average rates earned and paid
for the Corporation's major categories of assets, liabilities, and stockholders'
equity for the periods indicated:
<TABLE>

                                                               2000                                   1999
                                                 -----------------------------------    ---------------------------------
                                                 Average                                Average
                                                 Balance      Interest    Yield/Cost    Balance    Interest    Yield/Cost
<S>                                              <C>          <C>         <C>           <C>        <C>         <C>
Assets:
   Short term investments                          2,017         126        6.25%         3,028        168        5.23%
Securities:
   Taxable                                        21,823       1,525        7.00%        10,297        575        5.58%
   Tax-exempt                                        290          21        7.15%           633         37        5.85%
   Loans                                          18,040       1,635        9.17%         4,707        401        8.52%
   Total earning assets/total interest income     42,170       3,307        7.84%        18,665      1,181        6.26%
   Cash and due from banks                         1,083                                    601
   Unrealized Gain (Loss)                            (14)                                   (22)
   All other assets                                  780                                    563
   Allowance for loan loss                          (208)                                   (60)
                                                 -------      ------        -----       -------     ------       ------
      Total assets                                43,811       3,307        7.55%        19,950      1,181        5.92%
Liabilities and Stockholders' Equity
Interest bearing deposits:
   MMDA,  Savings/NOW accounts                    10,371         419        4.04%         5,940        187        3.15%
   Time                                           19,910       1,242        6.24%         4,513        245        5.43%
   Fed Funds Purchased
   Other Borrowed Money
   Total interest bearing
    liabilities/total interest expense            30,281       1,661        5.49%        10,453        432        4.13%
   Noninterest bearing deposits                    5,150                                  1,320
      All other liabilities                          430                                    257
Stockholders' Equity:
   Unrealized Holding Gain (Loss)                      0                                    (34)
   Common Stock, Surplus, Retained
    Earnings                                       7,950                                  7,954
   Total liabilities and stockholders' equity     43,811       1,661        3.79%        19,950        432        2.17%
   Interest spread                                             1,646                                   749
   Net interest income -FTE                                    1,646                                   749
   Net Interest Margin as a Percentage of
     Average Earning Assets-FTE                   42,170       1,646        3.90%        18,846        749        3.97%
</TABLE>


                                      A-9
<PAGE>
     Rate/Volume  Analysis  of  Net  Interest  Income.  The  following  schedule
presents the dollar  amount of changes in interest  income and interest  expense
for  major  components  of  earning  assets  and  interest-bearing  liabilities,
distinguishing  between changes related to outstanding  balances and changes due
to interest rates.
<TABLE>

Years Ended December 31,                             2000 vs 1999
------------------------           ---------------------------------------------
(in thousands)                               Increase (Decrease) Due to


Interest Income                      Volume       Rate          Mix       Total
---------------                      ------       ----          ---       -----
<S>                                  <C>         <C>          <C>        <C>
Taxable Securities                   $   643      $146         $161      $   950
Tax-Exempt  Securities                   (20)        8           (4)         (16)
Loans                                  1,136        31           67        1,214
Short Term  Investments                  (53)       31          (20)         (42)
                                      ------     -----       ------      -------

Total Interest Income                  1,706       216          204        2,126
                                      ------     -----       ------      -------
Interest Expenses
NOWs, MMDAs and Savings                 $140     $  53         $ 39       $  232
Time Deposits and IRAs                   836        37          124          997
Fed Funds Borrowed                         0         0            0            0
Other   Borrowings                         0         0            0            0
                                       -----     -----        -----       ------
Total Interest Expense                   976        90          163        1,229
                                       -----     -----        -----       ------
Net Interest Income                    $ 730     $ 126        $  41       $  897
                                       =====     =====        =====       ======
</TABLE>
Composition of Average Earning Assets and Interest Paying Liabilities
<TABLE>
                                                                    Year Ended                    Year Ended
                                                                December 31, 2000             December 31, 1999
<S>                                                            <C>              <C>          <C>            <C>
As a percent of average earning assets
  Loans.............................................           $ 18,040          42.8%        $ 4,707         25.0%
  Other earning assets..............................             24,130          57.2%         14,138         75.0%
                                                                 ------         ------       --------         -----
     Average earning assets.........................           $ 42,170         100.0%       $ 18,845        100.0%
                                                               ========         ======       ========        ======

As a percent of average interest bearing liabilities
  Savings and DDA accounts..........................             10,371          34.2%         5,940          56.8%
  Time deposits.....................................             19,910          65.8%         4,513          43.2%
  Other borrowings..................................                  0             0%             0             0%
                                                                -------         ------       -------         ------
     Average interest bearing liabilities...........            $30,281         100.0%       $10,453         100.0%
                                                                =======         ======       =======         ======

Earning asset ratio.................................              96.8%                        95.1%
</TABLE>
     Allowance for Loan Losses. The Corporation had an allowance for loan losses
of  approximately  1.47% and 1.24% of total loans at December 31, 2000 and 1999,
respectively. The provision for loan losses for the year ended December 31, 2000
and 1999 was $379,000 and $140,000,  respectively. This amount was provided as a
result of the  increase in the total loan  portfolio.  Management  considers  it
prudent during the

                                      A-10
<PAGE>
first  years of  operations  to  provide  for loan  losses  at a level  which is
consistent  with  levels  maintained  by banks  with  similar  loan  portfolios.
Management  will  continue to monitor its loan loss  performance  and adjust its
loan loss  reserve  to more  closely  align  itself to its own  history  of loss
experience.

     Non-Interest  Income.  Non-interest  income for the year ended December 31,
2000 and 1999 were $266,000 and $45,000,  respectively,  consisting primarily of
service fees on loan and deposit accounts.

     Non-Interest Expense.  Non-interest expense for the year ended December 31,
2000,  was $1.4  million and  December  31,  1999,  was $1.3  million.  The main
components  of  non-interest  expense were  salaries and benefits  which totaled
$658,000  for the year ended  December  31, 2000 and $553,000 for the year ended
December  31,  1999.  Other  significant   components  of  non-interest  expense
consisted of occupancy and equipment  expenses,  data processing fees,  supplies
and marketing expenses.

