<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 March 31, 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 April 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


                                                            Page
                                                           Number

PART I - FINANCIAL INFORMATION

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

          Consolidated Statement of Income for
          Three month periods ended
          March 31, 1997 and 1996............................ 2

          Consolidated Statement of Cash Flows
          for Three month periods ended
          March 31, 1997 and 1996............................ 3

          Changes in Shareholders' Equity for
          Three months ended March 31, 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


<PAGE>   3



                                     PART I

                            CAPITAL DIRECTIONS, INC.
                           CONSOLIDATED BALANCE SHEET

                                 (in thousands)


<TABLE>
<CAPTION>

                                                                        MARCH 31,            DEC. 31,
                                                                          1997                 1996
                                                                       (UNAUDITED)         (UNAUDITED)
                                                                      ---------------------------------
<S>                                                                   <C>                 <C>
Assets                                                                 
    Cash and non interest bearing deposits........................    $ 2,855            $  2,538
    Interest bearing deposits.....................................          0                 139
    Federal funds sold............................................        850               2,800
                                                                      -------            --------
                        Total cash and cash equivalents                 3,705               5,477
  Securities available for sale...................................      9,499              10,100
  Securities held to maturity (fair value of $9,867 as
   of March 31, 1997 and $9,230 as of December 31, 1996)
    U.S. Government and agencies..................................      3,414               3,551
    State and municipal...........................................      5,360               5,482
  Federal Home Loan Bank Stock....................................        364                 364
                                                                      -------            --------
                                                  Total securities     18,637              19,497       
  Loans
    Commercial and agricultural...................................      3,709               4,453
    Installment...................................................      3,302               3,739
    Real estate mortgage..........................................     44,507              43,600
                                                                      -------            --------      
                                                       Total loans     51,518              51,792
    Allowance for loan losses.....................................     -1,032              -1,020
                                                                      -------            --------
                                                         Net loans     50,486              50,772     
  Premises and equipment, net.....................................        544                 567
  Accrued income and other assets.................................      2,760               2,607
                                                                      -------             -------
                                                      Total assets    $76,132             $78,920
                                                                      =======             =======

Liabilities and shareholders' equity
  Liabilities
   Deposits
     Non interest bearing........................................     $ 8,417             $10,356               
     Interest bearing............................................      54,041              56,153
                                                                      -------             -------
                                                   Total deposits      62,458              66,509

   Long-term Federal Home Loan Bank borrowings...................       2,827               1,913
   Accrued expense and other liabilities.........................       1,255               1,101
                                                                      -------             -------
                                                Total liabilities      66,540              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...........................................       5,517               5,319
     Net unrealized gains/(losses) on securities
     available for sale, net of tax of $17 in 1996
     and $15 in 1997.............................................          29                  32
                                                                      -------             -------
                                       Total shareholders' equity       9,592               9,397
                                                                      -------             -------
                       Total liabilities and shareholders' equity     $76,132             $78,920
                                                                      =======             =======        
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -1-
<PAGE>   4



                            CAPITAL DIRECTIONS, INC.

                        Consolidated Statement of Income
                      (in thousands except per share data)


<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                              March 31,
                                                                          1997        1996
                                                                             (UNAUDITED)     
                                                                      --------------------------
<S>                                                                  <C>             <C>
Interest and dividend income                    
 Loans, including fees.............................................   $  1,158        $  1,112    
 Federal funds sold................................................          9              67
 Securities:
    Taxable........................................................        227             178
    Tax exempt.....................................................         63              68
 Other interest income.............................................          2               0
 Dividends on Federal Home Loan Bank stock.........................          7               7
                                                                      --------        --------
                                 Total interest and dividend income      1,466           1,432

Interest expense
 Deposits..........................................................        566             590
 Short-term borrowings.............................................          9               0
 Long-term Federal home Loan Bank borrowings.......................         29              31
                                                                      --------        --------
                                             Total interest expense        604             621      
                                                                      --------        --------
Net interest income................................................        862             811
Provision for loan losses..........................................          0               0
                                                                      --------        --------
Net interest income after provision for loan losses                        862             811

Non interest income
 Service charges on deposits.......................................         63              67
 Monex investment commission fees..................................          0              86
 Other income......................................................         58              78
 Gain on sale of loans.............................................          7               0
 Gain on sale of securities........................................          7               0
                                                                      --------        --------
                                          Total non interest income        135             231

Non interest expense
 Salaries and employee benefits....................................        343             346
 Premises and equipment............................................         83              94
 Monex investment sales expense....................................          0              80
 Other operating expenses..........................................        161             153
                                                                      --------        --------
                                         Total non interest expense        587             673
                                                                      --------        --------
Income before income tax expense...................................        410             369
Income tax expense.................................................        115             101
                                                                      --------        --------
Net income.........................................................   $    295        $    268
                                                                      ========        ========

 Average common shares outstanding                                     297,428         297,428
 Earnings per common share                                            $    .99        $    .90  
 Dividends per share of
  common stock, declared                                                   .33             .27

</TABLE>

See accompanying notes to consolidated financial statements.

