<PAGE>   1

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

               Quarterly Report Pursuant to Section 13 or 15(d)
                    of The Securities Exchange Act of 1934

 For the quarter period ended   June 30, 1997  Commission file number 33-20417
                              ----------------                        --------

                            Capital Directions, Inc.              
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           MICHIGAN                                    38-2781737             
-------------------------------        ---------------------------------------  
(State of other jurisdiction of        (I.R.S. Employer Identification Number)
incorporation or organization)

322 South Jefferson St., Mason, Michigan                            48854-0130
----------------------------------------                            ----------
(Address of principal executive offices)                            (Zip Code)

Registrant's telephone number, including area code:             (517) 676-0500
                                                                --------------

                                    None
             ---------------------------------------------------
             Former name, former address and former fiscal year,
                        if changed since last report

Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such 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     
                                            ---         ---

As of July 28, 1997, the registrant had outstanding 297,428 shares of common
stock having a par value of $5 per share.
<PAGE>   2
                          CAPITAL DIRECTIONS, INC.
                             INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
                                                             Page
                                                            Number
                                                            ------
<S>                                                          <C>
PART I - FINANCIAL INFORMATION

  Item 1. Consolidated Balance Sheet
          June 30, 1997 and December 31, 1996................ 1

          Consolidated Statement of Income for
          three and six month periods ended
          June 30, 1997 and 1996............................. 2

          Consolidated Statement of Cash Flows
          for six month periods ended
          June 30, 1997 and 1996............................. 3

          Changes in Shareholders' Equity for
          six months ended June 30, 1997..................... 4

          Notes to interim Consolidated Financial Statements. 5


  Item 2. Management's Discussion and Analysis of
           Financial Condition and Results of Operations..... 6-9

                                                              
PART II - OTHER INFORMATION

 Item 1.   Legal proceedings................................. 10

 Item 2.   Changes in securities............................. 10

 Item 3.   Defaults upon senior securities................... 10

 Item 4.   Submission of matters to a vote of
            security holders................................. 10

 Item 5.   Other information................................. 10

 Item 6.   Exhibits and reports on Form 8-K.................. 10

 Item 7.   Signatures........................................ 11

           INDEX TO EXHIBITS................................. 12
</TABLE>

<PAGE>   3
                           CAPITAL DIRECTIONS, INC.
                          CONSOLIDATED BALANCE SHEET
                          --------------------------
                                (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                         JUNE 30,     DEC. 31,
                                                           1997         1996
                                                        (UNAUDITED)  (UNAUDITED)
                                                        ------------------------
<S>                                                       <C>          <C>
Assets                                                        
      Cash and non interest bearing deposits............  $ 3,109      $ 2,538
      Interest bearing deposits.........................        0          139
      Federal funds sold................................    4,250        2,800

                                                          -------      -------
                         Total cash and cash equivalents    7,359        5,477
  Securities available for sale.........................    8,916       10,100
  Securities held to maturity (fair value of $8,317 as
    of June 30, 1997 and $9,230 as of December 31, 1996)
      U.S. Government and agencies......................    3,285        3,551
      State and municipal...............................    4,863        5,482
  Federal Home Loan Bank Stock..........................      364          364

                                                          -------      -------
                                        Total securities   17,428       19,497
  Loans, net of unearned income:
      Commercial and agricultural.......................    3,644        4,453
      Installment.......................................    3,553        3,739
      Real estate mortgage..............................   46,811       43,600

                                                          -------      -------
                                             Total loans   54,008       51,792
      Allowance for loan losses.........................   -1,037       -1,020

                                                          -------      -------
                                               Net loans   52,971       50,772
  Premises and equipment, net...........................      598          567
  Accrued interest receivable and other assets..........    2,656        2,607

                                                          -------      -------
                                            Total Assets  $81,012      $78,920
                                                          =======      =======

Liabilities and shareholders' equity
 Liabilities
  Deposits 
      Non interest bearing..............................  $ 8,881      $10,356
      Interest bearing..................................   57,358       56,153

                                                          -------      -------
                                          Total deposits   66,239       66,509

  Long-term Federal Home Loan Bank borrowings...........    3,824        1,913
  Accrued interest payable and other liabilities........    1,172        1,101