                         Liquidity and Capital Resources

     The  Company  obtained  its  initial  equity  capital in an initial  public
offering of its common stock in November,  1998. The Company's plan of operation
for the next twelve  months does not  contemplate  the need to raise  additional
capital  during that period.  Management  believes that its current  capital and
liquidity will provide the Company with adequate capital to support its expected
level of deposit  and loan  growth and to  otherwise  meet its cash and  capital
requirements for at least the next two or three years.
<TABLE>
         Capital Resources at December 31, 2000 (in thousands)
                                                            Tier 1
                                                           Leverage            Tier 1             Total Risk-Based
                                                            Ratio           Capital Ratio          Capital Ratio
                                                            -----           -------------          -------------
<S>                                                          <C>              <C>                     <C>
Minimum regulatory requirement for
  Capital adequacy.....................                       4.0%              4.0%                   8.0%
Well capitalized regulatory level......                       5.0%              6.0%                  10.0%
Consolidated...........................                      15.0%             20.3%                  16.3%
Bank...................................                      15.0%             20.3%                  16.3%
</TABLE>
The following table shows the dollar amounts by which the Company's  capital (on
a consolidated basis) exceeds current regulatory requirements on a dollar amount
basis:
<TABLE>
                                                                                                          Total
                                                                   Tier 1             Tier 1           Risk-Based
                                                                  Leverage            Capital            Capital
                                                                             (in thousands of dollars)
<S>                                                                <C>                <C>                <C>
Capital balances at December 31, 2000
   Required regulatory capital.........................            $2,409             $2,409             $4,818
   Capital in excess of regulatory minimums............             5,716              5,716              3,686
                                                                   ------              -----              -----
Actual capital balances................................            $8,125             $8,125             $8,504
                                                                   ======             ======             ======
</TABLE>
     The  Company's  sources of liquidity  include loan  payments by  borrowers,
maturity  and sales of  securities  available  for sale,  growth of deposits and
deposit  equivalents,  federal  funds sold,  and the  issuance of common  stock.
Liquidity  management involves the ability to meet the cash flow requirements of
the Company's  customers.  These  customers may be either  borrowers with credit
needs or depositors wanting to withdraw funds.

                                      A-11
<PAGE>
               Asset Liability Management and Market Risk Analysis

     Asset liability management aids the Company in maintaining  liquidity while
maintaining  a balance  between  interest  earning  assets and interest  bearing
liabilities.  Management of interest rate  sensitivity  attempts to avoid widely
varying net  interest  margins and to achieve  consistent  net  interest  income
through periods of changing  interest rates.  Management  monitors the Company's
exposure to interest rate changes using a GAP analysis.
<TABLE>
Asset/Liability Gap Position For the Year Ended December 31, 2000  (in thousands)

                                                  1 to 3          4 to 12          1 to 5        Over 5
                                                   Month           Months          Years          Years        Total
                                                   -----           ------          -----          -----        -----
<S>                                                <C>               <C>            <C>          <C>          <C>
Interest-Earning Assets
   Federal Funds sold                              $ 2,550           $   0         $     0      $     0       $ 2,550
   Investment securities                             8,989             405          10,249       10,662        30,305
   Loans - by maturity                               9,303           1,987          14,472            0        25,762
                                                   -------          ------         -------      -------       -------
   Total interest-earning assets                    20,842           2,392          24,721       10,662        58,617

Interest Bearing Liabilities
   DDA and Money Market                              1,940           3,056           6,173          588        11,757
   Savings accounts                                    348             870           4,348          231         5,797
   Certificates of deposit                           8,616          19,633           5,631            0        33,880
                                                   -------          ------          ------         ----        ------
   Total interest-bearing Liabilities               10,904          23,559          16,152          819        51,434

   Rate sensitivity gap and ratios:
      Gap for period                                 9,938         (21,167)          8,569        9,843         7,183
      Cumulative gap                                 9,938         (11,229)         (2,660)       7,183         7,183
   Percentage of cumulative gap
      to total assets                               16.50%         (18.65%)         (4.42%)      11.93%        11.93%
</TABLE>
     Other  variables  besides  interest  rate changes may have an impact on the
financial  condition of the Bank  including,  but not limited to,  growth of the
company, structure of the balance sheet, and economic and competitive factors.

                                      A-12
<PAGE>
                           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-13
<PAGE>
                          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, 2000 and 1999 and the
related consolidated statements of operations,  changes in stockholders' equity,
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Corporation's management. Our responsibility is to
express an  opinion  on these  consolidated  financial  statements  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Clarkston Financial  Corporation and subsidiary as of December 31, 2000 and 1999
and the  consolidated  results of their  operations and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.


                                   /s/ Plante & Moran, LLP


Auburn Hills, Michigan
January 29, 2001


                                      A-14
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                                      Consolidated Balance Sheet
                                                                  (000s omitted)
<TABLE>
                                                                             December 31
                                                                        ---------------------
                                                                          2000         1999
                                                                        --------     --------
                                                         Assets
       <S>                                                              <C>          <C>
       Cash and cash equivalents:
         Cash and due from banks                                            $862         $867
         Federal funds sold                                                2,550        1,600
                                                                        --------     --------
                Total cash and cash equivalents                            3,412        2,467

       Securities held to maturity (Note 2)                               21,342        9,604
       Securities available for sale (Note 2)                              8,989        9,294

       Loans (Note 3)                                                     25,762       11,263
       Allowance for possible loan losses (Note 4)                          (379)        (140)
                                                                        --------     --------
                Net loans                                                 25,383       11,123

       Bank premises and equipment (Note 5)                                  282          337
       Interest receivable                                                   457          256
       Deferred tax asset                                                    190            -
       Other assets                                                          165          185
                                                                        --------     --------
                Total assets                                             $60,220      $33,266
                                                                        ========     ========
                                 Liabilities and Stockholders' Equity

       Liabilities
         Deposits:
           Noninterest-bearing demand deposits                            $6,598       $2,671
           Interest-bearing (Note 6)                                      44,810       22,595
                                                                        --------     --------
                Total deposits                                            51,408       25,266

         Interest payable and other liabilities                              534          163
                                                                        --------     --------
                Total liabilities                                         51,942       25,429

       Stockholders' Equity
         Common stock - No par value:
           Authorized - 10,000,000 shares
           Issued and outstanding - 1,026,012 shares at December 31, 2000
             and 1999                                                      4,306        4,306
         Paid-in capital                                                   4,306        4,306
         Accumulated deficit                                                (335)        (753)
         Accumulated other comprehensive income (loss)                         1          (22)
                                                                        --------     --------
                Total stockholders' equity                                 8,278        7,837
                                                                        --------     --------
                Total liabilities and stockholders' equity               $60,220      $33,266
                                                                        ========     ========
</TABLE>
See Notes to Consolidated Financial Statements.