                                      -2-
<PAGE>   5

                            CAPITAL DIRECTIONS, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                          March 31,
                                                       1997      1996
                                                          (UNAUDITED)
                                                    ---------------------               
<S>                                                <C>       <C>
Net Cash From Operating Activities................. $    338  $    263

Cash Flows From Investing Activities
  Proceeds from maturities of securities...........      623       775
  Principal payments on securities.................      216       253
  Purchase of securities...........................        0    (2,336)
  Net change in loans..............................      286       851
  Premises and equipment expenditures..............        0        (5)
                                                    --------  --------  
Net Cash From Investing Activities.................    1,125      (462)

Cash Flows From Financing Activities
  Net change in deposits...........................   (4,051)   (4,260)
  Net change in long-term borrowing................      914       262
  Dividends paid...................................      (98)      (80)
                                                    --------  --------  
Net Cash From Financing Activities.................   (3,235)   (4,078)
                                                    --------  --------  

Net Change in Cash and Cash Equivalents............   (1,772)   (4,277)
  Cash and cash equivalents at beginning of year...    5,477     9,775
                                                    --------  --------  
  Cash and cash equivalents March 31............... $  3,705  $  5,498 
                                                    ========  ========

Supplemental Disclosures of Cash Flow Information
  Cash Paid During the Year For
    Interest....................................... $    605  $    647
    Income Taxes - Federal......................... $    124  $    172

</TABLE>





SEE NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                      -3-
<PAGE>   6




                            CAPITAL DIRECTIONS, INC.

                           CONSOLIDATED STATEMENT OF
                        CHARGES IN SHAREHOLDERS' EQUITY
                     FOR THREE MONTHS ENDED MARCH 31, 1997
                                 (IN THOUSANDS)

<TABLE>
<S>                                                             <C>
Balance - January 1, 1997....................................... $9,397
 Net income through March 31....................................    295
 Net change in unrealized gain/(loss) on securities
  available for sale, net of tax of $2..........................     (2)
 Cash dividends through March ($ .33 per share).................    (98)
                                                                 ------
Balance - March 31,............................................. $9,592
                                                                 ======

</TABLE>














 SEE NOTES TO INTERIM 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 March 31, 1997 and December 31,
   1996, the results of operations and cash flows for the three month period
   ended March 31, 1997 and 1996, and the change in shareholders' equity for
   the three month period ended March 31, 1997.

2. The results of the operations for the three months ended March 31, 1997 are
   not necessarily indicative of the results to be expected for the full year.

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 $402,000 at March 31, 1997 and 172,000 at December 31, 1996, summarized
   as follows:

<TABLE>
<CAPTION>
                                                March 31,  December 31,
     Non-performing loans                         1997        1996
     ---------------------------------------   ----------  -------------        
    <S>                                       <C>          <C>
     Non-accrual............................   $ 70,000       48,000
     90 days or more past due...............    279,000       70,000
     Renegotiated...........................     53,000       54,000
                                               --------     --------            
     Total..................................   $402,000     $172,000
                                               --------     --------
</TABLE>

   The renegotiated loans are all in compliance with the modified terms for
   both periods. As of March 31, 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. A summary of the activity in the allowance for loan losses for the three
   months ended March 31, follows:

<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...........................     (1)       (4)
   Recoveries..................................     13        16
                                                ------     -----
    Balance - end of period.................... $1,032     $ 826
                                                ======     =====
</TABLE>

6. The provision for income taxes represents federal income tax expense
   calculated using annualized rates on 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 6.30% 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 non interest bearing deposits.  Loans grew
by 5.50% when compared with the first quarter of 1996.  The Bank has completed
the sale of the student loan portfolio and will be offering this product
through a third party. Real estate mortgage lending continues to show strong
growth during this period.
     Net interest margin of 5.13% for the first three months of 1997 compares
favorably to 4.86% for the same period in 1996.
     The Bank accessed long term FHLB funding first quarter to match assets of
like term.
     Allowance for Loan Loss remains strong. At March 31, 1997 the allowance
was equal to 2% of total loans outstanding, down slightly from 2.06% on March
31, 1996 and 1.97% on December 31, 1996.