                                                          -------      -------
                                       Total liabilities   71,235       69,523
Shareholders' equity
      Common stock: $5 par value, 1,300,000 shares
        authorized: 297,428 shares outstanding..........    1,487        1,487
      Additional paid in capital........................    2,559        2,559
      Retained earnings.................................    5,715        5,319
      Net unrealized gains/(losses) on securities
      available for sale, net of tax of $17 in 1996
      and $8 in 1997....................................       16           32

                                                          -------      -------
                              Total shareholders' equity    9,777        9,397

                                                          -------      -------
              Total liabilities and shareholders' equity  $81,012      $78,920
                                                          =======      =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                     -1-

<PAGE>   4
                            CAPTIAL DIRECTNS, INC.
                       CONSOLIDATED STATEMENT OF INCOME
                     -----------------------------------
                     (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>                                   
                                                         THREE MONTHS ENDED   SIX MONTHS ENDED            
                                                             JUNE 30,             JUNE 30,                
                                                         1997       1996       1997      1996             
                                                           (UNAUDITED)           (UNAUDITED)              
                                                         ----------------     ----------------            
<S>                                                     <C>       <C>        <C>       <C>                
Interest and dividend income:                                                                             
  Loans, including fees...............................   $1,183    $1,106     $2,341    $2,218         
  Federal funds sold..................................                                                    
  Securities:                                                                                             
     Taxable..........................................      222       227        456       412            
     Tax exempt.......................................       58        63        121       131            
  Other interest income...............................                                                    
  Dividends on Federal Home Loan Bank stock...........       26        35         37       102            
                                                                                                          
                                                        -------   -------    -------   -------            
                    Total interest and dividend income    1,489     1,431      2,955     2,863            
                                                                                                          
Interest expense:                                                                                         
  Deposits............................................      585       576      1,151     1,166            
  Short-term borrowings...............................        9         0          9         0            
  Long-term Federal home Loan Bank borrowings.........       35        34         73        65            
                                                                                                          
                                                        -------   -------    -------   -------            
                                Total interest expense      629       610      1,233     1,231            
                                                                                                          
                                                        -------   -------    -------   -------            
Net interest income...................................      860       821      1,722     1,632            
Provision for loan losses.............................        0         0          0         0            
                                                                                                          
                                                        -------   -------    -------   -------            
Net interest income after provision for  loan losses..      860       821      1,722     1,632            

Net interest income:
  Service charges on deposits.........................       65        71        128       138
  Monex investment commission fees....................        0        38          0       124
  Other income........................................       61        46        119       124
  Gain on sale of loans...............................        0         0          7         0
  Gain or (Loss) on sale of securities................       (2)        0          5         0

                                                        -------   -------    -------   -------
                             Total non interest income      124       155        259       386

Non interest expense:
  Salaries and employee benefits......................      341       312        684       658
  Premises and equipment..............................       83       100        166       194
  Monex investment sales expenses.....................        0        43          0       123
  Other operating expenses............................      146       135        307       288

                                                        -------   -------    -------   -------
                            Total non interest expense      570       590      1,157     1,263

                                                        -------   -------    -------   -------
  Income before income tax expense....................      414       386        824       755
  Income tax expense..................................      117       109        232       210

                                                        -------   -------    -------   -------
  Net income..........................................   $  297    $  277     $  592    $  545
                                                        =======   =======    =======   =======

    Average common shares outstanding                   297,428   297,428    297,428   297,428
    Earnings per common share                             $1.00      $.93      $1.99     $1.83
    Dividends per share of
      common stock, declared                                .33       .27        .66       .54
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -2-
<PAGE>   5
                        CAPITAL DIRECTIONS, INC.
                  CONSOLIDATED STATEMENT OF CASH FLOWS
                  ------------------------------------
                             (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      Six Months Ended
                                                          June 30,
                                                       1997      1996
                                                         (UNAUDITED)   
                                                    --------------------
<S>                                                 <C>       <C>
Net cash from operating activities................. $    683  $    585

Cash flows from investing activities
  Proceeds from maturities or sale of securities...    2,320     1,776
  Principal payments on securities.................      423       555
  Purchase of securities...........................     (709)   (6,436)
  Net change in loans..............................   (2,199)     (309)
  Premises and equipment expenditures..............      (81)      (18)
                                                    --------  -------- 