                                      A-15
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                            Consolidated Statement of Operations
                                           (000s omitted, except per share data)
<TABLE>
                                                                        Year Ended December 31
                                                                        ----------------------
                                                                          2000         1999
                                                                        --------     --------
         <S>                                                            <C>          <C>
         Interest Income
           Interest and fees on loans                                     $1,652         $401
           Interest on investment securities:
             Taxable securities                                            1,472          575
             Tax-exempt securities                                            73           37
           Interest on federal funds sold                                    126          168
                                                                        --------     --------
                Total interest income                                      3,323        1,181

         Interest Expense - Deposits                                       1,661          432
                                                                        --------     --------
         Net Interest Income                                               1,662          749

         Provision for Possible Loan Losses (Note 4)                         243          142
                                                                        --------     --------
         Net Interest Income After Provision for Possible Loan Losses      1,419          607

         Other Operating Income (Loss)
           Service fees on loan and deposit accounts                         227           81
           Loss on sale of securities                                         (9)         (48)
           Other                                                               7           12
                                                                        --------     --------
                Total other operating income                                 225           45

         Other Operating Expenses
           Salaries and employee benefits                                    658          553
           Occupancy                                                         271          219
           Advertising                                                       124          127
           Outside processing                                                100           98
           Professional fees                                                  99           72
           Supplies                                                           27           35
           Other                                                             137          152
                                                                        --------     --------
                Total other operating expenses                             1,416        1,256

         Income (Loss) - Before income taxes                                 228         (604)

         Income Taxes (Benefit) (Note 7)                                    (190)           -
                                                                        --------     --------
         Net Income (Loss)                                                  $418        $(604)
                                                                        ========     ========
         Basic and Fully Diluted Income (Loss) per
         Share of Common Stock
         (Note 14)                                                         $0.41       $(0.58)
                                                                        ========     ========
</TABLE>
See Notes to Consolidated Financial Statements.

                                      A-16
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                       Consolidated Statement of Changes in Stockholders' Equity
                                           (000s omitted, except per share data)
<TABLE>
                                                                                                Accumulated
                                                                                                   Other            Total
                                                       Common        Paid-in     Accumulated    Comprehensive   Stockholders'
                                                       Stock         Capital       Deficit      Income (Loss)      Equity
                                                       -------       -------     ------------   -------------   -------------
         <S>                                           <C>           <C>           <C>            <C>           <C>
         Balance - January 1, 1999                     $ 4,378       $ 4,378       $ (149)        $     -       $ 8,607

         Purchase of outstanding common stock              (72)          (72)           -               -          (144)

         Comprehensive loss:
           Net loss                                          -             -         (604)              -          (604)
           Change in unrealized loss on securities
             available for sale                              -             -            -             (22)          (22)
                                                                                                                 ------
                Net comprehensive loss                                                                             (626)
                                                        ------        ------        -----           -----        ------
         Balance - December 31, 1999                     4,306         4,306         (753)            (22)        7,837

         Comprehensive income:
           Net income                                        -             -          418               -           418
           Stock split (Note 11)                             -             -            -               -             -
           Change in unrealized loss on securities
            available for sale                               -             -            -              23            23
                                                                                                                 ------
                Net comprehensive income                                                                            441
                                                       -------       -------       ------         -------       -------
          Balance - December 31, 2000                  $ 4,306       $ 4,306       $ (335)        $     1       $ 8,278
                                                       =======       =======       ======         =======       =======
</TABLE>
Book  value  per  share is  $8.07  and  $7.64 at  December  31,  2000 and  1999,
respectively.


See Notes to Consolidated Financial Statements.

                                      A-17
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                            Consolidated Statement of Cash Flows
                                                                  (000s omitted)
<TABLE>
                                                                       Year Ended December 31
                                                                       ----------------------
                                                                         2000          1999
                                                                       ---------     --------
         <S>                                                            <C>          <C>
         Cash Flows from Operating Activities
           Net income (loss)                                                $418        $(604)
           Adjustments to reconcile net income (loss) to net
            cash from operating activities:
           Depreciation and amortization                                     111           91
           Provision for loan losses                                         243          142
           Accretion of securities                                           (29)           -
           Deferred taxes                                                   (190)           -
           Loss on sale of available-for-sale securities                       9           48
           Increase in interest receivable                                  (201)        (256)
           Increase in other assets                                            3         (195)
           Increase in interest payable and  other liabilities               371           37
                                                                        --------     --------
                Net cash provided by (used in) operating activities          735         (737)

         Cash Flows from Investing Activities
           Purchase of securities available for sale                      (8,356)     (18,663)
           Proceeds from sale of available-for-sale securities             8,675        6,742
           Proceeds from maturities of held-to-maturity securities         2,113        2,557
           Purchase of held-to-maturity investment securities            (13,822)      (9,604)
           Premises and equipment expenditures                               (39)        (127)
           Net increase in loans                                         (14,503)     (11,265)
                                                                        --------     --------
                Net cash used in investing activities                    (25,932)     (30,360)

         Cash Flows from Financing Activities
           Net increase in time deposits                                   3,693       11,406
           Net increase in other deposits                                 22,449       13,860
           Purchase of outstanding common stock                                -         (144)
                                                                        --------     --------
                Net cash provided by financing activities                 26,142       25,122

         Net Increase (Decrease) in Cash and Cash Equivalents                945       (5,975)

         Cash and Cash Equivalents - Beginning of year                     2,467        8,442
                                                                        --------     --------
         Cash and Cash Equivalents - End of year                          $3,412       $2,467
                                                                        ========     ========
         Supplemental Disclosure of Cash Flow
          Information - Cash paid for
           Interest                                                       $1,471         $354
           Taxes                                                               -            -
</TABLE>
See Notes to Consolidated Financial Statements.

                                      A-18
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999



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  to Michigan  communities  in
     Oakland County. Banking operations commenced on January 4, 1999.

     Securities  -   Held-to-maturity   securities  are  those  securities  that
     management  has the  ability  and  positive  intent  to  hold to  maturity.
     Held-to-maturity securities are recorded at cost, adjusted for amortization
     of premium and accretion of discount.