RESULTS OF OPERATIONS

     Net income for the three month period ended March 31, 1997 was $295,000,
or $.99 per share compared to earnings of $268,000, or $.90 per share for
1996's comparable period.
     The increase in margin resulted in a $51,000 increase in net interest
income for the first three months of 1997 compared to the same period in 1996.
     The decrease of $96,000 in non interest income for the first three 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 over last year.
     The decrease of $86,000 in non interest expenses is due primarily to the
decrease in commission sales expense from the sales of mutual funds and
annuities over last year.





                                      -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 has maintained a net average balance of
$115,000 in Federal Funds sold during the first quarter 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 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.  Management feels it has
adequate sources for liquidity.
     At March 31, 1997 the securities available for sale were valued at
$9,499,000. 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 that 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 March 31, 1997, the percentage of rate sensitive assets to
rate sensitive liabilities within the one-year time horizon was 97%.
     The chart shows the Bank's GAP position as of March 31, 1997. The Bank has
a liability sensitive position within one year of $1,382,000, which indicates
higher net interest income may be earned if rates lower during the period. Due
to the limitations of GAP analysis, modeling is also used to enhance
measurement and control. A new program will be implemented to analyze non
maturity deposits. This will refine the GAP model over the next quarter.





                                      -7-

<PAGE>   10


MASON STATE BANK GAP OR INTEREST RATE RISK EXPOSURE MEASUREMENTS AS OF 03/31/97

<TABLE>
<CAPTION>

ASSETS SUBJECT TO INTEREST RATE
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           5,920   9.88%        32   8.78%       784   9.04%     323   9.75%     248   8.04%     7,307   9.72%
TOTAL CONSUMER LOANS         317   9.48%       400  10.42%       600  10.42%     600  10.42%     600  10.42%     2,517  10.30%
CONSUMER RUNOFF OFFSET
TOTAL REV. CREDIT          3,722  10.23%         0    .00%         0    .00%       0    .00%       0    .00%     3,722  10.23%
TOTAL MTGE. LOANS          1,300   8.24%     2,484   8.22%     3,878   8.31%   3,462   8.31%   2,917   8.13%    14,041   8.25%
MORTGAGE RUNOFF OFFSET
TOTAL OTHER MTGES.           106  13.66%       357   8.59%       119   7.23%     119   7.23%      119  7.23%       820   7.99%
RESERVE FOR LN. LOSS           0    .00%         0    .00%         0    .00%       0    .00%        0   .00%         0    .00%
                          -------------      ------------      ------------    ------------    ------------      ------------
TOTAL LOANS               11,365   9.79%     3,273   8.54%     5,381   8.63%   4,504   8.66%    3,884  8.45%     28,407  9.06%

INVESTMENTS-MUNI'S            30   5.67%       645   6.43%         0    .00%      45   7.93%      670  7.45%      1,390  6.95%
FED FUNDS                    850   5.13%         0    .00%         0    .00%       0    .00%        0   .00%        850  5.12%
CORPORATES                   500   5.14%         0    .00%         0    .00%   1,227   5.64%    1,014  5.41%      2,741  5.46%
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            46   6.24%         0    .00%         0    .00%       0    .00%        0   .00%         46  6.24%
INVESTMENTS-ARM'S            568   7.05%         0    .00%         0    .00%       0    .00%    1,967  6.84%      2,535  6.89%
INVESTMENTS-GOVT'S           368   7.25%         0    .00%         0    .00%       0    .00%    1,033  7.56%      1,401  7.48%
                          -------------      ------------      ------------    ------------    ------------      ------------
TOTAL INVESTMENTS          2,429   5.96%       778   6.40%       200   6.26%   1,472   5.79%    4,884  6.76%      9.763  6.37%

TOTAL EARNING ASSETS      13,794   9.11%     4,051   8.13%     5,581   8.54%   5,976   7.96%    8,768  7.50%     38,170  8.37%
NON-EARNING ASSETS             0    .00%         0    .00%         0    .00%       0    .00%        0   .00%          0   .00%
                          -------------      ------------      ------------    ------------     -----------      ------------
TOTAL ASSETS              13,794   9.11%     4,051   8.13%     5,581   8.54%   5,976   7.96%    8,768  7.50%     38,170  8.37%