Net cash from investing activities.................     (246)   (4,432)

Cash flows from financing activities
  Net change in deposits...........................     (270)   (1,033)
  Net change in long-term borrowing................    1,911       208
  Dividends paid...................................     (196)     (160)
                                                    --------  -------- 

Net cash from financing activities.................    1,445      (985)
                                                    --------  -------- 


Net change in cash and cash equivalents............    1,882    (4,832)
  Cash and cash equivalents at beginning of year...    5,477     9,775 
                                                    --------  -------- 
  Cash and cash equivalents June 30................ $  7,359  $  4,943
                                                    ========  ========

Supplemental disclosures of cash flow information
  Cash paid during the year for
    Interest....................................... $    646  $  1,262
    Income Taxes - Federal......................... $    245  $    289

</TABLE>

SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                  -3-
<PAGE>   6
                         CAPITAL DIRECTIONS, INC.

                        CONSOLIDATED STATEMENT OF
                     CHANGES IN SHAREHOLDERS' EQUITY
                    FOR SIX MONTHS ENDED JUNE 30, 1997
                              (IN THOUSANDS)



<TABLE>
<S>                                                          <C>
Balance - January 1, 1997................................... $9,397
 Net income through June 30.................................    592
 Net change in unrealized gain/(loss) on securities
  available for sale, net of tax of $5......................    (16)
 Cash dividends through June 30 ($ .66 per share)...........   (196)
                                                             ------

Balance - June 30........................................... $9,777
                                                             ======
</TABLE>


     See accompanying notes to consolidated financial statements

                                   -4-
<PAGE>   7
                        CAPITAL DIRECTIONS, INC.
           NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                              (UNAUDITED)


1. In the opinion of management of the Registrant, the accompanying
   consolidated financial statements contain all adjustments
   (consisting only of normal recurring items) necessary to present
   fairly the consolidated financial position of the Registrant as of
   June 30, 1997 and December 31, 1996, the results of operations and
   cash flows for the six month period ended June 30, 1997 and 1996,
   and the change in shareholders' equity for the six month period
   ended June 30, 1997.

2. Because the results of operations are so closely related to and responsive
   to changes in economic conditions, the results for any interim period
   are not necessarily indicative of the results that can be expected for
   future periods.

3. The accompanying unaudited consolidated financial statements should
   be read in conjunction with the notes to consolidated financial
   statements contained in the 1996 Annual Report.

4. Management determines the adequacy of the allowance for loan losses
   based on an evaluation of the loan portfolio, recent loss
   experience, current economic conditions and other pertinent factors.
   Non-performing loans, which includes loans contractually past due
   ninety days or more; loans accounted for on a non-accrual basis and
   loans whose terms have been renegotiated to provide a reduction or
   deferral of interest or principal because of deterioration in the
   financial position of the borrower; amounted to $337,000 at
   June 30, 1997 and 172,000 at December 31, 1996, summarized as
   follows:

<TABLE>
<CAPTION>
                                                June 30,  December 31,
     Non-performing loans                         1997         1996    
     ---------------------------------------   --------   ------------
     <S>                                       <C>        <C>
     Non-accrual............................   $224,000       48,000
     90 days or more past due...............     61,000       70,000
     Renegotiated...........................     52,000       54,000
                                               --------     -------- 
     Total..................................   $337,000     $172,000
                                               ========     ========

</TABLE>

   The renegotiated loans are all in compliance with the modified terms
   for both periods. As of June 30, 1997 in accordance with SFAS
   No. 114, as amended (Accounting by Creditors for Impairment of a
   loan), and as the registrant has defined in the 1996 Annual Report,
   there were no loans considered impaired.

5. Following is a summary of activity in the allowance for loan losses
   for the six months ended June 30:

<TABLE>
<CAPTION>
                                                  1997      1996
                                                  (IN THOUSANDS)
   <S>                                          <C>        <C>
   Balance - beginning of period............... $1,020     $  995
   Provision charged to operating expense......      0          0
   Loans charged-off...........................     (8)       (16)
   Recoveries..................................     25         34
                                                ------     ------ 
    Balance - end of period.................... $1,037     $1,013
                                                ======     ======
</TABLE>

6. Federal income tax expensed is calculated using annualized rates on
   the taxable income generated during the respective periods.