     Securities  classified as available for sale are securities  management had
     identified  that may be sold in the  future to meet the  Bank's  investment
     objectives of quality,  liquidity and yield and to avoid significant market
     value  deterioration.  Available-for-sale  securities  are recorded at fair
     value with unrealized gains and losses, net of income taxes,  reported as a
     component of other comprehensive income in stockholders' equity.

     Gains or losses on the sale of securities are computed on the adjusted cost
     of the specific security.

     Loan  Interest  and  Fee  Income  - Loans  are  generally  reported  at the
     principal amount  outstanding,  net of unearned income.  Nonrefundable loan
     origination  and certain  direct loan  origination  costs are  deferred and
     included  in interest  income over the term of the related  loan as a yield
     adjustment.

                                      A-19
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 1 - Summary of Significant Accounting Policies (Continued)

     Interest on loans is accrued and credited to income based on the  principal
     amount outstanding.  The accrual of interest on loans is discontinued when,
     in the opinion of management,  there is an indication that the borrower may
     be unable to meet  payments as they become due.  Upon such  discontinuance,
     all unpaid  interest  accrued  during the current  year is reversed and all
     other  unpaid  interest is charged to allowance  for possible  loan losses.
     Interest accruals are generally  resumed when all delinquent  principal and
     interest  have been brought  current or the loan becomes both  well-secured
     and in the process of collection.

     Allowance for Possible Loan Losses - The allowance for possible loan losses
     is maintained at a level  considered by management to be adequate to absorb
     losses inherent in existing loans and loan commitments. The adequacy of the
     allowance is based on evaluations that take into consideration such factors
     as  prior  loss  experience,  changes  in  the  nature  and  volume  of the
     portfolio,   overall  portfolio  quality,  loan  concentrations,   specific
     impaired or problem  loans and  commitments,  and  current and  anticipated
     economic conditions that may affect the borrower's ability to pay.

     A portion of the total  allowance  for loan  losses is related to  impaired
     loans.  A loan is impaired  when it is probable  that the creditor  will be
     unable to collect all principal  and interest  amounts due according to the
     established  terms of the loan  agreement.  Loans that have been  placed on
     nonaccrual  status or  renegotiated  in a troubled debt  restructuring  are
     considered  to be impaired.  The  allowance for loan losses for an impaired
     loan is recorded at the amount by which the outstanding  recorded principal
     balance exceeds the fair value of the collateral and available cash flow on
     the  impaired  loan.  For a  loan  that  is not  collateral-dependent,  the
     allowance  for  loan  losses  is  recorded  at  the  amount  by  which  the
     outstanding recorded principal balance exceeds the current best estimate of
     the future  cash  flows on the loan,  discounted  at the  loan's  effective
     interest rate.

     Premises and Equipment - Premises and  equipment  are stated at cost,  less
     accumulated  depreciation and amortization.  Depreciation,  computed on the
     straight-line  method,  is charged to operations over the estimated  useful
     lives of the  properties.  Leasehold  improvements  are amortized  over the
     terms of their  respective  leases  or the  estimated  useful  lives of the
     improvements, whichever is shorter.

                                      A-20
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999



Note 1 - Summary of Significant Accounting Policies (Continued)

     Intangible Assets - Intangible assets totaling $182,000 consist entirely of
     deposit intangibles acquired in a branch acquisition completed during 1999.
     Amortization  is  calculated  on a  straight-line  basis over the estimated
     asset life of eight years.

     Earnings  per Share - Basic  earnings  per share are based on the  weighted
     average  number of shares  outstanding  during each period.  Fully  diluted
     earnings per share are based on the weighted  average  shares  outstanding,
     assuming the exercise of the dilutive stock options. All potential dilutive
     securities have been excluded from the computation in 2000 and 1999 because
     their effect would be antidilutive.

     Book Value per Share - Book value per share represents total  stockholders'
     equity divided by the total number of shares outstanding at the end of each
     period.

     Stock Options - The  Corporation  has two stock option plans (see Note 10).
     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.

     Other Comprehensive  Income - Accounting  principles generally require that
     recognized revenue,  expenses, gains, and losses be included in net income.
     Certain  changes in assets and  liabilities,  however,  such as  unrealized
     gains and losses on available-for-sale securities, are reported as a direct
     adjustment to the equity  section of the balance sheet.  Such items,  along
     with net income,  are considered  components of  comprehensive  income.  At
     December 31, 2000 and 1999, accumulated other comprehensive income consists
     solely of unrealized gains (losses) on available-for-sale securities.

     Derivative  Instruments  and Hedging  Activities  - Statement  of Financial
     Accounting  Standards No. 133,  Accounting for Derivative  Instruments  and
     Hedging  Activities ("SFAS 133"), was adopted by the Bank effective for the
     year 2000.  SFAS 133 requires all derivative  instruments to be recorded on
     the balance  sheet at  estimated  fair value.  Changes in the fair value of
     derivative  instruments  are to be recorded  each period  either

                                      A-21
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


     in current earnings or other comprehensive  income,  depending on whether a
     derivative is designated as part of a hedge  transaction  and, if it is, on
     the type of hedge  transaction.  Adoption  of SFAS 133 had no effect on the
     consolidated financial position or results of operations.

     Recent  Accounting  Pronouncements  - In  November  2000,  the FASB  issued
     Statement  No. 140,  Accounting  for  Transfers  and Servicing of Financial
     Assets and  Extinguishments  of  Liabilities  ("SFAS 140").  It revises the
     standards  for  accounting  for  securitizations  and  other  transfers  of
     financial  assets and  collateral  and requires  certain  disclosures.  The
     impact  of  SFAS  140 as of  December  31,  2000  was not  material  to the
     consolidated financial statements.

     Reclassifications  - Certain prior year amounts have been  reclassified  to
     conform to current year presentation.