</TABLE>

<TABLE>
<CAPTION>


TYPE OF ASSET:                      1 - 3 YEARS                   3 - 5 YEARS               OVER 5 YEARS            GRAND TOTAL
==============                     =============                 =============             ==============          =============
<S>                               <C>      <C>                   <C>     <C>              <C>      <C>             <C>      <C>

TOTAL COM. LOANS                   3,866   8.76%                  2,243   9.01%             3,048   9.07%           16,464   9.28%
TOTAL CONSUMER LOANS               1,908  10.52%                  1,011  10.52%                 0    .00%            5,436  10.42% 
CONSUMER RUNOFF OFFSET                                                                                              -2,400  10.42%
TOTAL REV. CREDIT                      0    .00%                      0    .00%                 0    .00%            3,722  10.23%
TOTAL MTGE. LOANS                  2,550   8.60%                  1,457   7.54%            13,415   7.94%           31,463   8.11%
MORTGAGE RUNOFF OFFSET                                                                                              -4,000   8.12%
TOTAL OTHER MTGES.                     0    .00%                      0    .00%                12   4.00%              832   7.94%
RESERVE FOR LN. LOSS                   0    .00%                      0    .00%                 0    .00%           -1,032    .00% 
                                 --------------                 --------------            --------------           --------------
TOTAL LOANS                        8,324   9.11%                  4,711   8.88%            16,475   8.15%           50,485   8.96%

INVESTMENTS-MUNI'S                 1,180   7.58%                    685   7.64%             2,105   7.62%            5,360   7.44%
FED FUNDS                              0    .00%                      0    .00%                 0    .00%              850   5.12%
CORPORATES                         1,368   7.39%                    859   6.95%                 4    .00%            4,972   6.25%
MTG. BACKED PAYDOWNS                                                                                                     0   6.26%
INVEST-CMO'S FLOAT                     0    .00%                      0    .00%                 0    .00%               46   6.24%
INVESTMENTS-ARM'S                      0    .00%                      0    .00%                 0    .00%            2,535   6.89%
INVESTMENTS-GOVT'S                 2,265   6.30%                      0    .00%             2,014   6.76%            5,680   6.75%
                                 --------------                 --------------            --------------           --------------
TOTAL INVESTMENTS                  4,813   6.92%                  1,544   7.26%             4,123   7.19%           19,443   6.76%

TOTAL EARNING ASSETS              13,137   8.31%                  6,255   8.48%            20,598   7.96%           69,928   8.35%
NON-EARNING ASSETS                     0    .00%                      0    .00%                 0    .00%            6,141    .00% 
                                 --------------                 --------------            --------------           --------------
TOTAL ASSETS                      13,137   8.31%                  6,255   8.48%            20,598   7.96%           76,069   7.67%

</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             429     .00%           857   .00%       1,286   .00%       1,286   .00%      1,286   .00%
NOW ACCOUNTS                     301    2.00%           584  2.00%         884  2.00%       1,326  2.00%      1,326  2.00%
NEGOTIATED NOW                     0    3.75%             0  3.75%           0   .00%           0   .00%          0   .00%
MONEY MARKET SAVINGS             985    3.38%         1,970  3.38%       1,970  3.38%         985  3.38%        985  3.38%
                               -------------         ------------       ------------       ------------      ------------
TOTAL DDA ACCOUNTS             1,714    2.29%         3,410  2.29%       4,139  2.04%       3,597  1.66%      3,597  1.66%
TOTAL SAVINGS ACCTS              419    3.22%           719  3.22%       1,084  3.22%       1,409  3.22%      1,409  3.22%
TOTAL COD                      6,190    5.33%         2,537  5.47%       3,597  5.21%       2,591  5.69%      2,983  5.58%
FED FUNDS & OTHER                  0     .00%             0   .00%           0   .00%           0   .00%        157  6.21%
                               -------------         ------------       ------------       ------------      ------------
TOTAL DEPOSITS                 8,323    4.60%         6,666  3.60%       8,821  3.48%       7,597  3.33%      8,146  3.45%
OTHER LIABILITIES                  0     .00%             0   .00%           0   .00%           0   .00%          0   .00%
                               -------------         ------------       ------------       ------------      ------------
TOTAL LIABILITIES              8,323    4.60%         6,666  3.60%       8,821  3.48%       7,597  3.33%      8,146  3.45%
TOTAL CAPITAL                      0     .00%             0   .00%           0   .00%           0   .00%          0   .00%
                               -------------         ------------       ------------       ------------      ------------
TOTAL LIAB. & CAP.             8,323    4.60%         6,666  3.60%       8,821  3.48%       7,597  3.33%      8,146  3.45%
-------------------------------------------------------------------------------------------------------------------------
GAP FIGURES                    5,471                 -2,615             -3,240             -1,621               622
CUMULATIVE GAP                 5,471                  2,856               -383             -2,004            -1,382
NET POSITION AS
A % OF TOTAL ASSETS            7.19%                  3.75%              -.50%             -2.63%            -1.82%
RSA AS A % OF RSL            165.74%                119.06%             98.39%             93.62%            96.51%