                                  -5-
<PAGE>   8
            ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis of financial condition and
results of operations provides additional information to assess the
consolidated financial statements of the Registrant and its wholly-owned
subsidiaries. The discussion should be read in conjunction with those
statements.

     The Company is not aware of any market or institutional trends,
events, or circumstances that will have or are reasonably likely to have a
material effect on liquidity, capital resources, or results of operations
except as discussed herein. Also, the Company is not aware of any current
recommendations by regulatory authorities which will have such effect if
implemented.

FINANCIAL CONDITION

     Net interest income increased 5.51% when compared to the same period
in 1996. The increase is a result of growth in loan outstandings and
reduced funding costs due to the growth of average non interest bearing
deposit balances. Loans grew by 7.99% when compared with the first half of
1996. Real estate mortgage lending continues to show strong growth during
this period.

     Net interest margin of 5.08% for the first six months of 1997 compares
favorably to 4.89% for the same period in 1996.

     The Bank accessed long term FHLB funding during this period to match
assets of like term.

     Allowance for Loan Loss remains strong.  At June 30, 1997 the
allowance was equal to 1.92% of total loans outstanding, down slightly from
2.03% on June 30, 1996 and 1.97% on December 31, 1996.

RESULTS OF OPERATIONS

     Net earnings for the second quarter ended June 30, 1997 was $297,000,
or $1.00 per share compared to earnings of $277,000, or $.93 per share for
the same period in 1996. For the six months ended June 30, 1997, net
earnings were $592,000 or $1.99 per share compared to $545,000, or $1.83
per share for the same period in 1996. Cost control, increased margin,
strong loan demand and quality credits contributed to the 8.62% improvement
in earnings.

     The increase in margin resulted in a $90,000 increase in net interest
income for the first six months of 1997 compared to the same period in
1996.

     The decrease of $127,000 in non interest income for the first six
months of 1997, compared to the same period in 1996, is due primarily to
the decrease in Investment commission fee income from the sales of mutual
funds and annuities. This investment commission decrease was offset by a
like reduction in investment sales expense and resulted in a non interest
expense decline.


                                    -6-


<PAGE>   9

LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT

     The primary objective of asset/liability management is to assure
adequate liquidity and net interest income by maintaining appropriate
maturities and balances between interest sensitive earning assets and
interest bearing liabilities. Liquidity management insures sufficient funds
are maintained to meet the cash withdrawal requirements of depositors and
the credit demands of borrowers.

     Sources of liquidity include: federal funds sold, investment security
maturities, and pay downs. The Bank maintained a net average balance of
$1,408,000 in Federal Funds sold during the first six months of 1997. The
Bank is a member of the Federal Home Loan Bank system for several reasons:
access to an alternate funding source, lower cost for credit services, and
an alternate tool to manage interest rate risk.  In March and May of 1997,
the Bank used this source of funding to directly offset loans of like terms
and conditions.

     Other sources of liquidity include: internally generated cash flow,
repayments and maturities of loans, borrowing and growth in core deposits.

     At June 30, 1997, the securities available for sale were valued at
$8,916,000.  It is not anticipated that management will use these funds due
to the optional sources available.

     Interest rate sensitivity management seeks to maximize net interest
margins through periods of changing interest rates. The Bank develops
strategies to assure desired levels of interest sensitive assets and
interest bearing liabilities mature or reprice within selected time frames.
Strategies include the use of variable rate loan products as well as
managing deposit accounts and maturities in the investment portfolio. The
following chart, using recommended regulatory standards, reflects "the rate
sensitive position" or the difference between loans and investments, and
liabilities that mature or reprice within the next year and beyond. The
financial industry has generally referred to this difference as "GAP" and
its handling as "GAP Management".  At June 30, 1997, the percentage of rate
sensitive assets to rate sensitive liabilities within the one-year time
horizon was 112%.

     The chart shows the Bank's GAP position as of June 30, 1997. The Bank
has an asset sensitive position within one year of $4,408,000, which
indicates higher net interest income may be earned if rates increase during
the period. A new program was implemented which measured the rate
sensitivity of our non maturity deposits. This refines the GAP model to
give a better indication of rate sensitivity. Due to limitations of GAP 
analysis, price modeling is also used to enhance measurement and control.