                                      A-22
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 2 - Securities

     The amortized cost and estimated  market value of securities are as follows
     at December 31, 2000 and 1999 (000s omitted):
<TABLE>
                                                                                   2000
                                                            -----------------------------------------------------
                                                                             Gross       Gross
                                                             Amortized     Unrealized  Unrealized     Estimated
                                                                Cost          Gains      Losses      Market Value
                                                            ----------     ----------  ----------    ------------
<S>                                                           <C>            <C>         <C>         <C>
Held-to-maturity securities:
  U.S. Treasury securities and obligations of
    U.S. government corporations and agencies                 $ 21,244       $   71      $   95      $ 21,220
  Corporate securities                                              98            -           2            96
                                                              --------       ------      ------      --------
                Total                                         $ 21,342       $   71      $   97      $ 21,316
                                                              ========       ======      ======      ========
Available-for-sale securities:
  U.S. Treasury securities and obligations of
    U.S. government corporations and agencies                 $    836       $    2      $    3      $    835
  Obligations of state and political subdivisions                  975            2           1           976
  Corporate securities backed by letters of
    credit                                                       6,530            -           -         6,530
  Corporate securities                                             647            1           -           648
                                                              --------       ------      ------       -------
                Total                                         $  8,988       $    5      $    4       $ 8,989
                                                              ========       ======      ======       =======
</TABLE>

                                      A-23
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 2 - Securities (Continued)
<TABLE>
                                                                                     1999
                                                             ----------------------------------------------------
                                                                              Gross       Gross
                                                             Amortized      Unrealized   Unrealized    Estimated
                                                                Cost          Gains       Losses     Market Value
                                                              --------      ----------   ----------  ------------
<S>                                                           <C>            <C>          <C>         <C>
Held-to-maturity securities:
  U.S. Treasury securities and obligations of
    U.S. government corporations and agencies                 $ 9,507        $    -       $   91      $ 9,416
  Corporate securities                                             97             -            3           94
                                                              -------        ------       ------      -------
                Total                                         $ 9,604        $    -       $   94      $ 9,510
                                                              =======        ======       ======      =======
Available-for-sale securities:
  U.S. Treasury securities and obligations of
    U.S. government corporations and agencies                 $ 1,313        $    -       $    2      $ 1,311
  Obligations of state and political subdivisions               1,198             -           10        1,188
  Corporate securities backed by letters of
    credit                                                      6,130             -            -        6,130
  Corporate securities                                            675             -           10          665
                                                              -------        ------       ------      -------
                Total                                         $ 9,316        $    -       $   22      $ 9,294
                                                              =======        ======       ======      =======
</TABLE>
     The  amortized  cost  and  estimated   market  value  of   held-to-maturity
     securities at December 31, 2000, by contractual maturity,  are shown below.
     Expected maturities will differ from contractual maturities because issuers
     may have the right to call or prepay  obligations  with or without  call or
     prepayment penalties (000s omitted):
<TABLE>
                                                    Held to Maturity              Available for Sale
                                              ---------------------------      -------------------------
                                              Amortized       Estimated        Amortized     Estimated
                                                Cost         Market Value        Cost       Market Value
                                              ----------     ------------      ----------   ------------
<S>                                           <C>              <C>              <C>           <C>
Due in one year or less                       $    405         $    406         $ 7,655       $ 7,656
Due in one year through five years              10,247           10,214           1,244         1,244
Due after five years through ten years           2,797            2,816               -             -
Due after ten years                              7,893            7,880              89            89
                                              --------         --------         -------       -------
Total                                         $ 21,342         $ 21,316         $ 8,988       $ 8,989
                                              ========         ========         =======       =======
</TABLE>
                                      A-24
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

Note 2 - Securities (Continued)

     Securities  having a carrying value of $6,772,000  and  $1,060,000  (market
     value of $6,726,000 and  $1,052,000)  were pledged at December 31, 2000 and
     1999,  respectively,  to secure public deposits,  repurchase agreements and
     for other purposes required by law.

     Proceeds from the sale of available-for-sale securities were $8,675,000 and
     $6,742,000 in 2000 and 1999, respectively. Gross gains of $1,000 and $0 and
     gross losses of $10,000 and $48,000 were  recognized on those sales in 2000
     and 1999, respectively.

Note 3 - Loans

     Major  categories  of loans  included in the portfolio at December 31, 2000
     and 1999 are as follows (000s omitted):
<TABLE>
                                           2000            1999
                                        --------         ---------
          <S>                           <C>              <C>
          Commercial                    $ 16,100          $  5,936
          Residential mortgage             3,955             2,529
          Consumer                         5,707             2,798
                                        --------          --------
          Total                         $ 25,762          $ 11,263
                                        ========          ========
</TABLE>
     Certain  directors  of  the  Corporation  and  the  Bank,  including  their
     associates,  were loan  customers  of the  subsidiary  bank during 2000 and
     1999.  Such loans were made in the  ordinary  course of business and do not
     involve more than a normal risk of  collectibility.  The  outstanding  loan
     balance for these persons at December 31, 2000 and 1999 totaled  $1,308,000
     and  $1,146,000,  respectively.  During 2000,  $1,041,000 of new loans were
     made and repayments  totaled  $879,000.  The total unused  commitments  for
     these loans totaled $1,146,000 at December 31, 2000.

                                      A-25
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999



Note 3 - Loans (Continued)

     Final  loan  maturities  and  rate  sensitivity  of the loan  portfolio  at
     December 31, 2000 are as follows (000s omitted):
<TABLE>
                                    Within One       One to Five    After Five
                                       Year             Years         Years        Total
                                     -------          --------       -------      --------
<S>                                  <C>              <C>            <C>          <C>
Commercial                           $ 7,697          $  7,572       $   831      $ 16,100
Mortgage                                 328             2,810           817         3,955
Consumer                               1,184             4,251           272         5,707
                                     -------          --------       -------      --------
Total                                $ 9,209          $ 14,633       $ 1,920      $ 25,762
                                     =======          ========       =======      ========
Loans at fixed interest rates        $ 1,006          $ 11,068       $ 1,920      $ 13,994
Loans at variable interest rates       8,203             3,565            -         11,768
                                     -------          --------       -------      --------
Total                                $ 9,209          $ 14,633       $ 1,920      $ 25,762
                                     =======          ========       =======      ========
</TABLE>

Note 4 - Allowance for Possible Loan Losses

     A summary of the activity in the  allowance  for possible loan losses (ALL)
     is as follows (000s omitted):
<TABLE>
                                          2000         1999
                                         ------       ------
<S>                                      <C>          <C>
Balance - Beginning of year              $  140       $    -

Provision charged to operations             243          142
Loan losses                                 (10)          (2)
Loan loss recoveries                          6            -
                                         ------       ------
Balance - End of year                    $  379       $  140
                                         ======       ======
As a percent of total loans               1.47%        1.24%
                                         ======       ======
</TABLE>
     The  Bank  considers  all  nonaccrual  and  reduced-rate  loans  (with  the
     exception of  residential  mortgages  and  consumer  loans) to be impaired.
     There are no such loans outstanding as of December 31, 2000.