</TABLE>







<TABLE>
<CAPTION>

TYPE OF LIABILITY                 ANNUAL TOTAL          1 - 3 YEARS        3 - 5 YEARS         OVER 5 YEARS         GRAND TOTAL
=================                 ============          ===========      ==============        ============        ============

<S>                             <C>      <C>           <C>     <C>      <C>      <C>           <C>   <C>         <C>      <C>
NON-INT. BEARING DDA             5,142    .00%          3,428   .00%         0    .00%          0    .00%          8,570   .00%  
NOW ACCOUNTS                     4,421   1.95%          1,768  2.00%     2,653   2.00%          0    .00%          8,842  1.98% 
NEGOTIATED NOW                       0   3.75%              0   .00%         0    .00%          0    .00%              0  3.75%
MONEY MARKET SAVINGS             6,894   3.38%          2,954  3.38%         0    .00%          0    .00%          9,848  3.38% 
                                -------------          ------------     -------------       ------------         -------------
TOTAL DDA ACCOUNTS              16,457   1.95%          8,151  1.66%     2,653   2.00%          0    .00%         27,260  1.86%
TOTAL SAVINGS ACCTS.             5,040   3.22%          2,423  3.52%     2,951   3.52%          0    .00%         10,414  3.37%
TOTAL COD                       17,898   5.42%          6,304  6.16%       736   5.96%          0    .00%         24,938  5.62%
FED FUNDS & OTHER                  157   6.21%          1,271  6.56%       473   6.10%        926   6.10%          2,827  6.31%
                                -------------          ------------     -------------       ------------         -------------   
TOTAL DEPOSITS                  39,552   3.70%         18,149  3.81%     6,813   3.37%        926   6.10%         65,439  3.73%     
OTHER LIABILITIES                    0    .00%              0   .00%         0    .00%          0    .00%          1,255   .00%
                                -------------          ------------     -------------       ------------         -------------
TOTAL LIABILITIES               39,552   3.70%         18,149  3.81%     6,813   3.37%        926   6.10%         66,694  3.66%
TOTAL CAPITAL                        0    .00               0   .00%         0    .00%      9,375    .00%          9,375   .00%
                                -------------          ------------     -------------       ------------         ------------- 
TOTAL LIAB. & CAP.              39,552   3.70%         18,149  3.81%     6,813   3.37%     10,301    .55%         76,069  3.21%
------------------------------------------------------------------------------------------------------------------------------
GAP FIGURES                     -1,382                 -5,012             -558             10,297                      0        
CUMULATIVE GAP                                        -6,393           -6,951               3,346         
NET POSITION AS
A % OF TOTAL ASSETS             -1.82%                 -8.40%           -9.14%               4.40%    
RSA AS A % OF RSL               96.51%                 88.92%           89.23%             104.47%     

</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 $198,000 or 2.11% to $9,563,000 at March
31, 1997, which represents 12.56% of total assets. This figure does not include
the $29,000, 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.
     The "risk-based" capital to asset ratio, as established by the regulatory
authorities, was 23.03% as of March 31, 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>
Risked-Based Capital
March 31, 1997        $10,106,000  23.03  $4,012,000  8.00  $6,094,000 15.03

</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 three month periods ended
March 31, 1997 and 1996 totaled $115,000 and $101,000 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 March 31, 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

     There have been no matters submitted to a vote of the Registrant's
security holders.

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 
        March 31, 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 April 30, 1997         By: /s/ Timothy Gaylord
                                    -----------------------------       
                                     Timothy Gaylord
                                     President




     Date April 30, 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


  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





                                      -12-