                                    -7-


<PAGE>   10

<TABLE>
<CAPTION>

ADJUSTMENT WITHIN TIME HORIZON                    TIME HORIZONS

                          IMMEDIATE AND         > 30 DAYS
TYPE OF ASSET:            < THAN 30 DAYS        < 90 DAYS        2ND QUARTER     3RD QUARTER     4TH QUARTER      ANNUAL TOTAL
==============            =============        ===========       ===========     ===========     ===========      ============
<S>                       <C>      <C>         <C>  <C>         <C>   <C>       <C>   <C>        <C>  <C>        <C>    <C>
TOTAL COM. LOANS           5,884   9.82%       675   9.06%       546   9.57%     285   8.53%     883   8.47%     8,273   9.56%
TOTAL CONSUMER LOANS         311   9.60%       400  10.55%       600  10.55%     600  10.55%     600  10.55%     2,511  10.44%
CONSUMER RUNOFF OFFSET
TOTAL REV. CREDIT          4,176   9.82%         0    .00%         0    .00%       0    .00%       0    .00%     4,176   9.82%
TOTAL MTGE. LOANS          1,495   8.37%     2,398   8.30%     3,190   8.29%   2,447   8.20%   4,087   8.26%    13,617   8.28%
MORTGAGE RUNOFF OFFSET
TOTAL OTHER MTGES.           239   8.92%       482   8.72%       115   7.23%     115   7.23%      115  7.23%     1,066   7.87%
RESERVE FOR LN. LOSS           0    .00%         0    .00%         0    .00%       0    .00%        0   .00%         0    .00%
                          -------------      ------------      ------------    ------------    ------------      ------------
TOTAL LOANS               12,105   9.58%     3,955   8.71%     4,451   8.73%   3,447   8.60%    5,685  8.51%     29,643  9.02%

INVESTMENTS-MUNI'S             0    .00%         0    .00%        45   7.93%     645   7.45%      169  7.65%        859  7.51%
FED FUNDS                  4,250   5.25%         0    .00%         0    .00%       0    .00%        0   .00%      4,250  5.25%
CORPORATES                     0    .00%       519   5.57%     1,210   6.07%       0    .00%        0   .00%      1,729  5.92%
MTG. BACKED PAYDOWNS          67   6.26%       133   6.26%       200   6.26%     200   6.26%      200  6.26%        800  6.26%
INVEST-CMO'S FLOAT            41   6.24%         0    .00%         0    .00%       0    .00%        0   .00%         41  6.24%
INVESTMENTS-ARM'S            569   7.05%         0    .00%         0    .00%   1,879   6.93         0   .00%      2,448  6.96%
INVESTMENTS-GOVT'S           364   7.25%         0    .00%         0    .00%     523   5.78%    1,021  6.53%      1,908  6.46%
                          -------------      ------------      ------------    ------------    ------------      ------------
TOTAL INVESTMENTS          5,291   5.60%       652   5.71%     1,455   6.15%   3,247   6.81%    1,390  6.63%     12,035  6.12%

TOTAL EARNING ASSETS      17,396   8.37%     4,607   8.29%     5,906   8.09%   6,694   7.73%    7,075  8.14%     41,678  8.18%
NON-EARNING ASSETS             0    .00%         0    .00%         0    .00%       0    .00%        0   .00%          0   .00%
                          -------------      ------------      ------------    ------------     -----------      ------------
TOTAL ASSETS              17,396   8.37%     4,607   8.29%     5,906   8.09%   6,694   7.73%    7,075  8.14%     41,678  8.18%

</TABLE>

<TABLE>
<CAPTION>


TYPE OF ASSET:                     13 - 36 MTHS                 37 - 60 MTHS               OVER 5 YEARS            GRAND TOTAL
==============                     =============                 =============             ==============          =============
<S>                               <C>      <C>                   <C>     <C>              <C>      <C>             <C>      <C>