                                      A-26
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 5 - Bank Premises and Equipment

     The  following is a summary of Bank  premises and  equipment  for the years
     ended December 31, 2000 and 1999 (000s omitted):
<TABLE>
                                         2000         1999
                                        -----        -----
<S>                                     <C>          <C>
Building improvements                   $  69        $  68
Furniture and equipment                   372          351
Additions in process                       17           -
                                        -----        -----
Total Bank premises and equipment         458          419

Less accumulated depreciation             176           82
                                        -----        -----
Net carrying amount                     $ 282        $ 337
                                        =====        =====
</TABLE>

Note 6 - Deposits

     The following is a summary of interest-bearing deposit accounts at December
     31, 2000 and 1999 (000s omitted):
<TABLE>
                                        2000               1999
                                      --------           --------
<S>                                   <C>                <C>
Interest checking                      $ 1,635            $ 3,111
Savings                                  5,796              6,170
Money market                             3,524              1,908
Time:
 $100,000 and over                      15,480              3,839
 Under $100,000                         18,375              7,567
                                      --------           --------
Total interest-bearing deposits       $ 44,810           $ 22,595
                                      ========           ========
</TABLE>

     The remaining maturities of certificates of deposit outstanding at December
     31, 2000 are as follows (000s omitted):
<TABLE>
                      Under             $100,000
                    $100,000            and Over
                    --------            --------
<S>                 <C>                 <C>
2001                $ 14,330            $ 14,030
2002                   4,045               1,450
                    --------            --------
Total               $ 18,375            $ 15,480
                    ========            ========
</TABLE>

                                      A-27
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 7 - Income Taxes

     The Corporation and the Bank file a consolidated federal income tax return.
     The Corporation has net operating loss carryforwards totaling approximately
     $240,000 generated during the period from May 18, 1998 (inception)  through
     December  31,  2000 that are  available  to reduce  future  taxable  income
     through the year ending December 31, 2019. Based on the growth of the Bank,
     management  has  determined  that it is now more  likely  than not that the
     benefit of these loss carryforwards will be realized. In 1999, the deferred
     tax asset  generated  by loss  carryforwards  was offset  with a  valuation
     allowance.

     Deferred  income taxes are provided for the temporary  differences  between
     the financial reporting bases and the tax bases of the Corporation's assets
     and  liabilities.   The  source  of  such  temporary  differences  consists
     primarily of net operating loss carryforwards and the nondeductible portion
     of loan loss reserve.

     The temporary differences that comprise deferred tax assets and liabilities
     at December 31, 2000 and 1999 are as follows (000s omitted):
<TABLE>
                                                                   2000           1999
                                                                 -------        -------
<S>                                                              <C>            <C>
Deferred tax assets:
Bad debts                                                        $   115        $    44
Net operating loss                                                    81            193
Organization and preopening costs                                     24             33
Unrealized loss on securities available for sale                      -               7
                                                                 -------        -------
Total deferred tax assets                                            220            277

Valuation allowance for deferred tax assets                           -            (274)

Deferred tax liabilities:
      Unrealized gain on securities available for sale                (1)            -
Depreciation                                                         (13)            (2)
Accretion on investment securities                                   (16)            (1)
                                                                 -------        -------
Total deferred tax liabilities                                       (30)            (3)
                                                                 -------        -------
Net deferred tax asset                                           $   190        $    -
                                                                 =======        =======
</TABLE>
                                      A-28
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

Note  8  - Related Parties

     Operating  Lease - The Bank  entered  into a lease  for its main  operating
     facility  under a  noncancelable  lease  expiring  on October 1, 2003.  The
     facility was leased from an entity owned by certain members of the Board of
     Directors of the Corporation and the Bank. The lease payment  obligation is
     $5,000 per month through December 1, 2000 and $5,250 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, 2000 are as follows:

<TABLE>
                         <S>                 <C>
                         2001                $  63,000
                         2002                   63,000
                         2003                   47,250
</TABLE>

Note  9  - Restriction on Dividends or Dividends from Banking Subsidiary

     Unless prior regulatory approval is obtained, banking regulations limit the
     amount of dividends that the Corporation's  banking  subsidiary can declare
     to current  year net  profits,  as defined in the Federal  Reserve Act, and
     retained net profits from prior years.  There were no dividends declared or
     paid by the Bank to the holding company during 2000 or 1999.

Note 10 - 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 26,125  shares of common stock.
     Under the 1998 Founding  Directors Stock Option Plan ("Director Plan"), the
     Corporation  may grant  options  for up to 78,375  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 (contingent  options) under
     both plans vest on an  accelerated  basis upon 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.

                                      A-29
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

Note 10 - Stock-based Compensation (Continued)

     The following table summarizes stock option transactions for both plans and
     the related  average  exercise prices for the years ended December 31, 2000
     and 1999:
<TABLE>
                                                      2000                           1999
                                           ------------------------------  -----------------------------
                                                               Weighted                      Weighted
                                            Number of          Average      Number of        Average
                                             Shares        Exercise Price    Shares       Exercise Price
                                           -----------     --------------  -----------    --------------
<S>                                          <C>            <C>            <C>            <C>
Options Outstanding - Beginning of year       64,150        $    9.09        64,150       $    9.09

Options granted - Employee Plan                2,200             5.00            -               -
Options exercised                                 -                -             -               -
Options expired                                   -                -             -               -
                                             -------                       --------
Options Outstanding - End of year             66,350             8.96        64,150            9.09
                                             =======                       ========
</TABLE>

     The  following  table shows summary  information  about fixed stock options
     outstanding at December 31, 2000:
<TABLE>
                                      Stock Options Outstanding                               Stock Options Exercisable
                   --------------------------------------------------------------------    ------------------------------
                                                       Weighted
                                                        Average             Weighted        Number of        Weighted
                      Range of         Number of       Remaining            Average          Shares           Average
                   Exercise Prices       Shares     Contractual Life     Exercise Price    Exerciseable   Exercise Price
                   ---------------     ---------    ----------------     --------------    ------------   --------------
<S>                <C>                  <C>          <C>                 <C>               <C>            <C>
Contingent         $        9.09        32,076         7.9 years         $     9.09           4,009         $     9.09
Noncontingent        5.00 - 9.09        34,274         7.9 years               8.83          12,830               9.09
</TABLE>

     The Corporation has adopted the disclosure-only provisions of SFAS No. 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  granted in 2000 at $2.34 per share,  using a "minimum  value"
     concept.  The value was  calculated  using an assumed  interest rate of 6.5
     percent and estimated life of 5.0 years.

     If the  Corporation  had elected to  recognize  compensation  costs for the
     plans  based on the fair  value of  awards at the grant  date,  net  income
     (loss) per share on a pro forma  basis  would  have been as  follows  (000s
     omitted, except per share data):

                                      A-30
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

<TABLE>
                                                  2000                         1999
                                       ------------------------      ------------------------
                                       As Reported    Pro Forma      As Reported    Pro Forma
                                       -----------    ---------      -----------    ---------
<S>                                    <C>            <C>            <C>            <C>
Net income (loss)                      $   418        $   396        $   (604)      $   (635)
Net income (loss) per common
   share - Basic and fully diluted        0.41           0.39           (0.58)         (0.61)
</TABLE>

Note 11 - Common Stock

     In October 2000,  the  Corporation  declared an 11 for 10 stock split.  The
     Corporation   issued  the   additional   shares  of  common  stock  to  its
     stockholders  for the purpose of effecting a reduction in the unit price of
     the shares and obtaining a wider distribution and improved marketability of
     the  shares.  The  additional  shares  issued  were  not  intended  to be a
     distribution  of earnings.  All  applicable  per share  amounts for periods
     presented have been retroactively adjusted to reflect the transaction.

                                      A-31
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 12 - Financial Instruments

     Fair Values of Financial  Instruments - The carrying  amounts and estimated
     fair values of the Corporation's financial instruments are presented below.
     Certain assets,  the most significant being premises and equipment,  do not
     meet the  definition of a financial  instrument  and are excluded from this
     disclosure.   Similarly,  deposit  base  and  other  customer  relationship
     intangibles are not considered financial  instruments and are not discussed
     below.  Accordingly,  this fair value  information  is not intended to, and
     does not, represent the Corporation's  underlying value. Many of the assets
     and  liabilities  subject to the disclosure  requirements  are not actively
     traded,  requiring  fair  values  to  be  estimated  by  management.  These
     estimates  necessarily  involve the use of judgment about a wide variety of
     factors,  including,  but not limited  to,  relevancy  of market  prices of
     comparable instruments, expected future cash flows and appropriate discount
     rates.
<TABLE>
                                                 2000                                1999
                                      ---------------------------        ----------------------------
                                      Carrying         Estimated          Carrying         Estimated
                                       Amount          Fair Value          Amount          Fair Value
                                      ---------        ----------        ---------         ---------
<S>                                   <C>              <C>               <C>               <C>
Assets
Cash and short-term investments       $   3,412        $   3,412         $   2,467         $   2,467
Securities                               30,331           30,305            18,898            18,804
Loans                                    25,383           25,190            11,123            10,995
Accrued interest receivable                 457              457               256               256

Liabilities
Noninterest-bearing deposits              6,598            6,598             2,671             2,671
Interest-bearing deposits                44,810           44,675            22,595            22,531
Accrued interest payable                    268              268                78                78
</TABLE>

     The terms and short-term nature of certain assets and liabilities result in
     their carrying amount  approximating fair value. These include cash and due
     from  banks,  interest-bearing  deposits in banks,  federal  funds sold and
     securities  purchased  under  resale  agreements,   customers'   acceptance
     liabilities,  short-term borrowings,  and bank acceptance outstanding.  The
     following  methods and  assumptions  were used by the Bank to estimate  the
     fair values of the remaining classes of financial instruments.

                                      A-32
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

Note 12 - Financial Instruments (Continued)

     Securities are valued based on quoted market prices,  where  available.  If
     quoted  market  prices are not  available,  fair values are based on quoted
     market prices of comparable instruments.

     For variable rate loans that reprice  frequently,  fair values are based on
     carrying amounts,  as adjusted for estimated credit losses. The fair values
     for other loans are  estimated  using  discounted  cash flow  analyses  and
     employ  interest rates currently being offered for loans with similar terms
     to borrowers of similar credit quality.

     The fair values of demand  deposits,  savings  accounts,  and money  market
     deposits are, by  definition,  equal to the amount  payable on demand.  The
     fair values of fixed rate time deposits are estimated by  discounting  cash
     flows using interest rates  currently  being offered on  certificates  with
     similar maturities.

     The fair value of loan commitments and standby letters of credit, valued on
     the basis of fees currently  charged for commitments for similar loan terms
     to new borrowers with similar credit profiles, is not considered material.

     Off-balance-sheet  Risk - The Bank is party to financial  instruments  with
     off-balance-sheet  risk in the  normal  course  of  business  to  meet  the
     financing  needs of its  customers.  These  financial  instruments  include
     commitments to extend credit and financial  guarantees.  These  instruments
     involve, to varying degrees, elements of credit and interest rate risk that
     are not recognized in the statement of financial condition.

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there are no violations of any  conditions  established in the contract.
     Commitments  generally  have fixed  expiration  dates or other  termination
     clauses  and  may  require  payment  of a  fee.  Fees  from  issuing  these
     commitments  to extend credit are  recognized  over the period to maturity.
     Since a portion of the  commitments  is  expected to expire  without  being
     drawn upon, the total commitments do not necessarily  represent future cash
     requirements.  The Bank evaluates  each  customer's  creditworthiness  on a
     case-by-case basis.

                                      A-33
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 12 - Financial Instruments (Continued)

     The amount of  collateral  obtained  upon  extension  of credit is based on
     management's credit evaluation of customers.

     Exposure to credit loss in the event of  nonperformance  by others,  in the
     form of standby  letters  of  credit,  is  represented  by the  contractual
     notional amount of those items. The Bank generally  requires  collateral to
     support such financial  instruments in excess of the  contractual  notional
     amount of those instruments.

     The Bank had loan  commitments  and  standby  letters  of  credit  totaling
     $14,040,000 and $6,294,000 at December 31, 2000 and 1999, respectively,  on
     which loans of $7,568,000 and $2,393,000, respectively, were outstanding at
     year end and included in the Bank's consolidated balance sheet.