TOTAL COM. LOANS                   3,223   8.90%                  3,336   9.09%             2,272   8.96%           17,104   9.26%
TOTAL CONSUMER LOANS               1,928  10.65%                  1,183  10.65%                 0    .00%            5,622  10.55% 
CONSUMER RUNOFF OFFSET                                                                                              -2,400  10.55%
TOTAL REV. CREDIT                      0    .00%                      0    .00%                 0    .00%            4,176   9.82%
TOTAL MTGE. LOANS                  1,989   8.99%                    723   8.55%            16,099   7.89%           32,428   8.14%
MORTGAGE RUNOFF OFFSET                                                                                              -4,000   8.14%
TOTAL OTHER MTGES.                     0    .00%                      0    .00%                12   4.00%            1,078   7.82%
RESERVE FOR LN. LOSS                   0    .00%                      0    .00%                 0    .00%           -1,037    .00% 
                                 --------------                 --------------            --------------           --------------
TOTAL LOANS                        7,140   9.40%                  5,242   9.37%            18,383   8.02%           52,971   8.94%

INVESTMENTS-MUNI'S                 1,120   7.50%                    715   7.54%             2,170   7.52%            4,864   7.52%
FED FUNDS                              0    .00%                      0    .00%                 0    .00%            4,250   5.25%
CORPORATES                         2,223   6.44%                    529   6.49%                 0    .00%            4,481   6.25%
MTG. BACKED PAYDOWNS                                                                                                     0   6.26%
INVEST-CMO'S FLOAT                     0    .00%                      0    .00%                 0    .00%               41   6.24%
INVESTMENTS-ARM'S                      0    .00%                      0    .00%                 0    .00%            2,448   6.96%
INVESTMENTS-GOVT'S                 1,738   6.25%                    567   6.91%             1,356   6.66%            5,569   6.49%
                                 --------------                 --------------            --------------           --------------
TOTAL INVESTMENTS                  5,081   6.61%                  1,811   7.04%             3,526   7.19%           21,653   6.48%

TOTAL EARNING ASSETS              12,221   8.24%                  7,053   8.77%            21,909   7.89%           74,624   8.23%
NON-EARNING ASSETS                     0    .00%                      0    .00%                 0    .00%            6,331    .00% 
                                 --------------                 --------------            --------------           --------------
TOTAL ASSETS                      12,221   8.24%                  7,053   8.77%            21,909   7.89%           80,955   7.58%

</TABLE>

<TABLE>
<CAPTION>

LIABILITIES SUBJECT TO INTEREST
RATE ADJUSTMENT WITHIN TIME HORIZON

                                IMMEDIATE AND           > 30 DAYS
TYPE OF LIABILITY:              < THAN 30 DAYS          < 90 DAYS        2ND QUARTER        3RD QUARTER       4TH QUARTER 
==================              ==============        ============       ===========       =============     ============= 
<S>                             <C>    <C>           <C>    <C>         <C>    <C>         <C>    <C>        <C>    <C>
NON-INT. BEARING DDA             334     .00%           659   .00%       1,083   .00%         993   .00%        993   .00%
NOW ACCOUNTS                     885    1.95%         1,781  1.95%         853  1.95%         907  1.95%        907  1.95%
NEGOTIATED NOW                     0    3.75%             0  3.75%           0   .00%           0   .00%          0    .00%
MONEY MARKET SAVINGS           1,068    3.50%         2,136  3.50%       1,068  3.50%       1,068  3.50%      1,068  3.50%
                               -------------         ------------       ------------       ------------      ------------
TOTAL DDA ACCOUNTS             2,287    2.39%         4,576  2.39%       3,005  1.80%       2,968  1.86%      2,968  1.86%
TOTAL SAVINGS ACCTS.             399    3.65%           478  3.65%         720  3.65%         720  3.65%        720  3.65%
TOTAL COD                      4,616    5.44%         4,070  5.46%       3,919  5.63%       3,517  5.44%      2,066  5.53%
FED FUNDS & OTHER                  0     .00%             0   .00%         157  6.23%          86  5.73%          0    00%
                               -------------         ------------       ------------       ------------      ------------
TOTAL DEPOSITS                 7,302    4.38%         9,124  3.83%       7,800  3.98%       7,290  3.81%      5,753  3.40%
OTHER LIABILITIES                  0     .00%             0   .00%           0   .00%           0   .00%          0   .00%
                               -------------         ------------       ------------       ------------      ------------
TOTAL LIABILITIES              7,302    4.38%         9,124  3.83%       7,800  3.98%       7,290  3.81%      5,753  3.40%
TOTAL CAPITAL                      0     .00%             0   .00%           0   .00%           0   .00%          0   .00%
                               -------------         ------------       ------------       ------------      ------------
TOTAL LIAB. & CAP.             7,302    4.38%         9,124  3.83%       7,800  3.98%       7,290  3.81%      5,753  3.40%
-------------------------------------------------------------------------------------------------------------------------
GAP FIGURES                   10,094                 -4,517             -1,894               -596             1,322
CUMULATIVE GAP                10,094                  5,577              3,682              3,086             4,408
NET POSITION AS
A % OF TOTAL ASSETS           12.47%                  6.89%              4.55%              3.81%             5.44%
RSA AS A % OF RSL            238.23%                133.95%            115.20%            109.79%           111.83%