Note 13 - 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  financial  statements.  Under capital adequacy
     guidelines  and the  regulatory  framework,  the Bank  must  meet  specific
     capital guidelines that involve quantitative measures of the Bank's assets,
     liabilities,  and  certain  off-balance-sheet  items  as  calculated  under
     regulatory accounting practices.

     Since the Bank is considered a de novo or start-up  bank, the minimum total
     capital  ratio for 2000 is 8.0 percent.  As of December 31, 2000,  the most
     recent  notification from the FDIC categorized the Bank as well-capitalized
     under the regulatory framework.

                                      A-34
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 13 - Regulatory Matters (Continued)

     The regulations define  well-capitalized  levels of total capital,  tier 1,
     and  tier 1  leverage  as 10.0  percent,  6.0  percent,  and  5.0  percent,
     respectively.  There are no  conditions  or events since that  notification
     that management believes have changed the Bank's capital category.
<TABLE>
                                                            For Capital              To be Well-
                                        Actual            Adequacy Purposes          Capitalized
                                 ------------------      ------------------      -------------------
                                  Amount      Ratio       Amount      Ratio      Amount       Ratio
                                 --------  --------      ---------  -------      --------   --------
<S>                              <C>          <C>        <C>          <C>        <C>           <C>
As of December 31, 2000:
  Total risk-based capital
    (to risk-weighted assets)    $ 8,504      21.21%     $ 3,208      8.00%      $ 4,009       10.00%
  Tier I capital
    (to risk-weighted assets)    $ 8,125      20.27%     $ 1,604      4.00%      $ 2,405        6.00%
  Tier I capital
    (to average assets)          $ 8,125      15.03%     $ 2,163      4.00%      $ 2,704        5.00%


As of December 31, 1999:
  Total risk-based capital
    (to risk-weighted assets)    $ 7,799      32.31%     $ 1,931      8.00%      $ 2,414       10.00%
  Tier I capital
    (to risk-weighted assets)    $ 7,659      31.73%     $   966      4.00%      $ 1,448        6.00%
  Tier I capital
    (to average assets)          $ 7,659      38.39%     $   798      4.00%      $   998        5.00%
</TABLE>


Note 14 - 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 its  subsidiary at cost plus its share of
     the  undistributed  earnings of its subsidiary since inception.  The Parent
     Company   recognizes   dividends   from  its   subsidiary  as  revenue  and
     undistributed  earnings  of its  subsidiary  as other  income.  The  Parent
     Company  financial  information  should  be read in  conjunction  with  the
     Corporation's consolidated financial statements.

                                      A-35
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999

Note 14 - Parent-only Condensed Financial Information (Continued)

     The  condensed  balance  sheet as of December  31, 2000 and 1999 (with 000s
     omitted) is as follows:
<TABLE>
                                                             2000                1999
                                                            ------              -------
<S>                                                         <C>                 <C>
Assets
Cash on deposit with correspondent bank                     $     1             $    -
Receivable from the Bank                                         -                   27
Investment in the Bank                                        8,276               7,832
                                                            -------             -------
Total assets                                                $ 8,277             $ 7,859
                                                            =======             =======
Liabilities - Accounts payable                              $    -              $    -

Stockholders' Equity
Common stock                                                  4,306               4,306
Capital surplus                                               4,306               4,306
Retained earnings                                              (335)               (753)
                                                            -------             -------
Total stockholders' equity                                    8,277               7,859
                                                            -------             -------
Total liabilities and stockholders' equity                  $ 8,277             $ 7,859
                                                            =======             =======
</TABLE>
                                      A-36
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------
                                      Notes to Consolidated Financial Statements
                                                      December 31, 2000 and 1999


Note 14 - Parent-only Condensed Financial Information (Continued)

     The condensed statement of operations for the years ended December 31, 2000
     and 1999 (000s omitted) is as follows:
<TABLE>
                                                                        2000           1999
                                                                      --------       --------
<S>                                                                   <C>            <C>
Operating Income                                                      $     -        $     -

Operating Expenses                                                          26             49
                                                                      --------       --------
Loss - Before income taxes and equity in undistributed
income (loss) of subsidiary                                                (26)           (49)

Provision for Income Taxes                                                  -              -
                                                                      --------       --------
Loss - Before equity in undistributed income (loss) of subsidiary          (26)           (49)

Equity in Undistributed Income (Loss) of Subsidiary                        444           (555)
                                                                      --------       --------
Net Income (Loss)                                                     $    418       $   (604)
                                                                      ========       ========
</TABLE>

     The condensed statement of cash flows for the years ended December 31, 2000
     and 1999 (000s omitted) is as follows:

<TABLE>
                                                                  2000            1999
                                                                 ------         -------
<S>                                                              <C>            <C>
Cash Flows from Operating Activities
Net income (loss)                                                $  418         $  (604)
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Equity in undistributed (income) loss of subsidiary                (444)            555
Decrease in receivable from subsidiary                               27             202
Decrease in accounts payable                                         -              (40)
                                                                 ------         -------
Net cash provided by operating activities                             1             113

Cash Flows from Financing Activities - Payment for
stock repurchase                                                     -             (144)
                                                                 ------         -------
Net Increase (Decrease) in Cash and Cash Equivalents                  1             (31)

Cash and Cash Equivalents - Beginning of year                        -               31
                                                                 ------         -------
Cash and Cash Equivalents - End of year                          $    1         $    -
                                                                 ======         =======
</TABLE>
                                      A-37
<PAGE>
Clarkston Financial Corporation and Subsidiary
--------------------------------------------------------------------------------


Note 15 - Earnings (Loss) 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 years ended December 31, 2000 and 1999
     is as follows:
<TABLE>
                                                              2000               1999
                                                            -------             -------
<S>                                                         <C>                 <C>
Net income (loss)                                           $   418             $  (604)

Weighted average number of shares outstanding
for year                                                      1,026               1,037

Net income (loss) per common share                          $  0.41             $ (0.58)


                                      A-38
</TABLE>
<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, 2001, on our audit of the  consolidated  financial  statements for the years
ended December 31, 2000 and 1999, which report is included in this Annual report
on form 10-KSB.


March 29, 2001                                  /s/ PLANTE & MORAN, LLP
Auburn Hills, Michigan







::ODMA\PCDOCS\GRR\530474\2