</TABLE>












<TABLE>
<CAPTION>

TYPE OF LIABILITY                 ANNUAL TOTAL          13 - 36 MTHS      37 - 60 MTHS         OVER 5 YEARS         GRAND TOTAL
=================                 ============          ============      ============         ============        ============

<S>                             <C>      <C>           <C>     <C>      <C>      <C>           <C>   <C>         <C>      <C>
NON-INT. BEARING DDA             4,062    .00%          2,257   .00%     2,257    .00%        451    .00%          9,026   .00%  
NOW ACCOUNTS                     2,133   1.95%          2,133  1.95%     2,133   1.95%      1,067   1.95%         10,665  1.95% 
NEGOTIATED NOW                       0   3.75%              0   .00%         0    .00%          0    .00%              0  3.75%
MONEY MARKET SAVINGS             6,409   3.50%          1,602  3.50%     1,068   3.50%      1,602   3.50%         10,682  3.50% 
                                -------------          ------------     -------------       ------------         -------------
TOTAL DDA ACCOUNTS              15,804   2.08%          5,992  1.63%     5,458   1.45%      3,120   2.46%         30,373  1.92%
TOTAL SAVINGS ACCTS.             3,036   3.65%          2,097  3.65%     1,935   3.65%      2,907   3.65%          9,975  3.65%
TOTAL COD                       18,188   5.50%          6,840  6.18%     1,008   6.14%          0    .00%         26,036  5.70%
FED FUNDS & OTHER                  243   6.05%          1,941  6.50%       823   6.48%        817   6.10%          3,824  6.38%
                                -------------          ------------     -------------       ------------         -------------   
TOTAL DEPOSITS                  37,270   3.90%         16,870  4.29%     9,224   2.87%      6,844   3.40%         70,208  3.81%     
OTHER LIABILITIES                    0    .00%              0   .00%         0    .00%          0    .00%          1,074   .00%
                                -------------          ------------     -------------       ------------         -------------
TOTAL LIABILITIES               37,270   3.90%         16,870  4.29%     9,224   2.87%      6,844   3.40%         71,282  3.75%
TOTAL CAPITAL                        0    .00               0   .00%         0    .00%      9,673    .00%          9,673   .00%
                                -------------          ------------     -------------       ------------         ------------- 
TOTAL LIAB. & CAP.              37,270   3.90%         16,870  4.29%     9,224   2.87%     16,516   1.41%         80,955  3.30%
------------------------------------------------------------------------------------------------------------------------------
GAP FIGURES                      4,408                 -4,649           -2,171              5,393                      0        
CUMULATIVE GAP                                           -241           -2,413              2,980         
NET POSITION AS
A % OF TOTAL ASSETS              5.44%                  -.30%            -2.98%              3.68%    
RSA AS A % OF RSL              111.83%                 99.55%            96.19%            103.73%     

</TABLE>
<PAGE>   11

CAPITAL RESOURCES

     The adequacy of the Corporation's capital is reviewed regularly to
ensure that sufficient capital is available to meet current and future
funding needs and comply with regulatory requirements.

     Shareholders' equity increased $396,000 or 4.23% to $9,761,000 at
June 30, 1997, which represents 12.05% of total assets. This figure does
not include the $16,000, net of tax in net unrealized gain on available for
sale securities. At December 31, 1996, the similar ratio of shareholders'
equity to total assets was 11.87%. These measurements indicate the
Corporation has a strong capital position.

     The "risk-based" capital to asset ratio, as established by the
regulatory authorities, was 20.31% as of June 30, 1997 compared to 19.50%
at December 31, 1996 as shown below:


<TABLE>
<CAPTION>
                          Actual           Required           Excess   
                   ------------------  ----------------  ----------------
                       Amount     %      Amount     %      Amount     %
                   ------------------  ----------------  ----------------
<S>                <C>          <C>    <C>         <C>   <C>        <C>
Risk-Based capital
June 30, 1997      $10,400,000  20.31  $4,097,000  8.00  $6,303,000 12.31
</TABLE>

     Bank management does not perceive that future rate changes or
inflation will have a material impact on capital adequacy.

     It is the opinion of Management that capital and shareholders' equity
is and will remain adequate for 1997.

FEDERAL INCOME TAXES

     The provision for Federal income taxes for the six month periods ended
June 30, 1997 and 1996 totaled $232,000 and $210,000 respectively.  The
increase in taxes is reflective of the increase in taxable income
for those periods.

OTHER MATTERS

     SFAS No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities," was issued by the Financial
Accounting Standards Board in 1996. It revises the accounting for transfers
of financial assets, such as loans and securities, and for distinguishing
between sales and secured borrowings. It is effective for some transactions
in 1997 and others in 1998. The anticipated effect on the consolidated
financial statements has yet to be determined.

     The Corporation has not had significant dilution from stock options,
the new calculation methods will not affect future basic earnings per share
and diluted earnings per share.


                                    -9-
<PAGE>   12
                                PART II

Item 1. Legal proceedings

     There are no material pending legal proceedings to which the
Registrant or its subsidiaries, is a party or which any of its property
is subject, except for proceedings which arise in the ordinary course
of business. In the opinion of management, pending legal proceedings
will not have a material effect on the consolidated financial
statements of the Registrant or its subsidiaries as of and for the
period ended June 30, 1997.

Item 2. Changes in securities

     There have been no changes in the Registrant's securities which
would cause any shareholder's rights to be materially modified, limited
or qualified.

Item 3. Defaults upon senior securities

     There have been no defaults involving senior securities on the
part of the Registrant.

Item 4. Submission of matters to a vote of security holders

     The annual meeting of security holders of the Company was held
April 24, 1997. Information concerning the matters brought to a vote of
security holders is contained in the Company's Proxy Statement and
Notice of Annual Meeting of Shareholders held April 24, 1997, as
previously filed. There have been no further matters submitted to a
vote of the Registrant's security holders during the six months ended
June 30, 1997.

Item 5. Other information

     None.

Item 6. Exhibits and reports on Form 8-K

     1. Exhibits required by Item 601 of Regulation S-K

        See Index to exhibits on page 12.

     2. Reports on Form 8-K.

        No reports on Form 8-K were filed for the three months ended
        June 30, 1997.


                                  -10-
<PAGE>   13
                               SIGNATURES


Pursuant to the requirements 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.

                               CAPITAL DIRECTIONS, INC.


    Date August 04, 1997    By:    /s/ Timothy Gaylord        
         ---------------    -------------------------------
                                  Timothy Gaylord
                                  President & CEO




    Date August 04, 1997    By:    /s/ Robert G. Kennedy      
         ---------------    -------------------------------
                                  Robert G. Kennedy
                                  Treasurer



                                 -11-
<PAGE>   14
                      INDEX TO EXHIBITS

The following exhibits are filed or incorporated by reference
as part of this report:

 2 Plan of Acquisition, Reorganization, Arrangement,
   Liquidation or Succession - Consolidation Agreement
   included in Amendment No. 1 to Form S-4 Registration
   Statement No. 33-20417 and Form S-8 of the Articles
   of Incorporation, the related Amendment and By-Laws
   for the Incentive Stock Option Plan filed July 30, 1997

 4 Instruments Defining the Rights of Security Holders,
   Including Indentures - Not applicable

11 Statement Regarding Computation of Per Share Earnings -
   Not applicable

15 Letter Regarding Unaudited Interim Financial Information -
   Not applicable

18 Letter Regarding Change in Accounting Principals -
   Not applicable

19 Previous Unfiled Documents - Not applicable

20 Report Furnished to Security Holders - Not applicable

23 Published Report Regarding Matters Submitted to Vote of
   Security Holders - Not applicable

24 Consents of Experts and Counsel - Not applicable

25 Power of Attorney - Not applicable

27 Financial Data Schedule - (filed herewith)

28 Additional Exhibits - Not applicable